The bankruptcy filing of General Motors last week didn’t have to be this way.
GM could have – and as many of us argued at the time, should have – declared bankruptcy last December. Our bankruptcy laws exist to give troubled companies a chance to restructure their business models and get out from under crushing debts.
But now, after we lost $50 billion in a misguided bailout scheme, the bankruptcy GM is entering is not even real bankruptcy. It’s a political bankruptcy, brokered by the Obama administration to reward the very people who helped to destroy the company in the first place.
Under the agreement, investors and creditors were wiped out, while the federal government, the Canadian government, and the labor bosses will own 90 percent of the new company.
Going forward, GM won’t be able to make the tough business decisions necessary to get back to profitability. They will be second-guessed and overruled by politicians in Washington. Meanwhile, as GM becomes a government program, car companies that are succeeding will have to compete at an unfair disadvantage – all because the labor bosses funneled millions of dollars to Democrat candidates over the last few election cycles.
It isn’t fair, and it needs to stop.
Broken companies and greedy labor bosses shouldn’t be rewarded for their failures. Washington needs to get out of this quagmire before politicians do to our auto industry what they’ve already done to our financial system.
A free auto market will help revive our industrial economy, and give GM its best chance to succeed. As always, freedom will work…if we let it.