Congress in the Market to Run GM & Chrysler

| by Reason Foundation

Back in April, even as the federal government was bailing out General Motors and Chrysler to the tune of tens of billions of dollars, Obama flatly stated, "I don't want to run auto companies...." In June, the president reiterated his stance when he declared, "What I have no interest in doing is running GM...." Well, the president may have no interest in running car companies, but Congress certainly does.

One of the chief cost cutting measures adopted by the flailing automakers was to get rid of hundreds of marginal dealerships. Not so fast, say congresspeople who are dependent on campaign contributions from such dealers. As the Washington Post reports today:

Now that the Obama administration has spent billions of dollars on the bailouts of General Motors and Chrysler, Congress is considering making its first major management decision at the automakers.

Under legislation that has rapidly gained support, GM and Chrysler would have to reinstate more than 2,000 dealerships that the companies had slated for closure...

Since federal money has been used to sustain the automakers, they say Congress has an obligation to intervene.

Congressional justification for subsidizing the dealerships? Jobs. Supposedly a 170,000 of them. But is that really the case? The Post goes on to report that the dealers may be open to a compromise:

...the bill may simply be a way of extracting concessions -- possibly money -- from the auto manufacturers for the dealers.

Paying off the dealers will not save many jobs, but it may help Congresspeople garner future campaign contributions.

See Reason's August/September cover article "Illegal. Illiberal. Ill-Fated" on why Washington should not run Detroit here.