The Deepening Mess At Government-Owned GM

Thursday's Wall Street Journal noted that GM is drawing another slug of funding from us taxpayers.

Originally allocated as much as $50B, the new amount, expected to be more than $2.5B, is part of the initial $30.1B loan from the US government arranged at the time of GM's bankruptcy.

According to the Journal article,

"GM officials have been reluctant to give updates on the balance of the escrow funds because it gives only a partial portrait of the company's cash position."

So much for transparency of government and the operations of a large, failed car company you now own.

In the same edition of the paper, another Journal piece reported on how political favoritism is running rampant at GM.

It seems that, although the management is apparently trying, at last, to run things on an economic basis, current government ownership is complicating that.

One story involved a GM car dealer in Spencer, West Virginia. Upon learning his dealership was slated for closure, he appealed directly to one of his state's US Senators, Jay Rockefeller. In due course, Rockefeller brought pressure upon GM's management to reverse the decision.

So much for a taxpayer-funded entity being managed for better results. Instead, we see political favoritism trumping common sense.

Then there is the case of a Montana palladium producer. Learning that GM was sourcing this commodity from South Africa, for a lower price, the mining firm had Montana's two Democratic Senators, Baucus and Tester, pressure GM to relent.

A quote from Tester, revealing his stupidity and the lengths to which he'll bend logic to defend pure political favoritism, is priceless,

"Sen. Tester says he isn't just trying to protect a local mine, but is doing it for GM, too. Reinstating the contract "would be in the best interests of GM," he says. "They are dealing with mines in foreign countries, with all the whims of whatever they may do. This is a matter of stable supply." "

Stable supply. Foreign country whims. Hah!

Hasn't Tester heard of Henry Waxman's cap-and-tax bill?

So we see that GM is now being run- and plundered- according to the pressures brought to bear by states' governmental officials. Now that the company is federal-owned, the businesses with the best connections to powerful governmental officials get the best deals, no matter how uneconomic, with GM.

This is why boundaries between business and government are so sacrosanct. Once government gets involved with running businesses, profit takes a back seat to political cronyism and favoritism.

You're never going to get your $50B+ taxpayer money back from GM- not at this rate.