Wednesday, June 17, 2009

Why Shouldn't GM Be Allowed to Lobby?

The latest illogical attack that is running rampant through Washington and the media has to do with the lobbying activities of General Motors. The argument goes that, as a recipient of extraordinary aid from the federal government, GM is essentially lobbying itself when it pays a consultant to have dinner with a member of Congress. We believe that this sort of argument ignores the true interests of taxpayers, and succumbs to the misplaced reasoning that generally pervades every form of public discourse concerning federal-aid-receiving corporations these days.

As a taxpayer, the number one priority should be the safe return of all principal that you have effectively loaned to any number of American corporations. In order for this to be achieved in a timely fashion, recipients of aid, including GM, must be allowed to make prudent decisions that are in the best interest of the business. In other words, in all bailout scenarios, taxpayer interests are most closely aligned with the ability of the various corporations to make the most profitable decision at a particular point in time, every time. Lobbyists, disliked as they are in general, are held in such contempt because of a perceived unfair advantage they afford to the corporations on whose behalf they act. In the case of GM, the taxpayer should be cheering for the lobbyist, who will presumably be advocating for measures that will maximize the profitability of the auto-maker. Who wouldn't want GM to conduct lobbying activities? Why, politicians of course. The reason: the introduction of lobbyists into the current power structure would weaken their ability to influence GM's business decisions in favor of a particular Congressional district, but to the detriment of the Company as a whole. In a recent op-ed in the Wall Street Journal, we learned that, upon hearing the news of a pending plant closure in his district, Barney Frank proceeded to dial-up GM's newly appointed CEO and "persuade" him that, perhaps another plant should selected for closure (we presume he was leaning towards the "not one in my district" direction). According to the same article, this abdication by GM opened up a Pandora's Box, filled exclusively with members of Congress eager to avoid further job losses in their precious district.

So we pose the question(s): As part of its ongoing restructuring, would it be reasonable to assume that, when GM decides to close a manufacturing facility, it has made the decision based upon economic/supply chain/productivity/needs based analysis that has as its ultimate goal the profitability of the company? We hope for the sake of your intelligence that you answered "yes", and that, based upon the immutable rules of logic, Barney Frank chose to act against the economic best interest of GM. Therefore, Barney Frank chose to act against the economic interests of the taxpayer, for the purpose of securing his seat in Congress for another go-round.

Could lobbyists have stymied such an intervention? Maybe not. What we do know however, is that for the sake of the taxpayer, there needs to be someone allowed onto Capitol Hill who can advocate for the proper operation of GM. The alternative, we fear, is another Amtrak.

InfoNgen was used to research the content of this article.
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