Conservatives Cry 'Conspiracy' On Chrysler Closings

having to explain to Republicans part of their own base…

It would not surprise me if Chrysler preferentially closed dealerships in Republican areas.  Not because of “Obama made me do it”, though. 

Chrysler is now in the hands of Congress. Congress is controlled by Democrats. Congressmen like to have economic activity in their districts. You do the math.

Chrysler will keep dealerships in Democratic Congressional districts for the same reason as military bases (and pointless airports like the John Murtha airport) appear in the districts of powerful congressmen.

Chrysler is making the transition from being a private corporation to being a Federal facility.

GM will do the same.

I agree, this is probably another wingnut effort to smear the Obama administration. But in the interests of transparency and good government, the Chrysler execs and/or auto task force should release their notes, agendas, leadership structure, etc., as well as the selection criteria/model for making the dealership closure decisions. 

So far, I’ve heard a lot of back and forth speculation about some very limited data. Wingnuts say that almost all of the dealers to be closed are Republicans, but do not have data on the dealers to remain open as a point of comparison.  Nate Silver responds that car dealers in general (not just Chrysler dealers) contributed to Republicans in the 2008 election by an 8 to 1 ratio, but that’s like comparing oranges to grapefruit: for all we know, Chrysler dealers are more evenly split between D and R compared to the total dealer “control group.” Besides, if the auto task force decided to save about 10-20 of their friends while singling out 10-20 non-friends for closure, that might not show up as statistically significant, but it would still be an abuse of government power.

It’s pretty simple, really: take the model they used, re-run the dealership performance data through that model, print the list of winners and losers, and then compare that list to the list that ultimately designated which dealers were to be closed and which were not. If there is any difference whatsoever between the two lists, then other ulterior factors must have come into play. They could even do this while maintaining confidentiality of sensitive business data by releasing the model and data to a non-partisan review board first. If everything is kosher, no need to release the information publicly. 

Do we really want the Obama administration to acquire a reputation for praticing crony politics in a similar fashion as the crooked Bush administration? Nancy Pelosi promised us the most ethical Congress ever. If Democrats become just like the Republicans, how can we ever going to make meaningful long-term policy changes?

Well, it’s understandable that some people think Team Obama really has their fingers in GM goings on --because they do! However, there’s no hidden agenda or conspiracy.

Edward Harrison of Credit Writedowns lays out the stakes for Obama and the Democrats in what happens to GM: the ultimate ends are political — the economics of the matter are merely the means:

General Motors is a monster company employing a quarter million people worldwide. It sells $150 billion in cars – or at least it used to. It is not just a producer of vehicles. It is also a supplier. It has been through several joint ventures and has owned a number of foreign manufacturers, Isuzu and Opel being but two. In short, the company is a very big player, financially, economically and politically.

The GM bankruptcy is a very big deal and will have wide-ranging implications. Let me review a few of the issues here starting with the politics.

2010 elections

In the U.S., we have just witnessed an historic election that some are comparing to the election of Ronald Reagan in 1980 and Franklin Roosevelt in 1932. Indeed, there has been a sea change in the political climate here in Washington since January, with the Democrats and their agenda taking precedence over the Republicans. But, none of that is going to last if we don’t see a recovery that lasts through the mid-term elections in 2010. And that is already very much on the minds of politicians in Washington. Here is the calculus.

In 2008, the Democrats benefited greatly from Barack Obama’s election as President, taking large majorities in both houses of Congress. Their mandate was to work with the President to fix America’s economic problem. So, Obama’s and Congressional Democrats’ first priority is to end the recession as quickly as possible. I guarantee you there would be hell to pay if this is not done well before November 2010 when the next general election is held.

From Obama’s perspective, it is crucial that he fix the banks and fix the auto industry as these were the two economic issues front and centre in the election which he said he could tackle. With the banking industry stabilised, the Obama legacy rides crucially on how the Auto Bailout proceeds. Under no circumstances is the Obama Administration going to allow General Motors to do to the economy in 2009 what Lehman Brothers did to it in 2008. They are going to fix GM no matter what it takes. And if this includes heavy-handed tactics (e.g., forcing Waggoner’s resignation), so be it.

So, be very clear that the GM and Chrysler issue is an existential question for this administration. Handle it well and you get the Roosevelt treatment and ensure a good outcome for your party in 2010. Screw things up and the depression bears down on America and you’re out of office in due course. The key policy decision is how to ensure a favourable outcome. And when I say favourable, I mean one that ensures as many jobs as possible while minimizing any wider economic fallout. Other issues like treating bondholders well, not committing taxpayer monies to the effort, or keeping government out of the auto industry are going to be much less important.

In sum, while there’s no conspiracy, the stakes are so incredibly high for Team Obama and the Democrats and the scale of intervention into GM is so broad and deep now, they don’t need to hide anything they’re doing — whatever they feel they need to do, they’re going do it. The ends will justifiy the means.

It’s a hell of a gamble.

That’s the big picture and the real story -- wondering what’s really going on with dealerships is just grasping at a shard.

Monique, my bad, sorry I got the auto bailout money mixed up with the TARP money - thanks for the clarification.

My point is that the feds gave Chrysler a lot of taxpayer money, without which Fiat probably never agrees to take responsibility for the company. As of now, Fiat is not the owner, I think it’s actually a UAW health insurance entity. Now, Fiat might have told Chrysler/UAW/Treasury that we wanted to see certain dealers pared before the purchase, but it’s not actually their “decision” until they own the company. In the meantime, the taxpayer money must be answered for, can’t just blame it on Fiat.  Otherwise, you have billions of taxpayer money spent, a dubius bankruptcy process, and no transperancy.

Are the Democrats going to become crony capitalists just like the Republicans? If so, what’s the point? Chris above seems to be suggesting that anything goes - anything that it takes to win in 2010 and 2012.

Something similar happened under Bush’s watch with the Wells Fargo takeover of Wachovia. Right before the takeover, Wachovia received a bunch of TARP money, making them even more attractive to Wells Fargo (in this case, it turns out that Wachovia was actually financially stable all along, which made this deal even sweeter). Again, no transperancy, crony capitalism. Now is it okay if Democrats do the same thing? No, that’s why it is essential that we have accountability and transparency - and not hide behond European skirts and elude all responsibilty - otherwise, we’re all just suckers.