By Peter Roff, Thomas Jefferson Street blog
It should be clear to everyone by now that neither the Chrysler Corporation nor General Motors are going quietly into bankruptcy. The actions of the Obama Administration represent what, in my lifetime, is certainly an unprecedented level of government interference in private business.
The intersecting of government and business is almost always a highly controversial matter. And it is no different here. The White House has taken a number of well-deserved blows for, in effect, firing the CEO of Chrysler and for insisting on a number of additional changes to the corporate structure as a condition of support for the company's survival. It is one thing when private investors insist on changes as a condition of support; it is altogether another when the government makes the same demands.
And it is that way for, I think two reasons: First, private investors take risks, hoping they will enjoy a positive return on their investment in exchange for exposing their money to those risks; the government doesn't take risks and insists on certain outcomes, at least from the private sector. Second, private investors can always sell their investments to others, cash them in or simply walk away. The government almost never walks away from anything once they get their hooks into something—and according to the available polling data, most of America remains unconvinced that letting Washington run two of the three major U.S. automakers in anyway improves the way these companies will be managed.
As part of the effort to streamline operations at Chrysler and to hold costs down, the company announced in early May that it would ask the bankruptcy court overseeing its reorganization to allow it to break its franchise agreements with nearly 800 of its almost 3,200 dealers located around the country. And, understandably, many of the folks who own these dealerships are upset. In fact, as the blog Pricewheels.com has reported, "A group of Chrysler dealers that Chrysler plans to close on June 9th has banded together and asked the bankruptcy court to delay Chrysler's sale to Fiat."
The dealers are asking the bankruptcy court for more time to argue its case because, as attorney Stephen D. Lerner said on their behalf, "Chrysler's proposed asset sale and request for immediate termination of dealer franchises will destroy several hundred independent businesses, ruin the livelihoods of their owners, cause the loss of thousands of jobs and precipitate inevitable personal and business bankruptcies flowing from the closing of the affected dealers."
So it is clear the stakes are high. But is this a legal issue—or a political one, as some suggest?
A number of bloggers are pointing out that the dealerships targeted for closure are owned by people who appear to be overwhelmingly Republican in their political giving patterns. In fact, one of the auto dealers happens to be a Republican member of the U.S. House of Representatives. And that, they say, suggests that partisan politics are afoot.
Others are not so certain. As the left-wing media watchdog organization Media Matters for America points out, it may be a coincidence without causation. It may well be that America's automobile dealers are more Republican as a group; therefore any list of them would almost certainly contain more Republicans than Democrats. So it is terribly premature to allege, as some are already doing, that this is some kind of political retaliation by the White House and the labor unions against Republican donors.
On the other hand it does raise some questions that it are fair to ask and should be answered.
These are fair questions, ones that should be asked in any case, even if the dealerships to be closed were overwhelmingly owned by major givers to liberal causes or to Democrats running for office. If ever there was an issue that demanded transparency, this is it.
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