Grinning and Bearing GM’s Bitter Ironies
Via General Motors, American taxpayers will soon own a 61 percent stake in a Texas-based company called AmeriCredit. GM announced plans yesterday to acquire the auto finance firm for $3.5 billion, which management believes will help boost its auto sales and improve chances for an IPO later this year or next.
Thus, a greater chance for re-privatization later is the rationalization for more nationalization now.
For those who opposed the nationalization of GM for its affront to free markets and the rule of law in the first place, the acquisition presents a dilemma. On one hand, the deal means that the nationalization virus is spreading to infect another company in a different industry, ensuring that yet more business decisions are driven by political, rather than economic, considerations. (Although, to acknowledge the efforts of Messrs. Bush, Paulson, Obama, Dodd, Frank and others, politics already reigns supreme in the consumer finance industry.) One has to wonder what exemptions, loopholes, and carve-outs might be in store for AmeriCredit, as the administration crafts regulations to implement the just-passed “financial reform” legislation.
And Senator Chuck Grassley (R-IA), who questioned and brought attention to some of GM’s hyperbolic claims about its performance earlier this year, raised fresh doubts about the latest move:
If GM has $3.5 billion in cash to buy a financial institution, it seems like it should have paid back taxpayers first. After GM’s experience with GMAC, which left GM seeking a taxpayer bailout, you have to think the company and, in turn, the taxpayers would be better off if GM focused on making cars that people want to buy and stayed clear of repeating its effort to make high-risk car loans.
Republicans Rediscover Their Big-Government Principles
Sen. Chuck Grassley, who can always be counted on to stick the federal government’s nose where it doesn’t belong, is criticizing Attorney General Eric Holder’s teeny-tiny steps toward a less oppressive enforcement of drug prohibition. Holder said on Wednesday “that federal agents will target marijuana distributors only when they violate both federal and state law. This is a departure from policy under the Bush administration, which targeted dispensaries under federal law even if they complied with the state’s law allowing sales of medical marijuana.”
Grassley says that marijuana is a “gateway” drug to the use of harder drugs and that Holder “is not doing health care reform any good.”
As Tim Lynch and I wrote in the Cato Handbook for Policymakers:
President Bush . . . has spoken of the importance of the constitutional principle of federalism. Shortly after his inauguration, Bush said, “I’m going to make respect for federalism a priority in this administration.” Unfortunately, the president’s actions have not matched his words. Federal police agents and prosecutors continue to raid medical marijuana clubs in California and Arizona.
And as Justice Clarence Thomas wrote in dissenting from the Supreme Court’s decision to uphold the power of the federal government to regulate medical marijuana:
If Congress can regulate this under the Commerce Clause, then it can regulate virtually anything — and the Federal Government is no longer one of limited and enumerated powers.
That’s the principle that Chuck Grassley defends. Republicans claim to be the small-government party — and President Obama’s policies on taxes, spending, and regulation certainly justify a view that the GOP is, if not a small-government party, at least the smaller-government party — but they forget those principles when it comes to imposing their social values through federal force.
Cato on Facebook
Cato on Twitter
Cato on Google+
Cato on YouTube
