Everything you need to know about the nightmare of government-controlled businesses can be found in a damning new inspector general’s report on Dealergate. The independent review of how and why the Obama administration forced Chrysler and General Motors to oversee mass closures of car dealerships across the country reveals grisly incompetence, fatal bureaucratic hubris, and Big Labor cronyism. No wonder you won’t hear much about the report’s in-depth details in the so-called mainstream media.
Under the guise of “saving” the American auto industry through a bipartisan, taxpayer-funded bailout now topping $80 billion, President Obama’s know-nothing bureaucrats pushed the car companies to eliminate thousands of jobs — with unjustified haste using dubious economic models.
Obama ordered the bailout recipients to “prove” their long-term viability by submitting restructuring plans. But White House and Treasury Department “experts” rejected the auto manufacturers’ proposals, citing the too-slow pace of their plans to reduce their dealership networks over a period of five years. Once the auto companies modified those plans to meet government-backed timelines, the money flowed.
But Neil Barofsky, the federal watchdog overseeing the bank-auto-insurance-all-purpose bailout fund, found that the White House auto-industry task force and the Treasury Department “Auto Team” had no basis for ordering the expedited car-dealership closure schedules. They relied on a single consulting firm’s internal report recommending that the U.S. companies adopt foreign auto-industry models to increase profits — a recommendation hotly disputed by auto experts, who questioned whether foreign practices could be applied to domestic dealership networks.
Team Obama’s government auto mechanics also ignored the economic impact of rushing those closures. According to Barofsky, they discounted counter-testimony from industry officials that “closing dealerships in an environment already disrupted by the recession could result in an even greater crisis in sales.”
The inspector general also noted that “it is clear that tens of thousands of dealership jobs were immediately put in jeopardy as a result of the terminations by GM and Chrysler.” After extensive investigation, the watchdog concluded that “the acceleration of dealership closings was not done with any explicit cost savings to the manufacturers in mind.” Only after Capitol Hill critics — both Republicans and Democrats — started questioning the Dealergate decisions did Obama’s auto “experts” come up with market studies and estimated job-loss data to assess the impact of their reckless, arbitrary orders.
In sum, the inspector general found:
At a time when the country was experiencing the worst economic downturn in generations and the government was asking its taxpayers to support a $787 billion stimulus package designed primarily to preserve jobs, Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses and thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls — all based on a theory and without sufficient consideration of the decisions’ broader economic impact.