On Face the Nation Sunday, Obama’s chief-of-staff, Rahm Emanuel, used GM to illustrate the mistakes Americans have made that have brought us to a “day of reckoning.”
“Basically, over the last 20 to 30 years, they had a strategy that has gotten them to, I think, a very unfortunate position both on health care costs, new types of cars, weaning themselves off of basically gas guzzlers to energy-efficient cars,” he told a credulous Bob Schieffer.
You cannot prescribe a solution unless you know the problem, and Emanuel’s description of the problem is pure fiction.
‐GM has been a global leader in alternative-energy cars for the last 20 years, most notably with its $1 billion investment in the EV-1 electric car which was introduced in 1996 to meet zero-emissions mandates in California. The car was a bust. Despite press raves, the company lost money on every model and the EV-1’s advertised range of 100 miles between charges proved to be too optimistic (in the real-world, its range was more like 60 miles). Scarred by the experience, GM shied from future alternative-energy developments like hybrids because of their cost. Indeed, no hybrid car (including the vaunted Toyota Prius) has yet made money.
‐GM has struggled to make profit — not only on electric cars, but any small car — because its union health-and-benefits costs are uncompetitive. Emanuel has some chutzpah claiming these costs put them in a “very unfortunate position” when his party backed such union benefits, even as foreign transplants were offering their workers health and benefit plans at far more competitive rates. It is not the health-care system, in other words, that has crippled GM, but the greed of Democrat-backed unions who extracted health-care coverage with zero co-pays for 50-something retirees who could go on full pension after 30 years of work. It is these legacy overhead costs that have crippled GM and driven them to produce larger vehicles where they can actually make money.
‐Indeed, not a single automaker — foreign or domestic — has “weened” themselves from gas-guzzlers. Toyota, Honda, Hyundai, Mercedes etc. all greatly expanded their truck segments in the last 20 years to meet customer demand. Toyota, a small-car company in Rahm Emanuel’s imagining, in fact makes an estimated $8,000 per sale on its huge Landcruiser SUV.
Based on this blatant distortion of recent history, Emanuel and his boss hope to make a power grab for “a policy on energy independence” and a nationalized health-care system “that ensures that our health-care costs (are) under control and our ability to make sure that coverage (is) expanded to those who are uninsured.”
If history is any guide, there’s little hope to be derived from their audacity.