President Obama sent tongues wagging and Wall Street reeling with the announcement of his plan to revitalize the U.S. auto industry — a plan that began with the ouster of General Motors CEO Rick Wagoner and most of the company’s board of directors.

Recall that the Bush administration signed off on $17 billion in federal funds to help GM and Chrysler survive the current recession. It also demanded both companies submit restructuring plans that the Obama administration reviewed and ultimately rejected.

"Our auto industry is not moving in the right direction fast enough," Obama said earlier this week. His ultimatum to Detroit: Move faster, or expect more federal intervention.

Has President Obama overstepped his bounds? Or should the federal government do more to guarantee the survival of America’s struggling automakers — even if that means a larger role in dictating how those companies operate? Ben Boychuk and Joel Mathis, the RedBlueAmerica columnists, jump into the fray.


Well, if anyone doubted it before, there can be no question about it now: It’s Barack Obama’s economy.

The president insisted that his $750 billion stimulus bill would revitalize the sagging economy. He denounced the AIG bonuses while appealing for billions more in bailout dollars for struggling banks. And now he’s fired the CEO of General Motors in an effort to push Detroit in a direction more to the president’s liking.

Firing Rick Wagoner may be good populist politics, and the president’s move certainly made the United Auto Workers union happy. But it sets a terrible precedent. With the exception of Harry Truman’s takeover of the steel industry in 1952, no president since World War II has used such a free and heavy hand with the private sector as Obama has in the first 70 days of his presidency.

Whatever it was Americans elected Barack Obama to do — the oath of office has a few antiquated words about preserving, protecting and defending the Constitution — it wasn’t to dictate industrial policy or play corporate turnaround artist from the Oval Office.

If Obama’s gambit with the auto industry somehow succeeds, it will be in spite of the limits the Constitution places on the presidency and contrary to good sense. In saving Detroit, Obama may well have set America as we know it on a course to ruin.


Rick Waggoner’s firing was greeted with howls of outrage from the right, but Barack Obama isn’t socializing the economy — he’s instead trying to prevent the collapse of the American car industry and save capitalism to fight another day.

Obama didn’t seek this role. It was auto industry executives — including Waggoner, it should be remembered — who asked the federal government for money to give them time to restructure. It was George W. Bush, along with a Democratic Congress, who approved the request and set the deadlines for restructuring plans. Whether you like the bailout or not, it has been a bipartisan process sought and encouraged by the car companies.

The alternative? GM and Chrysler could’ve declared Chapter 11 bankruptcy last year, seeking protection from creditors while reorganizing their companies for the future. But auto executives suggested that bankruptcy would spook the remaining customers for American cars, causing sales to plummet and forcing the shutdown of manufacturing plants, with devastating ripple effects that might have made America’s current economic mess look pristine.

Instead, we have a kind of pre-bankruptcy process in which the reorganization of those companies is managed by the executive branch. Had the companies declared actual bankruptcy, a federal judge would be supervising the process — and there’s every reason to believe that Rick Waggoner would still be out of a job today. Government would still, in effect, be running the car companies. The difference, though, is that nobody would be declaring the imminent rise of socialism in America.

Perhaps the car companies should have declared bankruptcy. But Barack Obama didn’t create the process that led to Rick Waggoner’s firing — he just followed it to its logical conclusion. To portray Obama’s actions as a power grab aimed at ending capitalism is unfair, untrue and unwise.

(Ben Boychuk and Joel Mathis blog daily at and

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