February 3, 2025

How Socialism Works in America: Remembering Obama’s GM Boondoggle

https://www.americanthinker.com/articles/2025/02/how_socialism_works_in_america_remembering_obama_s_gm_boondoggle.html

By William Sullivan

In 2009, the Obama administration bailed out General Motors (GM) with American taxpayer dollars, prompting Venezuela's socialist dictator Hugo Chavez to quip, “Obama has just nationalized nothing more and nothing less than General Motors.  Comrade Obama! Fidel [Castro], careful or we are going to end up to his right.”

The mainstream media buried this unflattering story to the best of their ability. 

What they did report breathlessly, however, was Obama’s assurance that he had “no interest” in nationalizing or “running GM.”

This was an example of media gaslighting the public before we began calling it that.  Many Americans knew what we were witnessing back then as well as Hugo Chavez, and that it was thinly-veiled socialism in action.

Obama was unquestionably lying about his government not having an interest in the production and sales directives of GM, and more on this in a moment.  But he was certainly uninterested in any of the company’s previous shareholders’ financial interest in GM.  

Unfortunately for those shareholders who owned millions of outstanding shares of GM before this government takeov… er, “restructuring,” all the nearly-worthless common and preferred stock was made immediately and totally worthless, and new GM stock was issued and largely purchased by the government with taxpayer dollars.

It was known as the “New GM,” or as critics called it, “Government Motors.”  Washington would own roughly 60-percent of this new government-funded automobile startup, Canada would own another 11 percent, and, adding insult to injury for stockholders, the United Auto Workers (UAW) union would own nearly 20 percent of the new company. 

This would be the same UAW that was arguably the greatest driver of the conditions leading to GM’s bankruptcy, which, in conjunction with the corrupt Democrat party machine in Detroit and Washington, negotiated insanely impractical wage, benefit, and pension contracts that crushed GM’s ability to be competitive against its non-unionized competition. 

According to Elon Musk, who knows a thing or two about the auto industry, the UAW “drove GM and Chrysler into bankruptcy and lost 200,000 jobs for people they were supposed to protect … UAW destroyed the once-great US auto industry & everyone knows it.” [sic]

One of the most notorious of the UAW’s requirements for employers like GM was the necessity of a “jobs bank,” where the company is required to pay laid-off workers nearly full wages to do nothing at all.

One would be hard pressed to find a better analogy to portray the relationship between the professed ideas of socialist central planners and the real-world outcomes of those ideas.