Dear reader: in today's Wall Street Journal was an article I felt needed to be shared with you. I hope they don't sue me for posting this entire article. However for those of you who are not reading the Wall Street Journal on a regular basis (you should), I wanted you to have an opportunity to hear this interesting commentary. The original text of the article can be found at here.
Obama's America: Too Fat to Fail
The age of the induced industrial coma.
Studebaker, Nash-Kelvinator, Packard, Hudson, Stutz, Pierce-Arrow, Stanley, Checker and American Motors were once household names of the U.S. auto industry. Unlike General Motors in our time, they were not too big to fail.
Despite mergers and rescue efforts by their owners, each was shut down.
Their legacy lives on as classic cars, restored with erotic affection by collectors.
GM's end is different. In the spirit of the new age, General Motors, like Citigroup and AIG, will be kept alive in an industrial coma. One has to ask:
Is this where the entire country is headed? Since January, it looks like it is.
After GM's bondholders last weekend refused to answer the bell for another round with Uncle Sam, the White House put out a statement: "As a result, the President has deemed GM's plan viable and will be making available about $30 billion of additional federal assistance to support GM's restructuring plan."
Read that sentence again, slowly. It holds what look like the keywords of the American future: the president, deems, viable, making available, federal assistance, support, restructuring plan.
Last week's column in this space, "Obama vs. the Beach Boys," drew some responses from readers who thought its tone too nostalgic for a lost era of fast but inefficient cars with low mileage and high maintenance. Recognize and embrace the future, they said, which includes high-tech bikes and high-tech cars.
"Just pick up a copy of magazines like Euro Tuner or Import Tuner," said Thomas Alves, "and you will see many ads and articles about adding turbochargers, reprogramming engine management computers and the like to four cylinder engines. . . . California and Washington will try to kill and regulate, but the constant desire for innovation is still strong in this country, and there are more of us than there are of them."
Mr. Alves is right that the instinct to innovate lives on in America. The question is whether the innovators going forward will have an economy and system that gives them room to breathe, or whether the government's rescue of Old GM is the new paradigm.
So far Mr. Obama has used his personally exciting presidency for initiatives that are spending public money on a scale not seen since ancient Egypt.
Besides Obama Motors ($60 billion to $100 billion), there is Obama-Care for health insurance ($1.2 trillion over 10 years), the stimulus ($800 billion), a global-warming offensive called cap and trade that hopes to siphon hundreds of billions of dollars from the economy, and a fiscal year 2010 budget of $3.59 trillion. Out of these mists of federal "investment" they promise five million "green collar jobs." Only public-sector lifers could believe, or assert, anything so fantastic.
Then there is the never-ending march of the financial-rescue armies -- TARP, TALF, PIPP, EESA. The Federal Reserve's balance sheet stands at some $2 trillion and growing. Last week Treasury floated the possibility of a single financial regulator for the entire banking system.
All this is the Obama government's idea of innovation. It is all public sector because all any of them know is public sector.
Without exception, the Obama people with responsibility for the private economy come from a lifetime in politics, public administration or academia.
Besides Mr. Obama himself, the list includes Tim Geithner, Larry Summers, Peter Orszag, EPA's Lisa Jackson (16 years with EPA), Commerce's Gary Locke (zero private experience), or Transportation's Ray LaHood (14 years in the House). The bio for Agriculture's Tom Vilsack says he "has served in the public sector at nearly every level of government." How can the private sector -- especially the world of risk capital, sweat equity and start-ups
-- be anything but an abstraction for this group?
Many of Mr. Obama's supporters surely thought this young, dynamic generation of public leaders would elevate the hip, cutting edge of the U.S. economy -- nanotechnology, genomics, robotics, even health and medicine technology.
Instead, we've gotten the Old Economy on dialysis. General Motors has been commanded to restart aging UAW factories to output product on behalf of the administration's hybrid-car obsession. Where's the New Economy in any of this?
Or ObamaCare. How will a build-out of Medicare (b. 1965) to cover everyone and costing $1.2 trillion over 10 years not kill innovation in medical and health technology by siphoning away growth capital and its potential financial rewards?
All of this seems so out of sync with the persona and promise Barack Obama conveyed in the campaign. A lot of his Web-based supporters probably thought Mr. Obama was going to be about promoting young guns with new ideas seeking risk capital for the next big thing. Instead, it looks as if the Obama years will be about managing soft landings for mature industries and old unions in the American autumn.
Congress is talking about a "bad behavior" tax on beer and soda pop to reduce obesity and fund mega-Medicare. How about a bad-behavior tax on government? Slim as the president looks, Uncle Sam is looking like quite the fat boy.
Write to henninger@wsj.com
Printed in The Wall Street Journal, page A13
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