Just days after the US government announced their exit from General Motors, the company announced a move that sounds like it could have come directly out of the Obama Administration playbook. GM is boasting about “creating or retaining” roughly a thousand jobs at the cost of approximately $1.3 million per job in a move that could only be viewed as a positive from a political point of view.
The heavy spending to preserve union jobs did not go unrecognized by the Obama-friendly UAW. UAW Vice President Joe Ashton stated:
Today’s announcement is a win for American workers. The UAW is proud to be a part of this successful collaboration with GM that has helped rebuild the nation’s economy, created good paying, union jobs in communities across the country, and brought manufacturing that was moved overseas back to the U.S. This is further proof that collective bargaining works.
I would argue that this is “further proof that collective bargaining works” only if you believe that taxpayers should be obligated to pay billions of dollars to bail out companies like GM when union wages and legacy costs drive them into bankruptcy. You would also have to believe that spending $1.3 million per job saved is efficient spending. Besides that, should the motivation of GM be to save jobs or create profits for shareholders? I can not disagree that the process works well for UAW members, but the benefits came at a high cost to American taxpayers.
GM was essentially given a blank check tied into the American taxpayers’ bank account. They continue to spend the money they were gifted as if the account will never become overdrawn. The similarity to how our government spends is eerie. Even the terminology of “creating or retaining” jobs sounds identical to phrases used by the Obama Administration to justify spending billions of dollars to reward cronies and favored classes.
Incoming CEO, Mary Barra, should be wary of continuing the free-spending course set forth by the politically-influenced and Obama-appointed leadership at GM. At some point, the realization that spending billions of dollars for political gain is not a sound business strategy should sink in. If not, GM will squander the $49.5 billion that it received from US taxpayers and the risks will increase when the cyclical nature of auto sales inevitably again rears its head.
Mark Modica is an NLPC Associate Fellow.