Right now the Obama team is swearing up and down that General Motors is only going to be a government property for a short time – a few years, at the most. But there’s nothing harder to kill than a federal program. There’s already plenty of evidence that both the White House and Congressional leaders view GM as a jobs program, rather than a company. In my column at American Issues Project, I argue that GM today looks a lot like Amtrak did in 1971:
Now that the Obama administration has taken General Motors under its wing, it’s worth wondering what the exit strategy is. How quickly will the federal government sell its stake in the company, and recover the tens of billions it has loaned GM? It would be nice to think the intervention may be temporary, but the America’s history with federal intervention into the private market is not especially encouraging.
It’s true that Uncle Sam nationalized companies during wartime, and spun them back to the private sector afterwards. But once you start to look at peacetime nationalizations and emergency programs, the record is downright depressing. One instructive comparison might be to Amtrak – as the arguments for nationalization and the promises of independence ring familiar.
Amtrak was established in May 1971, in response to the financial collapse of several intercity passenger rail companies. Congress and the President believed that intercity passenger rail service was a critical industry. Rather than allow companies to go out of business, they bought them out. A senior Nixon administration official projected that Amtrak ‘would experience financial losses for about three years and then become a self-sustaining enterprise.’ Nearly 40 years later, Amtrak continues to benefit from federal capital assistance and operating subsidies, with no end in sight.