The Great Obama Bailout

It is a testament to United States political culture’s deadly marginalization of environmental concerns that Barack Obama’s liberal defenders trumpet his Administration’s bailout of General Motors and the auto industry as a shining success. Many Democrats pumped their fists in triumph when Obama blew his own automotive horn in his State of the Union Address (SOTUA) on January 24: “On the day I took office, our auto industry was on the verge of collapse. Some even said we should let it die. With a million jobs at stake, I refused to let that happen. In exchange for help, we demanded responsibility. We got workers and automakers to settle their differences. We got the industry to retool and restructure. Today, General Motors is back on top as the world’s number one automaker. Chrysler has grown faster in the U.S. than any major car company. Ford is investing billions in U.S. plants and factories. And together, the entire industry added nearly 160,000 jobs. We bet on American workers. We bet on American ingenuity. And tonight, the American auto industry is back.”

Forget for a moment that GM finally defeated Toyota last year because the Japanese firm’s supply chain was decimated by an historic tsunami and a nuclear disaster. Forget that the triumph came at inordinate and largely uncompensated corporate-welfarist taxpayer expense. Libertaran commentator Peter Suderman remarked the day after the SOTUA, “…GM is no longer on the precipice of complete fiscal meltdown; all it took was a $50 billion gift from taxpayers, and a $20 billion tax break. Also: continued public losses as the company under performs. When GM went public, taxpayers bought up a 61 percent stake in its operations at about $33 a share. So I suppose Obama was right about one thing: the auto bailout was a bet of sorts; in order for the public to simply break even, GM’s share prices would have to rise to roughly $51.

“Recently, shares traded at $24.75. The company’s investors—that would be everyone who pays taxes—are losing money on this deal. This is straightforward industry favoritism and it’s not particularly fair to the millions of American workers and taxpayers who play by the rules, but weren’t bailed out, and are now having to foot a giant-sized bill for a company that was.”

Speaking of fairness to workers, forget, also, that the White House’s restructuring plan for the auto industry in 2009 included letting the company raid union pension funds to pay off wealthy Wall Street investors and permitted General Motors to double its car production for the U.S, market in Mexico, South Korea, and China. That’s the harsh top-down global-corporatist reality behind the president’s claim to have enforced “responsibility” and to have “got[ten] workers and automakers to settle their differences.” 

Environmental Apocalypse

Put all that aside to reflect on what ought to be the biggest concern: celebration of the real or imagined recovery of an industry that is helping destroy life on Earth. The U.S. auto industry is hardly the only, or even the leading contributor, to the anthropogenic global warming that is creating an ever more imminent environmental apocalypse. Methane-spewing animal agriculture is actually the number one source of greenhouse emissions. Still, Big Auto is a giant source of the global warming that has significantly attacked life’s prospects. U.S. automobiles emit more than 333 million tons of carbon dioxide (CO2) per year, more than a fifth of the nation’s total CO2 emissions. With just 5 percent of the world’s population but 30 percent of the world’s automobiles, the United States accounts for nearly half the world’s automotive CO2 emissions.

Of course, the notion that “what’s good for General Motors is good for America” has always been a deadly illusion. The highly sub-divided work in the nation’s automobile plants has long been alienating, dangerous, exhausting, and strongly segmented by inequalities of race and gender. Along with other leading corporate players in the petro-industrial complex, moreover, GM, Ford, and Chrysler have been centrally involved in the creation of an unsustainable, over-extended, oil-addicted, and carbon-spewing way of life. Automobile dependency has ravaged America’s cities, neighborhoods, and landscape for nearly a century now, helping turn the country into an over-extended, highly atomized, and polluted “asphalt nation.”

The role of GM in the creation of this many-sided disaster was more than accidental or structural. Over three decades in the last century, for example, GM pursued a deliberate strategy of dismantling the nation’s electrical railways—including urban streetcars and inter-urban railways—and replacing them with cars, trucks, and buses. In 1921, fully 90 percent of Americans trips were by rail, mainly electric. Just one in 10 Americans owned an automobile. There were 1,200 electric street and inter-urban railways in the U.S.—“a thriving and profitable industry with 44,000 miles of track, 300,000 employees, 15 billion annual passengers, and $1 billion in income.” Nearly every U.S. municipality with at least 2,500 residents enjoyed its own electric rail system. This was a problem for GM, which set up a special unit charged with bringing about the great replacement through a variety of means:
 

• the use of freight leverage to compel railroads to abandon electric cars
• the purchase and scrapping of electric lines
• the use of financial (banker) leverage to encourage conversion to motor buses
• the forming of holding companies to buy up electric lines and convert them to motor buses directly
• the bribing of public transit officials
  

The conversion was complete by the early 1960s with the very last run of a train on the inter-urban North Shore Line. That $50 million transit line was “the fastest electric service in the world, providing Wisconsin’s lakeshore cities and Chicago’s northern suburbs high-speed access to the downtown loop.” The state-of-the-art North Shore line was purchased and taken down by GM and two bus lines (Greyhound and National City). As the onetime U.S. Senate Counsel Bradford Snell noted, “The streetcar [and the inter-urban lines] did not die…because of demographics or economics or disinvestments or evolution; [they] died because GM in 1922 made a conscious decision to kill [them] and, for the next several decades, pursued a strategy designed to accomplish this objective.”

To acknowledge all this is not to call for the abandonment of past and current U.S. autoworkers or of the many heartland communities that have been devastated by the decline of the American automobile industry over the last 30-plus years. The point, rather, is for government to make a conscious decision to reconvert the nation’s transportation technologies and systems in accord with ecological principles, creating a new national fleet of very low-to-zero carbon-emitting automobiles and to rebuilding mass electric transit. The re-conversion required would put millions to work in new green jobs, including many of those formerly employed in the manufacture of ecocidal gas-guzzlers that have ravaged the world for decades.

In the summer of 2009, the business press reported that Obama’s transportation secretary was traveling abroad in pursuit of contracts with European manufacturers for a small number of potential high-speed rail projects with federal funds designated by Congress for U.S. economic stimulus. U.S. taxpayer funding for badly needed infrastructural development would go to Spanish and other European corporations. “At the same time,” Noam Chomsky notes, “Washington is busy dismantling leading sectors of U.S. industry, ruining the lives of the workforce, families, and communities.”

It appears that some car-making jobs have come back (at significantly downgraded wage and benefit levels) in “the homeland” (along with many auto jobs sent abroad) under the terms of the Great Obama Auto Bailout ballyhooed by the Democrats this campaign year. But the environmental catastrophe marches on, unabated. With new imagination and courage, we could address the employment and the environmental crisis while producing what the country and the world urgently needs.

Z

Paul Street is the author of numerous books, including The Empire’s New Clothes: Barack Obama in the Real World of Power, and Crashing the Tea Party: Mass Media and the Campaign to Remake American Politics.