CEObama | Daniel J. Ikenson | Cato Institute: Commentary

CEObama | Daniel J. Ikenson | Cato Institute: Commentary: "Even if President Obama were sincere in his claim that he doesn't want to run a car company, it will be impossible for him to eschew policies that distinctly benefit GM. With taxpayers on the hook for $50 billion (just for starters), the administration will do whatever it takes to demonstrate the wisdom of its intervention.

That will require, at a minimum, a positive return on the coerced investment. But to merely break even on taxpayers' 60% stake, GM will have to be worth $83 billion (60% of $83 billion is $50 billion). How and when will that ever happen? At its peak in 2000, GM's value (based on its market capitalization) stood at $60 billion. Thus, the minimum benchmark for 'success' will require a 38% increase in GM's value from where it was in the heady days of 2000, when Americans were purchasing 16 million vehicles per year. U.S. demand projections for the next few years come in at around 10 million vehicles. Taxpayer ownership of GM is something we should all get used to, and the 'investment' is only going to grow larger. Think Amtrak.

It should be obvious that the administration will rely on policy (tax policy, trade policy and regulations) to induce consumers to purchase GM products, to subsidize production and, indeed, to hamstring GM's competition. This will have perverse effects on Ford and other companies that find it difficult to compete against a free-spending Treasury. And all of this will happen even if the president is true to his claim that he doesn't want to run a car company. He can take a hands-off approach and tilt the playing field in GM's favor at the same time."