< meta name="DC.Date.Valid.End" content="20050825"> Amendment Nine: GM

Monday, January 17, 2005


I almost wrote about GM's problems on Friday. But I decided to tip off a few friends on what I heard about tort reform. The too are related of course. And the GOP will likely use the shockwaves caused by aany credit downgrade to reinforce the position that lawsuits are hurting legitimate business practice.

This is bullshit. Liberals, heed my word here, don't let the GM problem go unnoticed. There are of course several problems with their balance sheets, but the biggest is health care expense. The health care system is in despearate need of a major restructuring. This space is already hot with 11s, and simultaneously its hot with high-growth. Such a situation cannot exist indefinitely. Using the GM fallout to Democratic advantage is an imperative, in my view.

First, it refocuses the debate. If GM can't pay their healthcare bills, how can you?

Second, it truly is a crisis. GM is the largest private employer in America. I can tell you from an insider's view, if this thing goes 11 it will be ugly, massive restructuring and layoffs, and tens of thousands of jobs moved overseas. It will destroy the midwest because of the ripple effect as supplier, ancillary product and service industries see 50% or more of their business move away. There isn't any hidden value proposition in the business. Cut and run would be the likely strategy involved.

Third, it reinforces the view that Bush is out of touch. He's arguing about social security and tort reform, while rising health care costs continue to drive good companies out of business.

Fourth, its a stretch, but there is a connection to high oil prices, the Iraq screw up, and GMs difficulties. Had they gotten it right in Iraq, oil would be cheap again, and people would buy new cars. But Bush's blunder is now causing GM to go bust.

In all seriousness, GM still has a way to go before they contemplate reorganization. But that isn't any reason for Democratic politicians to wait as well. Don't miss this one, its big.