IT ALIVE.
ELIZABETH: GREAT REPORTING,
DEIRDRE.
COME BACK SOON.
LET'S BRING IN AN AN EXPERT.
SHE'S BRILLIANT, SHE'S AT THE
MERCATUS CENTER, ALSO A
SYNDICATED COLUMNIST.
THERE YOU ARE.
WE DON'T KNOW WHAT FEDERAL
SUBSIDIES THE WHITE HOUSE IS
TALKING ABOUT.
THERE'S A PLUG-IN TAX CREDIT
THAT GOES TO CONSUMERS FOR
ELECTRIC CARS, BUT I WANT TO
HAVE THIS CONVERSATION WITH YOU.
WE KNOW THAT GM GOT, YOU KNOW,
BILLIONS, TENS OF BILLIONS OF
DOLLARS IN BAILOUT MONEY.
WHY CAN'T THESE AUTOMAKERS
RETOOL THEIR FACTORIES TO BUILD
EITHER SMALL CARS OR BIG CARS
LIKE TRUCKS AND SUVs?
>> WELL, I MEAN, YOU KNOW ME,
I'M AGAINST THOSE BAILOUTS THAT
GM AND OTHER AUTOMAKERS GOT, AND
I THINK IT'S NOT THE ROLE OF THE
GOVERNMENT TO INTERFERE IN THE
PRODUCTION LINES OR THE BEHAVIOR
AND WHATEVER PRODUCTION DECISION
COMPANIES ARE MAKING.
AND THEY SHOULD BE -- AND IT'S
ACTUALLY GOOD PRACTICE, IT SEEMS
TO ME GM IS ACTUALLY DOING THE
RIGHT THING WHICH IS LOOKING AT
THE MARKET OF YOUR FUTURE IN
CARS AND SAYING THIS IS WHAT WE
NEED TO DO.
AND, OBVIOUSLY, THEY SHOULD BE
DOING IT WITHOUT SUBSIDIES.
ELIZABETH: YEAH, THAT'S THE
POINT.
BECAUSE YOU CAN, YOU KNOW,
PEOPLE CAN UNDERSTAND THE
PRESIDENT'S FRUSTRATION HERE.
LET ME BACK UP.
U.S. TAXPAYERS LOST $11 BILLION
ON THE 2008 BAILOUT OF GM, AND
YOU KNOW WHAT HAPPENED THEN WAS
THAT OIL PRICES SPIKED UP, AND
NOBODY WANTS GM IF'S BIG CARS
AND TRUCKS AT THAT TIME.
OIL PRICES AND GAS PRICES GO
DOWN, NOW PEOPLE WANT THE BIG
CARS, THEY CAN AFFORD IT.
THEY DON'T WANT THE LITTLER
CARS.
WHY CAN'T GM AND CARMAKERS GET A
GRIP ON WHERE GAS PRICES ARE
GOING?
I THINK THE PRESIDENT KNOWS THAT
CARMAKERS CAN COME WITH THEIR
TIN CUPS TO GET BAILOUTS.
HE DOESN'T WANT IT ANYMORE.
>> GOVERNMENT INTERVENTION INTO
PRIVATE BUSINESSES CREATE
MASSIVE DISTORTIONS.
IT'S BAD FOR EVERYONE, AND
CONSUMERS AND TAXPAYERS
OBVIOUSLY, BUT IT'S ALSO NEVER
QUITE GREAT FOR THE COMPANIES
GETTING THEM BECAUSE IT ACTUALLY
PUSHES THEM INTO BEHAVIORS THAT
ARE NOT EFFICIENT, AND THEY'RE
JUST OUT TO SEEK SUBSIDIES.
THAT BEING SAID, I WOULD WELCOME
THE PRESIDENT CUTTING ALL
SUBSIDIES TO ALL COMPANIES, BUT
I DON'T THINK THIS IS WHAT HE IS
TRYING TO DO RIGHT NOW.
HE'S FRUSTRATED, AND HE'S USING
THE THREAT OF REMOVING SUBSIDIES
FOR THIS PARTICULAR COMPANY AS A
THREAT AGAINST IT.
AND I THINK THAT HAS REALLY JUST
NOT PROPER FOR A PRESIDENT TO DO
THIS.
ELIZABETH: I HEAR WHAT YOU'RE
SAYING, AND LET'S DO THE BACK
STORY HERE.
WE KNOW THAT THE BAILOUT OF THE
CARMAKERS IS OFTEN A BAILOUT OF
THE UNIONS.
>> YEAH, OF COURSE.
ELIZABETH: WE GET THAT.
AND WE KNOW THAT THESE CARMAKERS
OPERATE IN IMPORTANT SWING
STATES FOR ELECTIONS.
THAT'S THE BACK STORY TOO.
THE QUESTION IS, ARE THE
CARMAKERS GETTING TOO LAZY IN
FIXING THEIR OWN OPERATIONS
BECAUSE THEY KNOW THEY CAN COME
TO THE FEDERAL TAXPAYER?
IN OTHER WORDS, BUILD FACTORIES
YOU CAN IMMEDIATELY RETOOL TO
BUILD THE CARS THAT ARE IN
ACCORDANCE WITH GAS PRICES GOING
UP OR DOWN.
>> I COMPLETELY AGREE WITH YOU.
AND THE PROBLEM IS A LOT OF
THESE SUBSIDIES ACTUALLY LEAD TO
WHAT WE CALL MAL INVESTMENT.
ELIZABETH: RIGHT, THAT'S IT.
>> YOU SPEND A LOT OF TIME GOING
AFTER SUBSIDIES AND INVESTING
MONEY BECAUSE YOU WANT THE
SUBSIDIES AS OPPOSED TO ACTUALLY
REALLY THINKING ABOUT WHAT'S
BEST FOR YOUR COMPANY.
AND IT DOES SEEM THOUGH -- AND,
OBVIOUSLY, THE BAILOUT WAS PART
OF THIS, I'M SORRY.
IT IS NOT THE ROLE OF A
GOVERNMENT AT THE FEDERAL LEVEL
OR AT THE STATE LEVEL TO GO AND
BAIL OUT COMPANIES IF THEY'RE
NOT SELLING PRODUCTS THAT
CONSUMERS WANT TO BUY.
THEY SHOULDN'T BE BAILED OUT.
THEY SHOULD GO UNDER, OR THEY
SHOULD REVAMP THEIR MODEL, YOU
KNOW?
THEY WILL HAVE A DRY PATCH OR
WHATEVER, BUT THIS PRACTICE IS
NOT PRODUCTIVE, IT DOESN'T LEAD
TO AN AUTO SECTOR THAT IS
ACTUALLY PRODUCTIVE --
ELIZABETH: YEAH.
>> -- AND COMPETITIVE.
AND THAT IS ONE OF THE PROBLEMS.
ELIZABETH: YOU'RE GREAT.
ALL OF A SUDDEN GM SAYS IT CAN
MOVE WORKERS TO OTHER FACTORIES.
I DON'T UNDERSTAND HOW MERCEDES
CAN SUDDENLY RETOOL IT EXISTING
CAR PLANTS TO MAKE ELECTRIC
VEHICLES.