Today General Motors announced the closure of several auto facilities, including the Lordstown plant in northeast Ohio. This is a devastating development for those workers and their communities. Secondarily, it is a political setback for President Trump, who has boasted repeatedly that his policies have brought back American manufacturing. Trump responded by loudly threatening GM.
“You’d better get back in there soon, that’s Ohio,” Trump told reporters, zeroing in on the plant whose fate concerned him the most. He elaborated in an interview with the Wall Street Journal, “They better damn well open a new plant there very quickly. I love Ohio. I told them, ‘You’re playing around with the wrong person.’” Apparently concerned he had made the point with too much subtlety, Trump continued, “I said, ‘I heard you’re closing your plant. It’s not going to be closed for long, I hope, Mary, because if it is you have a problem.’”
Trump has spent his brief political career systematically exposing the bad faith of every complaint Republicans made against Barack Obama (and, for that matter, Bill Clinton). But his overt bullying of GM is a special case that calls to mind a spate of especially virulent hysteria that was summed up by the phrase “gangster government.”
In 2009, the Obama administration extended loans from the Troubled Asset Relief Program to General Motors and Chrysler, which were facing imminent bankruptcy. While both firms had serious competitiveness problems, neither would have had any danger of failure except for the financial crisis having frozen the credit markets, which they needed to finance their operations. (Ford was safe — not because its autos were more economically sound, but because it happened to have secured a loan shortly before the crisis.)
The Obama administration considered its dilemma carefully. The administration had strong reservations about wading into the economy on a firm-by-firm or sector-by-sector basis. Obama ultimately decided the economic and social repercussions of the auto industry failing was too great a calamity to bear, and extended loans to Detroit. (They have since been repaid.) As part of the deal, the administration forced both unions to accept wage reductions and creditors to take some losses.
It is almost impossible to convey the tenor of the freak-out this generated on the political right. Conservatives, already whipped into a lather by the fiscal stimulus and Obama’s plans to reform health care and create a cap-and-trade system, treated the auto bailout as the literal death knell for capitalism. Michael Barone quickly coined the phrase “gangster government” to capture the conservative belief that the Obama administration was threatening the private sector with the untrammeled power of government. Denunciations of “gangster government echoed from editorials (the Washington Examiner “the way Obama strong-armed creditors who rightfully expected to be treated justly under the law was right out of Juan Peron’s playbook”) to tea-party rallies to a book by David Fredosso (Gangster Government: Barack Obama and the New Washington Thugocracy.)
The conservative pundit Lawrence Kudlow used the term in a hysterical interview with one of the bondholders who had to accept some losses as part of the bailout. “I mean was there bullying in those meetings? I have heard from other sources that there was. And some of this stuff is pretty mean and nasty. And that ain’t the American way,” he asked at one point. “We are corrupting the Constitution and contract law,” Kudlow declared at another point.
As I explain in my book about the Obama presidency, the backlash against the alleged strong-arming of the bailout was so intense it reached well beyond partisan right-wing outlets. The Washington Post denounced it in an editorial headlined, “The Obama administration bullies GM’s bondholders.” The Economist called it “an offer you can’t refuse.” (The latter eventually admitted Obama had been correct.)
One early sign that the right-wing freak-out about gangster government might not have been completely sincere is the Republican Party’s decision to nominate for president a man who has spent his career working closely with literal mobsters, from the Cosa Nostra in New York to the Russian mafia. But the fact that the Republican president is now publicly threatening a private company, and making perfectly clear his concern is not the overall economy but his specific needs in a particular swing state, casts an especially clarifying light on the “gangster government” attack.
Kudlow, now Trump’s chief economic adviser, is holding a meeting today with GM president Mary Barra. Presumably he will not simply tell her that the administration is staying out of private business decisions out of fealty to the Constitution and contract law.