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What's Good For GM Is Not Good For Trump

[ Posted Tuesday, November 27th, 2018 – 18:06 PST ]

General Motors just announced several plant closures and over ten thousand layoffs, in a bid to restructure their operations for the future. Americans aren't buying so many sedans any more, so GM is shuttering some plants that make these cars. This includes a plant in Ohio, after President Trump personally promised workers that no factories would be shutting down there. Trump even went further, by personally advising Ohio workers not to sell their houses and move since manufacturing jobs would be such solid future prospects. So the GM announcement came as a rather personal blow to the president.

Trump, being Trump, reacted as he usually does to bad news -- by throwing a petulant tantrum and rage-tweeting dire (but ultimately meaningless) threats. Trump also apparently called up the C.E.O. and tried to talk her into changing her mind. This was noticeably unsuccessful, since that is not how gigantic corporations do business in the real world. Trump, channelling his inner strongman, then began threatening to take away "all subsidies" the federal government gives to GM, in retaliation. This is a paper tiger of a threat, however, since Congress passes tax law and is constitutionally barred from "bills of attainder" that target one individual (or one corporation -- as Mitt Romney would say: "corporations are people, too"). The executive branch can't just unilaterally threaten an American company, and the legislative branch is likewise prohibited from such targeted punishment.

But that has never stopped Trump from expressing his feelings about the way he would like the government to work (rather than the way it actually does, which Trump has only a very tenuous grasp on). Trump sees himself as the ultimate mob boss, who orders his henchmen to go break someone's kneecaps -- and isn't going to listen to any excuses about why that simply isn't possible. Fortunately for us all, that's not exactly what the Founding Fathers had in mind.

Wall Street -- who never met a massive layoff it didn't like -- reacted favorably to GM's news, sending the stock up five percent.

All of this represents a direct blow to the image that Trump has carefully cultivated, that of being the "king of the deal" who would fight hard for the little guy and bring about a new dawn for American manufacturing. This was never true, of course, but Trump certainly believes in this persona he has created for himself. But as it turns out, showering corporations with massive tax cuts doesn't save anyone's job, despite all the laudatory praise of the "job creators" that always accompanies such tax giveaways. Again, corporate business just doesn't work that way, and never has.

In fact, Trump contributed in a large way to what just happened with GM. Another big automaker, Ford, has reported that Trump's steel and aluminum tariffs have already cost them one billion dollars. It's a fair bet that GM is also feeling this pinch to a similar degree. Trump's disastrous tariff war with China (and the rest of the world) is finally coming home to roost, to put it another way. Trump bailed out -- with our tax dollars -- soybean farmers who were hit hard by the tariff war, but he hasn't bailed out automakers or any other industry that is heavily reliant on steel and aluminum products to operate. Sooner or later, these companies can't just absorb such massive losses without reacting. As GM just did.

The GM announcement may later be seen as a harbinger, according to some economists. The general belief among economists (which could always be wrong, of course) is that the U.S. economy will likely slow its growth rate in the coming year. Nobody's talking about an impending recession yet, but many are predicting that the rate of economic growth will slow down considerably in the very near future. The sugar-high nature of the tax cuts is going to wear off at precisely the same time that long-term negative effects of Trump's trade wars begin to really bite. Both will contribute to much slower growth. So GM's announcement could be just the first of many.

Although most presidents are guilty to some degree of claiming personal credit for good economic times (they all do it, even if their policies had little or nothing to do with the larger business cycle), Trump has likely been the most expansive on the subject. In fact, the entire Republican Party just ran an entire election cycle on the single-plank platform of: "The economy's doing great, so re-elect us!" It didn't have a whole lot of success, of course (see: the House, the governorships, and state legislative seats), but that was really all they had left to run on, so they went with it.

Which leads one to wonder what would have happened if the GM announcement had come in, say, September rather than at the end of November. The Democratic gubernatorial candidate in Ohio lost his race, but not by so many votes that this outcome might have been different after a big auto plant closure in the state had been announced. But it's impossible to say, really.

What happens next is anyone's guess. Trump, the ultimate wounded elephant in a china shop, will likely continue to lash out at GM. After all, their bad news directly contradicts several of the things Trump loves to brag about being personally responsible for. Trump says the economy is doing great for everyone. Trump says he's personally bringing about a new renaissance for American manufacturing. Trump swore that his tax cuts would mean everyone's job would be safer than ever. Trump told everyone that his steel and aluminum tariffs would actually boost the American economy, and then attacked another corporate buyer of steel and aluminum (Harley Davidson) when they made a corporate move in response. Trump, in essence, has promised blue-collar workers that he -- and only he -- has such a unique understanding of the economy that he will be their best champion and always put them first. And Trump believes that he's such a great dealmaker that he can just pick up the phone and browbeat anyone into doing exactly what he wants them to do.

GM's announcement undercuts all of those premises. Every single one of them. However, if the GM announcement doesn't turn out to be a harbinger of other corporate actions and merely stands alone, then Trump will likely survive this setback. The personal spat with Harley Davidson didn't cause him too much political harm, after all. If he provides his usual constant stream of distraction, then most Trump supporters (other than the displaced GM workers, the businesses reliant upon the plants, the local small businesses, and all their families, of course) will have forgotten all about it in a few months' time.

A long-ago leader of General Motors once testified that what was good for GM was good for America, and vice-versa. This has always been a debatable point, of course, but what this particular episode seems to be proving -- at least in the short term -- is that what is good right now for GM is not good for President Donald Trump.

-- Chris Weigant

 

Follow Chris on Twitter: @ChrisWeigant

 

9 Comments on “What's Good For GM Is Not Good For Trump”

  1. [1] 
    James T Canuck wrote:

    So...To summarise, Trump is in the process of doing to America exactly what he did to his own businesses.

    If you didn't see that coming, you're an idiot.

    When a proven huckster sells you a stake in your own future based on their failures, Stacey Keach will be the narrator of the outcome.

    And now for something amusingly connected;
    https://www.msn.com/en-ca/news/newspolitics/could-robert-mueller-be-about-to-tell-us-something-big/ar-BBQ9u09?ocid=spartandhp

    My take on this is, Mueller is putting the squeeze on the middlemen between Trump-Assange-Putin. People forget...Putin has Trump's back. Russia has an uncanny way of committing an ignoble act whenever Trump is fresh out of distractions. Win-win for Putin.

    Manafort was long thought to be the linchpin betwixt the Ruskies and Trump, throw Stone and Assange into the mix, then you have some naughty boys.

    Strap in. it's going to get real.

    LL&P

  2. [2] 
    TheStig wrote:

    "Trump sees himself as the ultimate mob boss, who orders his henchmen to go break someone's kneecaps"

    Trump may fancy himself as Oh So Mafioso, but he's just another NYC real estate developer who has "used their services" in order to get concrete poured in a timely manner with a minimal number of "human inclusions" in the aggregate. To be blunt, Donny "Two Scoops" is just another thug who doesn't get invited to the colorful Family Gatherings.

    I'm of the opinion that Paul Manafort is the fellow with the real fear of getting his kneecaps broken by the Mafia....and by his knees, I mean the knees of his family members, and by Mafia, I mean the Eastern European Mafia, and by broken I mean poisoned. That's why Manafort lied to Mueller...and why Pauli "Sharp Suits" is going to jail for a very long time. Pauli lied to Mueller in order to protect Manafort family members from the Ukrainian/Russian professionals that hired Pauli. Manafort is probably doing the right thing by his wife and children.

  3. [3] 
    James T Canuck wrote:

    [2] Manafort does indeed have a problem there. People who cross Putin have a tendency of winding up rubbed out. However, if Manafort is angling for a pardon from Trump by lying to Mueller, it won't improve his life expectancy, his overlords will still want to know what he did say to Mueller...easier by far to have him quietly killed. Putin and his Poutines don't do anything by halves.

    LL&P

  4. [4] 
    nypoet22 wrote:

    @jtc,

    russia attacks its burned assets with cheese fries?

    :o
    JL

  5. [5] 
    TheStig wrote:

    JTC-

    If Manafort is expecting a pardon he is going to be disappointed. Manafort is played out as a witness and Trump faces obstruction of justice risks if he offers up a pardon. There is nothing in it for Donny Two Scoops.

  6. [6] 
    Balthasar wrote:

    The sugar-high nature of the tax cuts is going to wear off at precisely the same time that long-term negative effects of Trump's trade wars begin to really bite.

    Interestingly, the first person that I heard make this prediction was Ben Bernanke, former chair of the fed. Nearly every financial analyst has followed suit, at least on the reliable news channels.

    I heard an analyst say once that tax cuts are the tentpole that supports the entire Republican circus, as it's the only part of their platform that they all agree with.

    Not so much Trump's tariffs, although Trump's reasons for imposing them does comport with the tough-guy Masters of the Universe personas the maga-donors love to adopt for themselves. Trump is by no means alone in his admiration for authoritarian strong men in those political circles, and I suspect that his decrees of punishment and reward play for the moment to their elitist instincts.

    Wall Street -- who never met a massive layoff it didn't like -- reacted favorably to GM's news, sending the stock up five percent.

    Channeling the spirit of Louis Rukheyser there, CW. I can't read that sentence without hearing it in his voice. He used to say that between the ghouls of the bond market and the vampyres of the stock markets, Halloween is just another day on Wall Street. And that was before the voodoo and witchcraft of hedge funds and dark markets had yet even appeared.

  7. [7] 
    nypoet22 wrote:

    I'm not so sure any of this will have any impact on who gets the most electors in 2020. like the germans who even a decade after ww2 blamed their diminished condition on everything and everyone but hitler himself, donald and his core 40% will manage to find someone else to blame.

    “None of my ten friends, even today, ascribes moral evil to Hitler, although most of them think (after the fact) that he made fatal strategical mistakes which even they themselves might have made at the time. His worst mistake was his selection of advisers—a backhand tribute to the Leader's virtues of trustfulness and loyalty, to his very innocence of the knowledge of evil"
    ~milton mayer

    https://www.press.uchicago.edu/Misc/Chicago/511928.html

    JL

  8. [8] 
    Kick wrote:

    JL
    4

    russia attacks its burned assets with cheese fries?

    :o

    smothered in brown gravy... like a "fry pie." ;)

  9. [9] 
    nypoet22 wrote:

    diabolical!

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