On this Earth Day all our thoughts are supposed to be directed at saving the planet. Some think we can do this by passing cap-and-trade legislation designed to reduce carbon emissions, but as I point out in passing in my Examiner column today, with the Obama administration leaving the task of writing legislation to Congress, such legislation is highly unlikely to pass, for the very good reason that it will impose sharply higher increases in electricity rates for half the country than for the other. It’s going to be hard to get members of Congress from the first half to vote for it.
In the meantime, with the Obama administration pressing General Motors bondholders to take 15 cents on the dollar, as Holman Jenkins of the Wall Street Journal points out, General Motors has announced that it will default on $1 billion of debt payments on June 1. That’s the date which has the administration has set as the deadline for GM’s reorganization, and the announcement makes it look likely that GM will head into bankruptcy. The administration’s goals seem to have been to protect the United Auto Workers contracts and to shove GM into the green car businesss by selling the electric Chevy Volt (not likely to be profitable) and eliminating gas guzzling SUVs (which have been profitable). This is a prime example of the crony capitalism that Larry Kudlow describes. But it’s not clear that the administration will get its way if this goes into bankruptcy court.
