Tony Fratto: GM A Costly Ride For Taxpayers


As he announces his plan to run an auto company this morning, President Obama will again assert that he has no interest in running an auto company.

But like it or not, he has the wheel, and every seat is filled with taxpayers along for the ride.

And like millions of business owners in America, President Obama is about to learn the first lesson of the market: the customer comes first.

The customer - American car buyers - want to buy the cars they want to buy, not necessarily the cars that meet the economic engineering goals of the Obama Administration.

Despite White House protestations to the contrary, today's lead editorial in New York Timesperfectly captures the prevailing sentiment in the Obama Administration.

"[President Obama] should make clear that the overarching objectives are to create a profitable company that makes cars that people want to buy, and that are more fuel-efficient."

And there's the rub. Selling cars is the concern of the automaking business. Fuel-efficiency is the concern of public policy. If GM is in the business of administering the Administration's public policy as a twin goal, it risks the automaking business of selling cars -- and along with it the substantial taxpayer investment.

American car buyers have not purchased more fuel-efficient cars because of a lack of availability. Fuel-efficient cars are available in abundance from both foreign and domestic automakers. In millions of individual decisions every year, American car buyers balance their tastes and needs with costs, and rationally decide on purchasing the car that fits them best.

If President Obama fails to learn the lesson that customers will decide the fate of GM, then all of us out for the ride will find ourselves pitching in at toll booths along the way, and never finding the off ramp.

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Tony Fratto is a CNBC on-air contributor and most recently served as Deputy Assistant to the President and Deputy Press Secretary for the Bush Administration.