There can be a high cost when businesses get assistance from the government

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The cost of doing business with the government became clear last month and everyone should take a long hard look at those consequences: Bailout-mania comes with a heavy price tag. Just ask Rick Wagoner.

    Wagoner was the chairman of General Motors until President Obama decided late last month it was time for the three-decade GM employee to go. Though not entirely unprecedented, the ouster of Wagoner by the Obama Administration lengthened the expansion of government even further into the private sector, an expansion that has been fast and furious the past couple of months and shows no sign of slowing down.

    So says Treasury Secretary Timothy Geithner. In a recent interview Geithner said the government will make sure that banks that need “exceptional assistance” will get it, noting that “where that requires a change in management and the board, then we will do that.”

    The Obama Administration took a black eye last month when word leaked out that American International Group Inc. had given out millions of dollars in bonuses to employees, though the company had received billions in bailout money. Wagoner’s ouster by the government became a chance to deflect criticism away from that mess and show that it was in control.

    But what control should the government exercise?

    In addition to ousting Wagoner, the President is using the $13.4 billion in federal loans to force General Motors to build cars the way he wants. In laying out his vision for GM, the President said the company — along with Chrysler, which also accepted billions in loans from the government — will have to pick up the pace on producing smaller, more fuel-efficient vehicles. While these initiatives were already underway at the companies, the government under President Obama is forcing faster change — it’s his way or the highway. The problem is, the President’s business plan isn’t taking note of the fact that hybrid-car sales have been plummeting the past year.

    This isn’t about running a business, it’s about promoting a political agenda.

    That message is causing pause, and rightly so. Some smaller banks are choosing to give bailout money they received back to the government — fearing the strings attached to those funds. Good for them. The cost of allowing the government to take over private companies may be just too high in the long run.