|The American Presidency Project|
|• Barack Obama|
|Press Briefing by Press Secretary Robert Gibbs|
|June 1, 2009|
|James S. Brady Press Briefing Room
2:20 P.M. EDT
Q: Robert, was the package that was left inside the gate the northeast gate?
MR. GIBBS: I simply saw an email that said there was one, but I have not seen an email since then.
Q: You don't know what it was or -- where inside the gate was it?
MR. GIBBS: It just simply said -- I didn't even know it was inside the gate. They just said along the gate -- was, I think, the email that I saw. But I didn't see anything other than that.
Q: Was the First Lady, anyone in that office -- it was such a lock-down situation in the --
MR. GIBBS: I can check, but nobody apprised me of that before I came out here.
Q: Is it open yet?
MR. GIBBS: Is it all clear? They got the email and read it; I didn't.
Q: Thank you, Robert. Leader Boehner said the administration has got to release an exit strategy for General Motors. Does the President have an exit strategy? And I know he described these principles that he's going to follow during restructuring, but is there a timeline for Washington to get out of Detroit for good?
MR. GIBBS: Well, Phil, as you know, the President has made a series of difficult decisions that lead us to the point where we are now. And as he has said on many occasions, he doesn't desire to hold a significant share of, or run on a day-to-day basis, an auto company.
But he does believe that the investment that we're making -- structured in what is in the best interests of taxpayers, and it -- we'll get out of this equity as quickly as possible in order to protect the investment that taxpayers have made.
I don't know that there's a specific timeline. But, Phil, let me broaden a little bit, because -- and I did this a little on Friday, but you basically have several different pathways here. On one side you have a bankruptcy that largely would have resulted in a liquidation -- probably 60,000, 70,000 direct jobs lost, not including suppliers or things like that -- obviously would have had a dramatic economic devastation in the Midwest region and throughout the country.
I think another side of this was simply to continue pouring money into a company that you knew wasn't acting in any viable way. The President decided on a different path that I think made some real concessions in restructuring the company. You'll have a company after about a 60- or 90-day bankruptcy that will emerge without a balance sheet loaded down with debt; a restructured company that the task force and the President believe can be profitable in a scenario that sells far fewer cars than what it would take to break even at this point.
So the President is certainly anxious to get out of this business, but at the same time he made a series of tough decisions to stave off something that I think would have been far more economically devastating.
Q: But there is no exit strategy?
MR. GIBBS: Well, no, no, no -- I don't --
Q: Do you want to --
MR. GIBBS: Well, maybe I should -- I can start all over again. There is an exit strategy -- it's to get this company viable; it's to get the economy strengthened so that GM is producing cars that people want to buy; that Americans have the income to buy those cars; to do so in a restructured way that allows them to be profitable more quickly; and then in order to protect the investment that taxpayers have made, we get out of any involvement in the company -- that's the exit plan.
Q: Robert, I wanted to zero in on the President's pledge to be hands-off when it comes to the day-to-day management of the company. And you said the same thing from the podium, but a lot of people are very skeptical that Washington will really be able to resist the temptation to be hands-off. There's a lot of decisions that will come up that are politically sensitive, on Capitol Hill and elsewhere, such as which plants are going to close -- those types of things.
MR. GIBBS: Well, a lot of those decisions are being made right now. Those decisions are being made by the companies. The dealership structure -- those are decisions that are being made by the companies.
Q: But down the road there may be other decisions that have to be made -- dealerships and plants and things like that --
MR. GIBBS: Let me interrupt you for a second. I don't think many people ever thought that we could get to this point of restructuring, in all honesty. I think if you take a look at what was set up by some in Congress in November and December when the very first discussions were going on about bridge loans to cover the operating costs for fixed period of time while GM made some restructuring -- I think if you look at some of the standards that were laid out, the Auto Task Force has far exceeded what anybody thought was possible in restructuring.
This is a company that will emerge from bankruptcy in 60 to 90 days with no debt, whereas people were saying, well, it would be nice to have -- if we could get to some place that reduced the debt by maybe half. You've got a company that has, I think, a real chance to emerge viable based on some of the tough decisions that have been required. And I think a lot of those decisions have been made without politics in mind.
Q: But if lawmakers decide they do want to interfere with decisions such as the mix of vehicles and things like that, you can't prevent them from passing a law. What are the safeguards?
MR. GIBBS: I think you're now into a little bit of a different question. What if Congress acts to --
Q: No, the question is about interference and meddling the day-to-day operations.
MR. GIBBS: But let me make sure that I understand your question. Are you talking about if Congress does that or --
Q: If Congress does that, as well as if Congress asks you to do it.
MR. GIBBS: Well, look, I think it would be unhelpful to get into a hypothetical on what we would do based on a bill that Congress might pass asking us to do something. I think that's a few too many leaps for me to go into. I can simply say that we will work on core governance issues. I think one of the ways to get to a viable company as quickly as possible is working on a board of directors, and a serious and stable management structure that moves this company quickly through bankruptcy and quickly to viability.
I think those are the type of core issues that are important as we protect the investment of taxpayers while at the same time, as the President has said, as the task force has said, and lastly as I have said, not involved in the meddling decisions on a day-to-day basis. That's never been and isn't our desire.
Q: Just to probe a little further on the White House, on the administration's -- how much you're going to be involved in the day-to-day operations of the company -- if General Motors wants to manufacture a car that your Auto Task Force -- whether it's Rattner, Deese, or whoever -- thinks is not going to be a car that's going to sell very well, are you going to stop General Motors from manufacturing that car?
MR. GIBBS: Jake, we don't make those determinations. Those aren't -- Brian Deese isn't picking out Chevy Malibu's colors for next year.
Q: I'm not talking about the color for next year. You said that the point is -- that the exit strategy to make the company about viable for the GM is making cars that people want to buy. So are you going to be involved in --
MR. GIBBS: No, we will be involved in corporate governance decisions such as setting up a board of directors that is going to make those business decisions based on how to get the company the profitability. That's what each company -- that's what the board of directors and the CEOs and the managers and the workers of every company we want to be involved in is a viable, strong, profitable company.
Look, now, I don't want to confuse this, so obviously Congress and the executive branch are involved in -- have always been involved in some decisions. And again, I'm not -- I don't want to co-mingle these issues, but I am separating to some degree -- two years ago, Congress set fuel mileage standards that go through model 2016, okay. Those have been established. I've seen reports that said, well, you know, we may -- the Auto Task Force may decide that it's time to build these tiny little cars that go 40 miles an hour, blah, blah, blah. Congress has always exercised its purview to set, for instance, corporate average fuel economy standards. That's, I know, not what you're talking about, but I am sort of separating some of those issues so that we're not in the midst of confusing them.
Q: Right. I guess my point is, Fritz Henderson said today that the standard is going to be that they're going to try to build, for their new lines of cars and trucks, ones that are outstanding that people want to buy -- which came as a surprise to me that this was some new idea for an auto manufacturer, the idea that they would try to come up with something that consumers actually would like to purchase. What reason do you have for confidence that United Automakers, the people who have been running these companies, are going to be able to come up with something that Americans are going to want to buy, and therefore, this $30 billion to $50 billion investment is going to pay off?
MR. GIBBS: Well, look, I think you have seen over the course of several years an auto industry that has seen, regardless of economic conditions, a fairly dramatic decrease in its auto sales, not the least of which is because some of -- you know, you've seen the reports --
Q: Yes, and they kept on making Hummers and they kept on making junky cars that nobody wanted to buy.
MR. GIBBS: Well, I think part of the restructuring ultimately is that the Auto Task Force forced some decisions that I think in many ways some of these companies had been putting off for years. The auto companies have dropped brands. We've all seen that -- whereas some people -- different companies are marketing only a few different models and using a fixed number of advertising dollars to push them, whereas some of the American auto companies have had 10 or 12 different models. You've seen different companies that have the same car -- literally the same car under different names and several different manufacturers, which hasn't made a lot of sense. Obviously I think, again, one of the things that's been done is there is a fundamental --
Q: You're proving my point. You're proving my point. It's not like Fritz Henderson just walked in from another company. I mean, what makes you think that this investment is going to pay off? Just because they've learned a lesson now?
MR. GIBBS: I think in many ways their previous business model had been very locked in. I think you've all seen the reports today of the serious amount of debt that GM was carrying, right? When you're losing that kind of money, it's hard to undergo some fundamental restructuring without making some very fundamental decisions.
I think it's pretty clear that the companies have, in many instances, decided that they've got to produce different cars; some of those are coming on in later model years. There are things like the Chevy Volt that I think people believe, based on the high price of gas, based on consciousness about our dependence on foreign oil, can create different markets. But I think that fundamentally what has happened is a company is free now to make fundamentally different decisions.
Q: Robert, have you defined the criteria for the board of directors?
MR. GIBBS: Not that I know of, but I can check on that. I don't know if there's been a strict delineation.
Q: But, I mean, sort of overriding principles for these people, because they will key.
MR. GIBBS: Well, look, I think you want a group of people that have been very successful in the businesses that they've run; that have some experience in running companies and understand what it means to undergo fundamental restructuring; to operate in a whole different world. Again, if you look at -- I used this analogy last week -- you're going to have to make fundamental different decisions. Thirty years ago this was a company that employed probably 10 times the number of workers that it does right now. Obviously, there's a mind-set change that has to go on, and I think that's what they'll look for in a board of directors.
Q: Do you think they have to come from the auto industry, per se?
MR. GIBBS: Well, no I don't. I don't think that's necessary, no. I think that having people that understand how to run a good business means running a good business regardless of what you're doing.
Q: Following up on this, you said the company is now free to make fundamentally different decisions. But I think the question is what if they don't? And adding to that, that the President has an obligation here -- if he's spending $30 billion or $50 billion of taxpayer money, he has an obligation to make sure that money is well spent. So if they make a decision he disagrees with on a line of cars or anything else, doesn't he have an obligation to taxpayers to make sure that the decision is a good decision?
MR. GIBBS: Well, I think he has a strong obligation to ensure that there is a management structure in place that is making smart business decisions.
Q: And if they're not?
MR. GIBBS: Well, I think we covered an example about two months ago of the President and the Auto Task Force thinking that GM might not have made business decisions that were so good in the past.
But, again -- and this isn't --
Q: So in other words --
MR. GIBBS: But, Chip, is the President going to thumb through engineering reports and each page of the annual report? No.
Q: Well, I'm not asking. I'm asking fundamental business decisions.
MR. GIBBS: I'm simplifying this question -- (laughter) --
Q: Thank you very much for that; appreciate it.
MR. GIBBS: -- a helpful service I provide from the podium.
Q: But I mean on big decisions -- on what lines of cars, what to go with. What if he simply disagrees and thinks they're making bad decisions? And he has an obligation to make sure that tax dollars are well spent.
MR. GIBBS: Well, the obligation is to find people to manage General Motors, when it emerges from bankruptcy as a different company.
Q: So it sounds like you're saying the leverage here isn't in getting in there and changing decisions, it's if he doesn't like the decisions he can change the people like he did two months ago.
MR. GIBBS: Look, I think, again, we will -- as we stated in our principles -- have a limited role, but vote on corporate governance issues. I think the President and the Auto Task Force are aware of what's involved and what's at stake, and the need to get a strong management team in there that can get this company to viability.
Q: And if I could follow up on the question about Congress -- you said it's a hypothetical, it's a lot of steps and a hypothetical, but I don't think it's hard to imagine that members of Congress, now that the government owns 60 percent of GM, would start saying, hey, we have a role here and start lobbying GM to build things in particular places or to --
(Cell phone rings.)
MR. GIBBS: I don't know where people get these ring tones. (Laughter.) Sorry.
Q: -- to make other decisions. I mean, it's not hard to imagine that Congress is going to start lobbying behind the scenes GM to do things in their states or do other things that they would like them to do. Will the President get actively involved in keeping Congress's fingers out of the mix?
MR. GIBBS: Well, again, I'm reminded that just last week you guys were asking me questions about Congress complaining about not being involved enough and now you're presenting me with situations where they would be overly involved in those decisions.
Q: They do both of those things.
MR. GIBBS: Well, I guess I'll come back on any given week to whichever scenario we're pursuing at that time.
Q: Okay, Robert, quickly on this exit strategy, is it -- will the administration deliver -- you talked about, that the President wouldn't thumb through annual reports, but at this point isn't the government responsible for delivering annual reports to taxpayers on how this money is being spent?
MR. GIBBS: I mean, that's, again --
Q: To see when profitability is hit.
MR. GIBBS: Well, look -- well, I don't --
Q: I mean, will you report to taxpayers: Okay, every six months, this is the status of our investment in GM. And will this be a very public, a regular thing that we're going to see reported on?
MR. GIBBS: I don't know what -- other than normal corporate communications that are done as -- that every company does, I don't -- I mean, Bill is not going to work for GM -- not that I'm aware of. Do you want to talk to me afterwards? (Laughter.)
Q: All right, how about this: Is the government's stake always for sale, if there is -- if it's to repay -- if --
MR. GIBBS: Well, look, again --
Q: -- if somebody -- if an investor comes in and comes to the federal government and says, hey, we know you own 60 percent, we'd like to buy some of those shares, and you'll turn a profit - or you'll get some of the taxpayer -- but right now, is the government's stake for sale?
MR. GIBBS: I think if the President was convinced that we had taken the steps to put the company on a path toward viability and that we could recoup for investors -- meaning the taxpayers, in this case -- their investment in ensuring that GM is taking -- continuing to take those steps, the President is eager to get out of any ownership stake in the auto companies.
Q: Not for sale right now? Nobody can come now?
MR. GIBBS: If you want to buy it, Chuck, we can talk after this. I don't --
Q: No, but you just said, when it's viable, so obviously --
MR. GIBBS: Well, look, I think right now, Chuck, if there were a lot of -- if today there were a lot of buyers, I think we'd be having a different discussion.
Q: Fair enough. Quickly on North Korea, Defense Secretary Gates seemed to hint that the United States would hold North Korea accountable if they were involved in trading nuclear materials across their border. Does that mean nothing is ruled out at that point; the United States would act unilaterally?
MR. GIBBS: Well, I don't want to get into, from here, what steps would be on the table or could be taken. Obviously we continue to watch what's going on in North Korea. Again, the many ways their actions were predicted by them by telling us that they were going to do a series of things -- and they've done those things.
Again, I think, as Secretary Gates and others have said, they're continuing to take steps that isolate themselves from the community of nations. We'll continue to watch, and obviously we're concerned that -- as they work to develop weapons and work to develop delivery systems, you're always concerned about proliferation. That's why --
Q: That's the red line in this case, more so than what they're doing?
MR. GIBBS: Well, look, I don't want to absolve the North Koreans of any of their actions. I think they're all serious violations of their responsibilities and responsibilities that they've agreed to. But obviously I think the greatest concern of anybody would be taking these weapons and delivering them to somebody to use.
Q: And the President agrees with the Defense Secretary that this isn't a crisis?
MR. GIBBS: I think that we agree with the Defense Secretary that even as the Defense Secretary himself would tell you, we're watching the situation closely. But I think as I've said from here a number of times, I think it does not make sense to provide North Korea repeatedly with attention that they desire by making a series of irrational international decisions.
Q: Follow on that, Robert?
MR. GIBBS: Do you want to follow? Go ahead.
Q: Just to follow, how personally involved is the President in this issue right now? Can you tell us how often he's been briefed on this?
MR. GIBBS: Let me check. I want to say they were -- let me check on this before I get too far -- the schedule from last week, the end of last week blurs. Obviously a series of meetings have been continuously held off and on for many weeks on this issue. And the President obviously gets regular updates.
Q: Robert, are you going to tell us how much the President and the First Lady's date night cost on Saturday night, and if not, why not?
MR. GIBBS: Well, Jonathan, I think spokespeople have spoken to this over the weekend that the President would -- had he or could he, based on the Secret Service, he would have taken the shuttle, but I would say that the costs are proportionate with travel for Presidents. And I would encourage you to look up previous coverage on travel costs because they're analogous.
Q: But is there any President or a President and First Lady who have taken an out-of-town date night like this, not connected to an official or even a political -- previous event?
MR. GIBBS: You've got probably more researchers than I do.
Q: You've got a dozen or so Cabinet Secretaries and others fanning out tomorrow to some of these auto-producing states. What are their talking points, especially to auto workers who may not be too thrilled to sacrifice for the common good, as the President argued today?
MR. GIBBS: I'm going to have you talk to Chip. (Laughter.)
No, look, Peter, in many ways -- and I talked about this last week -- 700,000 jobs have been lost in Michigan since the beginning of this decade, in a little more than nine years. The auto industry has seen a tremendous -- in a sense, it has seen some restructuring before we got to the point of some serious restructuring, even before bankruptcy.
As I've said, GM employs about 10 percent of the people that it employed just 30 years ago. But I would say to you that the President -- obviously the Cabinet, many of the Cabinet, Ed Montgomery, who the President has specifically tasked to deal with communities and elected officials -- the President is asking those to go out into those communities to listen, to see what -- to make sure that people know what's available in terms of retraining; in terms of help on their behalf; in making sure that they have the benefits that they deserve.
But what I would also say is, again, the other path that the President didn't choose is not some losing their jobs, but all losing their jobs. And the President made some tough decisions to give GM and its workers and the communities it supports a fighting chance to be the GM of old again.
Q: On the GM board, will the White House be suggesting names?
MR. GIBBS: I can check with those guys. I don't know whether that's the case. I think sort of similar to earlier --
Q: It's just a question of whether or not you'll be either appointing (inaudible) and you'll be voting your slate on the board of directors.
MR. GIBBS: Well, let me check in terms of whether we have candidates or not. I assume that we will be involved in finding names of people that we believe -- as we have done with other companies that have received extraordinary assistance in both this administration and previous administrations -- to find people that we think represent good management.
Q: Okay. So, just, the criteria will be good management -- will there be any bipartisan consideration there?
MR. GIBBS: Well, I think what you pick on a board of directors are people, regardless of their politics, who can make hard-nosed business decisions and turn a profit -- that's what you want a company to do. We're not checking voter registration; we're looking for good managers.
Q: Robert, I may have missed this. How many will be on the board of directors? What's the actual number?
MR. GIBBS: I don't have that number in front of me.
Q: Does anyone -- Jen?
MS. PSAKI: I'll get it for you.
Q: Okay. And as I understand it, the administration, the task force, will name or suggest all but two -- Canada will have one and the UAW VEBA will have one; the rest will come from the task force. So the administration, through the task force, will play a substantial role and voice in creating this new board of directors.
MR. GIBBS: Right.
Q: And will the administration retain the right to remove members of the board of directors, based on GM performance as they evaluated, on behalf of the U.S. taxpayer?
MR. GIBBS: Yes, well let me just -- I will double check exactly. I just want to make sure that I have going forward. But I'll check on that.
Q: Okay. Now, in the -- as this bankruptcy process was put together, the administration was in favor of getting a declaration from General Motors that it will not import for sale in the U.S. market automobiles manufactured in China, correct? That was part of the deal, and I just want to make sure the task force was interested in --
MR. GIBBS: I don't know about that aspect of the deal, so let me -- let us check on that.
Q: Was the task force in favor of General Motors committing to the production of a new, small car for the U.S. market to be produced here in the United States?
MR. GIBBS: Look, Major, I don't have that level of detail on the deal, so let me --
Q: Well, these were all part of the details that were announced last night, they were part of the fact sheet. It just seems to me that those are significant decisions made by this new GM. And it would seem the task force would have had some voice that.
MR. GIBBS: Well, let me take a look more closely.
Q: And the bottom line of this question is, maybe it won't have day-to-day operational supervision going forward, but clearly the task force, it appears, was involved in some very significant General Motors decisions relating to the U.S. market: a product line that doesn't exist now, that it's committed to creating -- I just want to make sure that I understand correctly that those were task force involved.
MR. GIBBS: Look, I don't think it took a -- I don't think it takes a task force to understand that the company has got to make cars that are going to do better fuel-efficiency-wise --
Q: No, I know, but the President in his remarks said that there will be the large amount of U.S. production of vehicles. The only way you get there is by General Motors committing to make this new small car in the U.S. market.
MR. GIBBS: Well, I think General Motors --
Q: And it seems to me that's an outgrowth of these talks --
MR. GIBBS: Well, I think General Motors put out a press release Friday denoting that -- from what I saw, denoting that a factory would, at some location in the United States, be chosen for that production. But past that, I will check on that with --
Q: Does the President expect GM to be profitable by the end of his first term?
MR. GIBBS: You know, again, I think that -- I think there -- I think it would be unwise for me to speculate. I think the President believes a number of factors are important getting in place that good management, ensuring that we have a strong and stable economy. Obviously, the biggest determining factor in profitability is going to be the number of auto sales. So ensuring that we have an economy that is strong and robust where people are buying cars is going to be the largest determinant as to profitability, and how quickly we can get out of the business of being involved in auto companies.
Q: Yes, Secretary Geithner is in China, and he's telling audiences that the United States plans to reduce its debt. Is the administration concerned that the Chinese demand for U.S. debt is declining?
MR. GIBBS: No, again, I think we've said up here many times that we have the deepest credit markets in the world. Obviously the President has long been concerned about fiscal responsibility, but believes that -- does not believe -- is not concerned about that right now, no.
Q: Just a quick follow. In making decisions about when to start reducing the debt, particularly out-years of the budget, what is the White House looking for, in terms of economic indicators or legislative benchmarks that are going to prompt you all to start revisiting some of these numbers and bringing them down?
MR. GIBBS: Give me some -- give me examples of what you're --
Q: For example, the period we're in now, obviously, there's a lot of almost emergency spending taking place to fill in demand. Once that is finished, I imagine if you're serious about reducing out-year budget numbers, you're going to revisit the budget and those figures. What will prompt you to do that? When will you know it's time to do that, it's safe to do that?
MR. GIBBS: Economically, you mean?
MR. GIBBS: Well, look, I think this is obviously an ongoing process. I think it's hard to pick in the future some mythical date certain. But I think you've heard the President discuss on a number of occasions the reason why we thought a recovery and reinvestment plan was important was to get money into the hands of American citizens, to get money to states that were struggling, to ensure that those that were displaced and losing their job had the type of benefits that they deserved, and that one of the ways to get control ultimately of our deficit is to get our economy growing again.
So without having sort of a firm graph of numbers, obviously we need to see some concrete economic growth and job growth as equally as important.
Q: When I mentioned legislation, I meant health care reform and energy reform, two things that you're hoping -- that you say will lead to long-term savings. Once those are passed, will you have a better sense?
MR. GIBBS: Well, I think, again, we've talked about it on a number of occasions and I would reemphasize again, getting our health care costs under control, making the system dramatically more efficient over the long term will provide a huge change in our budgetary outlook as we struggle with rising health care costs. I think the same is true as we create the jobs of the future to deal with energy independence -- obviously short term and then I'd say probably medium to long term, creating that strong foundation in order to get the economy going again.
Q: Robert, oil prices hit $68 a barrel today -- very substantially up in recent weeks. When the President goes to Saudi Arabia, is going to talk to King Abdullah about that? Is he going to express concern?
MR. GIBBS: Well, we'll have a readout exactly of what's done and said in the meeting, but as I said last week I assume that's something that will indeed be on the docket next -- later this week -- sorry, I'm getting my weeks mixed up.
Q: Robert, one question --
MR. GIBBS: Hold on a second. Hold on --
Q: -- you will want to answer, I'm sure.
MR. GIBBS: I appreciate the certainty with which you said that. (Laughter.)
Q: I also wanted to ask about the Cairo stop -- since we talked to you last week about that, the schedule is more firm. Is the President going to be meeting with any dissidents?
MR. GIBBS: We'll have more on that as we get closer.
Q: Robert, you have gone out of your way to reassure people that the government isn't going to be micromanaging and they're not going to be picking the paint colors --
MR. GIBBS: Many people have given me the opportunity to do that.
Q: Right. But, I mean, you could look at it -- come at it in a completely different way, which is when you own this much of a company and you are representing the taxpayers, you have a fiduciary responsibility to make sure that this company turns a profit as soon as possible, and that might behoove you to get as involved as you need to be to make sure that happens. So I'm wondering if you can imagine times when the goal of making GM profitable as fast as possible conflicts with the goal of it being the kind of car company that you might want it to be. I mean, what if it turns out that they can sell more big gas-guzzlers, at least in the near term, than little --
MR. GIBBS: Well, I see no present evidence that would make that theory plausible.
Q: Well, once they're restructured and get rid of all the kind of dead weight and they're leaner and meaner, I mean, it's possible that some of the profit --
MR. GIBBS: The company, not the cars.
Q: Yes, the company, that's what I'm talking about. (Laughter.) But, I mean, there is -- when you're the owner of a company, making a profit for the taxpayers and maintaining a "viable" U.S. auto industry sometimes will come into conflict.
MR. GIBBS: I actually don't know that that's the case, given, again -- I think if you take a look at auto sales for the past many, many months, go back a year or two, I don't think you would say, we didn't end up in this place because these companies were doing great and we wanted them to do greater. I think if Hummer was a brand that was turning a big profit it wouldn't be for sale for anybody that has $5 in loose change to buy it.
Q: So you're just saying those two things right now are one and the same. But to follow up on Chuck's question, if somebody came in next year to buy out your share, returning a profit to the taxpayers, and then proceeded to kind of dismantle GM -- still would have given a profit to the taxpayers, but the end result would have been a non-viable U.S. auto industry, I mean, those are choices that you're going to have to make --
MR. GIBBS: Let me just address this for a second, Mara, because the scenario that you're setting up is, somebody would want to come in and pay markedly more than what the stock price is once we purchase it; they want to give us more than that, establishing that difference as being the taxpayer profit; and assuming that they're making a rational decision about how much to pay for each share of that stock, they're then going to make business decisions that are in the opposite of that in order to make the company less viable?
Q: No, no, I'm saying sometimes --
MR. GIBBS: But I think that if you actually --
Q: -- the most profitable thing you can do is sell off the parts of a company, that's all.
MR. GIBBS: But Mara --
Q: Part of what you're doing you're doing now, in fact.
MR. GIBBS: -- if you look at the scenario outlined by your question, I think in many ways the scenario I just outlined is exactly what you outlined. I don't know of anybody that's going to come pay twice the share price and go back to making the decisions that got the company into $172 billion in debt.
Q: Well, of course not.
MR. GIBBS: Then I guess I'm straining to understand your scenario.
Q: I guess what I'm asking you is there any acknowledgment that sometimes there can be a conflict between representing the taxpayers as their investor, which is what the U.S. government is right now, and doing things that you would like the U.S. auto industry to do or be? You don't see any --
MR. GIBBS: -- example. Sure, if somebody can --
Q: If Michael Moore came out this morning and he said, look --
MR. GIBBS: I'm sorry, what?
Q: If Michael Moore, you know, "Roger Rabbit" or whatever -- (laughter) --
MR. GIBBS: Not exactly, but yes --
Q: -- came out and said, look, if you -- if it is in the United States' interest to retool these plants so that we make high-speed railroads, railroad cars, that we make public transportation automobiles that will carry more people and use less fuel, et cetera, then we should retool the GM plants to do that. Now that's sort of the opposite of what her question is, which is, is there a way to make this so that it actually not only helps the taxpayer become profitable but also helps our long-term goals of becoming more green, and would we have an interest in doing that?
MR. GIBBS: Well, again, as I said, there are traditional roles that Congress and the executive branch have played regarding, for instance, as I've said before, corporate average fuel economy; ensuring that there is for the average of a fleet some standard by which it should meet given the mix -- given an appropriate mix of different vehicles.
But, again, going back to Mara's scenario, I don't -- again, I just don't understand a scenario where somebody is going to come in and pay more than the company is -- more than what we paid for the company in order to make wildly disparate decisions that in some ways are what got the company to where we were, say, last night.
Q: You're assuming that entity might want to run it just the way the old, bad managers did. There's a lot of ways to dispose of assets -- meaning, you want to keep a viable U.S. market --
MR. GIBBS: What you're saying is -- wait, so let me understand this --
Q: -- industry going no matter what.
MR. GIBBS: So what you're saying is, you think -- you're saying somebody is going to come in and pay, say, twice the -- hold on, let me do this scenario -- hold on, let me see if I'm inferring what you're saying -- somebody is going to pay twice the share price but ultimately decide that selling the factory, basically, covering simply a fixed cost -- well, I mean --
Q: Aren't you doing a little bit of that --
MR. GIBBS: Well, I mean, there is a fairly --
Q: -- in this kind of structured bankruptcy -- isn't that what it is?
MR. GIBBS: Well, I will tell you this. There's a -- I mean, there's an economic theory -- I took a few of these classes that -- (laughter) -- no, no, no, I don't mean -- I did, I don't mean that in a sarcastic way --
Q: You had to clarify that --
MR. GIBBS: Yes, exactly. (Laughter.) I mean, I think there are not many people, and the President -- the President made a conscious decision about what path to take, right? But if the investment far exceeded the assets, the fixed costs, that would be a terribly irrational business decision, and I think you can assume rightly that the President and the task force made decisions based on what they thought the company could become.
Look, guys, this isn't an exercise in perpetuating a company -- to perpetuate a company just for that sake. That doesn't make any sense, and that wouldn't be rational for taxpayer investment. That's why I think -- that's why people are making those decisions.
Q: Robert, related to that, you're not setting up any benchmarks for the investment, is that correct? And if so, why not?
MR. GIBBS: I'm sorry, say that again.
Q: No benchmarks for GM, for the company -- steps towards the road to viability that you'd like to see accomplished, year one, year two --
MR. GIBBS: Well, look again --
Q: You're basically -- playing off what people said, a way to evaluate whether this is working.
MR. GIBBS: Well, whether or not they've handed me how they would enumerate the evaluation, David, I think the notion that we're somehow writing them a check and then walking away and hoping to come back in two years and find a company that's in different shape -- again, I don't think we would be involved in core corporate governance issues like a board of directors if we didn't have some concern about viability.
And as I've said, as the President has said -- look, guys, he didn't -- if he wanted to run an auto company, he wouldn't have run for President.
Q: There's got to be a trigger here. I mean, I guess that's what I think -- you've six versions of this question. What is the trigger point at which you say, okay, is it the market that will evaluate the price of the government -- you know, the share price on the sales? The taxpayers --
MR. GIBBS: Well, look, that's the stock market, yes.
Q: Right, that's what I'm saying. If the market shows that the taxpayers can get their money back, does that mean, okay, we've got to get -- is that the trigger?
MR. GIBBS: If there's a good -- well, if there's a good deal, I can assure you we don't want to --
Q: Should we watch the stock price -- that should be the evaluating --
Q: I'm not on the Dow anymore. (Laughter.)
MR. GIBBS: I would note that for all the questions I've gotten about our actions in the market, I would note the market seems to be doing seemingly well today.
Q: I mean, is that the trigger? That's what we should watch?
MR. GIBBS: Well, look, I think we desire to get out of the auto industry as quickly as we can and do it in a way that protects taxpayers. I can't -- Chuck, I can't sit here and tell you that when -- I think, first of all, we're going through a 60- to 90-day bankruptcy. We've got to figure out -- and a judge is going to do that -- the size, the entity, the scope, and the stock price that you're going to watch, what that's going to do when it spits out the other side.
So I think it would be disingenuous for me to speculate or stand up here and say, when it hits 375, then we're out. But I can assure you, again, the President is not looking to --
Q: Put the sell order on E-Trade.
MR. GIBBS: Yes, exactly. Check whitehouse.gov.
Q: But I still think the question is what procedures do you anticipate having in place at the end of the 60-to-90-day period by which the Auto Task Force or anybody else will be monitoring, whether or not intervening, but monitoring what's happening and deciding if things are going in a good or not so good direction.
MR. GIBBS: Well, look, I think, again, part of that is the purview -- will be the purview of what we believe will be a strong board of directors that are making decisions to make this company profitable. That's the basic --
Q: Robert, will the government exercise its authority to remove Fritz Henderson as CEO either now or after the bankruptcy exit? And what's the realistic likelihood that the government will get much of the $50 billion back? There were some officials who said last week that of the first $20 billion that the Bush administration gave, it's not likely to get much of that back.
MR. GIBBS: Well, again, I think it's, at the beginning of this process, not based on market implications and such, I think it's important that I not speculate precisely on what that is, again, simply to say that the investment that was made -- it splits out roughly -- some is secured debt, but the bulk of this is equity, because you don't want to take a company that's just come out of massive debt and saddle it with massive debt under a different name. So that's one of the reasons that we exercised the equity option in this case.
Lester, I'm just going to -- here we go.
Q: On Thursday, Buckingham Palace announced: "Neither the Queen, nor any other members of the Royal Family will be attending the D-Day commemoration on June 6, as we have not yet received an official invitation to any of these events."
And my question: Since Queen Elizabeth is the only living head of state who served in the armed forces during World War II, President Obama believes she should surely be officially invited, doesn't he?
MR. GIBBS: He does. And we are working with those involved to see if we can make that happen.
Q: Wonderful. (Laughter.)
MR. GIBBS: Lester, will you please pass that directly to the Queen for me?
END 3:07 P.M. EDT
|Citation: Barack Obama: "Press Briefing by Press Secretary Robert Gibbs", June 1, 2009. Online by Gerhard Peters and John T. Woolley, The American Presidency Project. http://www.presidency.ucsb.edu/ws/?pid=86239.|
© 1999-2011 - Gerhard Peters - The American Presidency Project