GM should not be handing out campaign contributions


The American car company General Motors has resumed contributing to political campaigns after the federal government took a majority stake in the company. GM is using its political action committee (PAC) to contribute to a number of candidates who represent districts and states with a large GM presence.

No company whose majority shareholder is the United States government should be contributing to candidates for political office. I understand that the PAC is a separate entity from the corporate treasury, but the appearance of a conflict of interest is far too great. This is equally as outraging as if Fannie Mae, Freddie Mac or A.I.G. had resumed contributing to candidates despite being owned by the government.

The Atlantic’s Daniel Indivigdio says as much here:

Such political giving should not be permitted. The U.S. government is majority shareholder of GM. It controls the company. This effectively means GM is providing non-dividend money to select decision makers of its biggest shareholder. It would be like if GEICO sought favorable treatment by giving money to select managers of Berkshire Hathaway, its parent company. If securities law doesn’t forbid such activity, it certainly should.

Though the PAC may give the company a rationale to explain the contributions, it does not forgive the failure to appeal to the public interest. When the company is no longer owned by the federal government they should resume all normal activities of a privately-owned company. While under majority-control by the federal government the company should refrain from activities that invite conflict of interest discussions.