Three months after George W. Bush ignored the will of Congress and provided $ 17 billion in taxpayer dollars to General Motors and Chrysler, President Obama has stepped in and expanded it into what can only be described as the most-far reaching government intervention in a specific industry in history:
WASHINGTON — President Obama announced what amounts to a do-or-die ultimatum for the struggling automobile industry on Monday, laying out strict standards that the carmakers must meet to get more government aid and declaring that the industry must survive because it is “like no other, an emblem of the American spirit.”
A failure of leadership “from Washington to Detroit” over the years has led the industry to the brink of collapse, the president said, and in more recent days both General Motors and Chrysler have failed to come up with plans adequate to justify the billions more in government help that they are requesting.
“And so today, I am announcing that my administration will offer G.M. and Chrysler a limited period of time to work with creditors, unions and other stakeholders to fundamentally restructure in a way that would justify an investment of additional tax dollars; a period during which they must produce plans that would give the American people confidence in their long-term prospects for success,” the president said at the White House.
Speaking a day after the White House pushed out the chairman of G.M., Mr. Obama said Chrysler has been instructed to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid.
And, here are the details, such as they are:
Mr. Obama’s auto industry task force, in a report released Sunday night assessing the viability of both companies and detailing the administration’s new plans for them, concluded that Chrysler could not survive as a stand-alone company.
The report said the company would get no more help from the government unless it can finalize a proposed alliance with the Italian automaker Fiat by April 30. It must also reduce its debt and health-care obligations.
If a deal is reached between Chrysler and Fiat, the administration says it would consider another loan of $6 billion to Chrysler.
G.M., on the other hand, has made considerable progress in developing new energy-efficient cars and could survive if it can cut costs sharply, the task force reported. The administration is giving G.M. 60 days to present a cost-cutting plan and will provide taxpayer assistance to keep it afloat during that time.
In his statement announcing the new plan, Obama said that if G.M. and Chrysler failed to meet these deadlines, then the consequences could be severe:
If GM is unable to restructure and Chrysler cannot strike a deal with Fiat, they may need to use the bankruptcy code “as a mechanism to help them restructure quickly and emerge stronger,” Obama said. He said that could enable the companies to “quickly clear away old debts that are weighing them down,” even as their workers remain on the job.
“What I am not talking about is a process where a company is simply broken up, sold off and no longer exists,” he said. “And what I am not talking about is having a company stuck in court for years, unable to get out.”
Tough talk, perhaps, but remember, it’s the same exact thing we heard three months ago:
WASHINGTON — The emergency bailout of General Motors and Chrysler announced by President Bush on Friday gives the companies a few months to get their businesses in order, but hands off to President-elect Barack Obama the difficult political task of ruling on their future.
The plan pumps $13.4 billion by mid-January into the companies from the fund that Congress authorized to rescue the financial industry. But the two companies have until March 31 to produce a plan for long-term profitability, including concessions from unions, creditors, suppliers and dealers.
Here we are on the eve of the deadline and even the Obama Administration admits that the plans that these companies provided are not viable, and yet their response is to give them even more money.
Does anyone really believe that when the time limits announced today pass and, once again, the plans come up wanting, that Obama will really just let these companies fall into bankruptcy like they should ?
Of course not. He’ll come up with some new form of government aid with yet more government control, and we’ll take another few steps down the road to serfdom.
