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What's Good for General Motors?

It's becoming something of a pattern: President Obama is faced with an economic mess of epic proportions left over from the previous administration and acts with a firm hand. In doing so he accrues extraordinary power --- and takes on enormous risk.

It was the auto industry's turn yesterday.

David E. Sanger writes in the New York Times: "In essentially taking command of General Motors and telling Chrysler to merge with a foreign competitor or cease to exist, Mr. Obama was saying that economic conditions were sufficiently dire to justify a new level of government involvement in the management of corporate America.

"His message amounted to an inversion of the relationship that had helped define the rise of American manufacturing might in the 20th century; now, Mr. Obama seemed to be saying, what is good for America will have to be good enough for General Motors."

Peter Wallsten and Jim Tankersley write in the Los Angeles Times: "President Obama's plan to save failing U.S. automakers -- and make them the instruments for creating a cleaner, greener transportation system -- marked a major step across the line that traditionally separates government from private industry.

"His announcement Monday of a new position on bailing out Detroit went beyond a desire to be sure tax dollars were not wasted in bailing out struggling companies. It put the Obama administration squarely in the position of adopting a so-called industrial policy, in which government officials, not business executives or the free market, decided what kinds of products a company would make and how it would chart its future."

Wallsten and Tankersley write that Obama's actions "drew immediate criticism, especially from conservatives." But, they note: "Obama's actions are 'consistent with the pattern of presidents acting during economic crises,' said Allan Lichtman, a professor at American University and an expert on the presidency. 'And it's absolutely consistent with patterns of presidents intervening to make sure major components of the economy don't fail.'"

In his remarks yesterday, Obama returned to some familiar themes in explaining what caused him to act: "[I]t's a failure of leadership -- from Washington to Detroit -- that led our auto companies to this point," he said. "Year after year, decade after decade, we've seen problems papered over and tough choices kicked down the road, even as foreign competitors outpaced us. Well, we've reached the end of that road. And we, as a nation, cannot afford to shirk responsibility any longer. Now is the time to confront our problems head-on and do what's necessary to solve them."

And despite calling upon all parties -- including unions and workers -- to make sacrifices, he had a particular messsage to "all those men and women who work in the auto industry or live in countless communities that depend on it....[W]hat I can promise you is this: I will fight for you. You're the reason I'm here today. I got my start fighting for working families in the shadows of a shuttered steel plant. I wake up every single day asking myself what can I do to give you and working people all across this country a fair shot at the American Dream."

But as David Brooks writes in his New York Times opinion column: "The Obama administration and the Democratic Party are now completely implicated in the coming G.M. wreck. Over the next few months, the White House will be subject to a gigantic lobbying barrage. The Midwestern delegations, swing states all, will pull out all the stops to prevent plant foreclosures. Unions will be furious if the Obama-run company rips up the union contract. Is the White House ready for the headline 'Obama to Middle America: Drop Dead'? It would take a party with a political death wish to see this through."

Meanwhile, Eugene Robinson writes in his Washington Post op-ed column: "The president is telling Detroit to shape up or die while at the same time politely asking Wall Street, whose recklessness and greed caused this economic crisis, if it would be so kind as to accept another heaping helping of taxpayer funds.....

"There are reasons for structuring the bank bailout this way, and there are reasons to take a get-tough attitude with the auto companies. But the juxtaposition is galling -- and, for many autoworkers, potentially devastating."

And Dana Milbank writes in his Washington Post column that Obama's pitch for Americans to buy more cars didn't go over well with the press corps: "The president had promised car buyers everything but rich Corinthian leather seats -- and reporters leaving the Grand Foyer got in the spirit of the day. 'Zero money down!' proposed one. 'Will he throw in a few oil changes?' wondered another."

By Dan Froomkin  |  March 31, 2009; 11:50 AM ET
Categories:  Financial Crisis  
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Next: Obama Gets High Marks From Public


A pattern is beginning to emerge from the ongoing economy debacle. Overall, our way of life has become unsustainable. The original bailout last fall was an emergency stopgap measure designed to prevent a catastrophic collapse of social order. What we bought was not a preservation of the old system. Instead we were able to buy some time during which an orderly deconstruction of the banking/financial, energy, healthcare sectors (to name a few) can take place. Much will be made by the Right of the inconsistency of dumping billions of Dollars into various bailouts, only to see the underlying corporate entities fail anyway.

A proper analogy would be that of an ER trauma patient who needs to be stabilized before life saving surgery can take place. Tough medicine is called for. Yet it has to be administered very skillfully.

Posted by: PatD1 | March 31, 2009 1:08 PM | Report abuse

Context is everything. Wallsten and Tankersly assert that the proposed intervention in GM is the first governmental forray into the economic workings of the Auto industry and supporting sectors. Don't forget that wars have been waged as a subsidy to the oil industry to keep our auto-centric, oil-based economy on its current trajectory. Also remember that light rail was systematically removed from metro Detroit early in the 20-th century. It's laughable to believe that markets operate freely in this regard. We've been manipulated for more than a century to believe that the approach put forward by these power brokers is the only approach that supports the American way of life. I think what the President is saying is this: what is good for the American economy IS what is good for the manufacturing sector - AND it releases us from the stranglehold that the oil-auto complex has had on free market processes. Perhaps now we'll see success in regard to wildly popular innovations like electric cars and urban light rail rather than their deliberate removal from the reach of consumers.

Posted by: ecoexpert | March 31, 2009 3:45 PM | Report abuse

Why save the stock market, because that's what saving the banks entails when a lot more people are helped by saving the auto industry? If GM and Chrysler can't reorganize effeciently, why not request strongly that the oil corporations support
American car manufacturers monetarily. After all, the American car manufacturers have been building gas guzzlers for the oil corporations forever! Why shouldn't they be involved in the rescue of the American economy?

Posted by: sailorflat | March 31, 2009 4:02 PM | Report abuse

Trust Dana Milbank and Maureen Dowd just give us the most important parts of the news - like, what (not funny) quips did the reporters make when they were leaving the room? Is this the best jokes that the White House reporters can come up with? I believe that I could have come up with something about Clinton and Hummers that would have been funnier and just as informative to the reader.

Posted by: dickdata | March 31, 2009 4:41 PM | Report abuse

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