The Village Car Tune Caper

Needless to say, most pundits agree that GM and Chrysler should have faced bankruptcy back in the Bush administration, but since Barack Obama actually did something about it, the Village now hates his ass more than ever, staring with the LA 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.

The Wall Street Journal:

GM's CEO Rick Wagoner got the Presidential boot over the weekend, and GM was given two months to reorganize, or get forced into a "quick and surgical" bankruptcy. For once, we agree with Michigan Governor Jennifer Granholm, who called Mr. Wagoner "a sacrificial lamb." The Administration needed someone to take the fall to sate the anticorporate furies it has helped to unleash. Mr. Wagoner wasn't solely responsible for GM's bad business decisions, but only recently did he promote the kind of radical restructuring the company has long needed. We only wish someone in Washington would also be shown the door, starting with those at the Federal Reserve whose oil-price bubbles also helped to break the car makers.

Sacking a CEO for appearance sake was the easy part. Good luck trying to get the unions to make concessions on wages and legacy costs, and bondholders to agree to reduce the debt burden. A senior Treasury official told us the Administration isn't holding its breath and considers "surgical bankruptcy" the likeliest outcome. In that event, "a shiny new GM" would emerge, said the official, who didn't want to be identified. Asked why GM wasn't forced into Chapter 11 immediately, the official said the Administration wanted to avoid "years of uncontrolled chaos" and needed time to set the stage for "the more surgical process."

David Brooks in the NY Times:

And yet by enmeshing the White House so deeply into G.M., Obama has increased the odds that March’s menacing threat will lead to June’s wobbly wiggle-out. 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.

USA Today:

But critics said the president overstepped by forcing Wagoner out.

Sen. Bob Corker, R-Tenn., said the move was "a power grab." That level of federal control over GM "should send a chill to the people in this country," he said.

GM should never have gone to the government asking for help, said Gerald Meyers, former CEO of American Motors.

"It was a terrible mistake, pleading poverty and going to Washington asking for money," Meyers said.

The company could have survived without government help if Wagoner had been willing to search out alternative forms of financing, similar to the recent investments in Daimler by the sovereign fund of Abu Dhabi, he said.

Dana Milbank at the Washington Post:

When Obama, preceded by a sales team of a dozen economic aides, entered the Grand Foyer yesterday morning, he offered assurances that "we have no intention of running GM." But, in the rest of his 18-minute speech, he sounded as if he was doing just that. He ordered up "a better business plan" from GM and asserted that "Chrysler needs a partner to remain viable." In both cases, the restructuring "may mean using our bankruptcy code."

The idea of bankruptcy may be "unsettling," Obama allowed -- so he came equipped with a sales pitch worthy of Madison Avenue. "Some of the cars made by American workers right now are outperforming the best cars made abroad," Obama declared, tossing in phrases such as "unsurpassed around the world" and "some of the finest cars the world has ever known."

No credit? No problem. "We are working intensively with the auto finance companies to increase the flow of credit to both consumers and dealers," Obama pledged.

The Village universally hates it. It's funny. Of the five articles tearing into Obama as the First Used Car Salesman, only one bothers to mention Bush's December 2008 bailout of the auto industry and his requisite punt to Obama, and that was, ironically enough, the WSJ. Folks, Obama got stuck with this mess and is trying to do what he can to clean it up.

Let him work.