To some extent, General Motors is caught in a political squeeze not of the automaker’s own doing. Barack Obama was elected president last week by a wide margin.
Obama is in favor of saving the automotive industry. But he is not president yet, and won’t be for more than two months. By then, analysts say it may be too late, GM is running out of cash, and may be forced to declare bankruptcy. There are those who think bankruptcy might not be all that bad, that it could give the troubled automaker time and the legal cover needed to reorganize itself.
Yet industry experts say, no way. Bankruptcy might make sense if GM were a department store chain. But it is not. If you think GM has trouble selling its cars now, imagine if customers worried the automaker might vanish. What would happen to my warranty?
Where would I get parts and service? Honda and Toyota, here we come!
Additionally, if General Motors stopped paying its bills, many of the big suppliers it depends on might also go belly up. It‘s hard to breathe without oxygen, and it‘s hard to stay in business without cash flow. Some of these suppliers also service Ford and Chrysler. Can you say, spreading industry shutdown?
Obama understands this. But -- he isn’t president yet. He doesn’t want to give the impression that he is responsible for this emergency before he can do anything about it.
He especially doesn’t want to give the appearance that he is tied to decisions President Bush will be making.
This has an eerie precedent in history. Franklin D. Roosevelt was elected President at an even worse time, during the depths of the Great Depression. The man he defeated, Herbert Hoover, wanted Roosevelt to join him in issuing decisions.
But FDR wouldn’t take the bait. He did not want to be bound by failed policies not of his own making. So he politely declined, saying something similar to what President-elect Obama is saying now: That we have one president at a time.
Trouble is, events move at a much faster pace these days. Our economy is not as bad as in 1932. But we may have less margin for error. If we lose our auto industry, it will be virtually impossible to create another. Michigan’s congressional delegation needs to realize that we are all in this together. According to the Center for Automotive Research, even a fifty percent cut in Detroit auto operations would mean a loss next year of two and a half million jobs.
This isn’t a partisan issue, this is a survival issue. Congress just appropriated $700 billion to prop up people who push paper.
You’d think they’d be willing to devote a small fraction of that to one of the remaining manufacturing sectors of our economy.
Some day, there might be another major war. If so, will we be content to have our tanks made by Toyota?