The top executives of General Motors, Ford, and Chrysler appeared before the Senate Tuesday to plead for a $25 billion lifeline, and they make their case before the House Wednesday. The Big Three automakers say that without a federal “bridge loan,” they could go bankrupt, killing 3 million jobs and hobbling the nation’s economy. GM said it is on track to run out of cash by the end of the year. (AP in Yahoo! Finance)
What the commentators said
“Few companies more deserve failure” than GM, said Michael Gerson in The Washington Post (free subscription required), but no president is going to allow the U.S. auto industry to fail, especially in today’s “fragile economy.” Some argue that bankruptcy might save the Big Three, but let’s get real—“who would buy a car and warranty” from a bankrupt automaker?
That’s why a “managed bankruptcy” makes sense, said Mitt Romney in The New York Times, where the government guarantees the warranties of Detroit automakers. But the Big Three need major restructuring—new management, new technologies, lower labor costs—not a handout. If lawmakers bail them out, “kiss the American automotive industry goodbye.”
In arguing against a bailout, our “critics simply ignore the substantial changes that U.S. auto companies have already made,” said GM Chairman Rick Waggoner in The Wall Street Journal. We have slashed labor and management costs, invested “billions in fuel-efficient vehicles,” and made our cars as reliable as Japanese imports. We’re on the right track, but we—and our beneficiaries in all 50 states—need “short-term government support” for long-term benefits.