What happened
GM and Chrysler submitted their restructuring plans to the federal government Tuesday, with GM proposing to cut 47,000 jobs worldwide and Chrysler, 3,000 jobs. The plans—a prerequisite for the next installment of the $17.4 billion in federal loans—also seek up to $16.6 billion more for GM and another $5 billion for Chrysler. The United Auto Workers union reached a tentative agreement with GM, Chrysler, and Ford to cut labor costs. (Bloomberg)
What the commentators said
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GM and Chrysler merit “incomplete” grades, said Case Western economics professor Susan Helper in The New Republic online. Their restructuring plans rely on job cuts, but hardly mention parts suppliers—which account for half of GM's costs, or $50 billion a year. The biggest omission, though, is “an honest, humble appraisal” of why people are choosing foreign cars over GM and Chrysler models.
The viability of the plans “deserves more than a few hours of analysis,” said the Detroit Free Press in an editorial. Besides, they are clearly much more detailed than those from Wall Street bailout recipients. And with the alternative being far-costlier bankruptcies, President Obama and Congress should view the new, $21 billion loan proposal as “as an offer they can’t refuse.”
It was Obama’s pointed refusal to take bankruptcy off the table, said The Washington Post in an editorial, that has loosened the “logjam” among the automakers, bondholders, and UAW. And it needs to stay on the table so the negotiations for more sacrifices don’t become a “farce.” The “outright collapse” of GM and Chrysler could be one shock too many for our “fragile” economy, but endless bailouts would be worse.
“Does anyone believe this is the end of the bailout requests?” said Kevin Drum in Mother Jones online. “I certainly don’t.” GM is “arguably salvageable,” so if we want to prevent a mid-recession manufacturing meltdown, we could bail it out and let Chrysler, “a hopeless basket case,” go under.
