At the White House on March 30, President Barack Obama, in his speech on the failing auto industry, insisted that the U.S. government had no intentions of running General Motors. Then, he created the Presidential Task Force on the Auto Industry. On March 29, the president asked the former GM Chief Executive Rick Wagoner to step down. With the company declaring bankruptcy this week, Uncle Sam would control 60% of the failing auto giant. Some media pundits are crying socialism.
Top Senate Republicans such as John McCain of Arizona and John Boehner of Ohio suggested a traditional hands-off approach to the marketplace, letting supply-and-demand run its course and ultimately spelling disaster for the families of thousands of autoworkers. On the other hand, the administration insists that through owning more than half of the company, GM will be able to back the warranties originally offered to buyers.
It's no secret that foreign automakers such as Toyota are doing quite well today, despite the economic recession and the American public's cautious spending. With the creation in the Cabinet of the new Presidential Task Force on the Auto Industry, has Obama conceded that GM is too big to fail? Or is it that we don't want to lose an American institution?
The government, which has already spent trillions on auto loans and bank bailouts, is imprisoning our children and grandchildren with a potentially catastrophic amount of debt, when GM's future viability isn't even certain.
However, the families of autoworkers will be given a reprieve. The government's role could also help GM restructure, perhaps going greener and emerging stronger than ever before.
How do you feel about the government becoming a 60 percent stakeholder in General Motors?