As an assertion of government control over a huge swath of the industrial landscape, President Obama's decision to reshape the automobile industry has few precedents.
In essentially taking command of General Motors and telling Chrysler to merge with a foreign competitor or cease to exist, Obama was saying that economic conditions are sufficiently dire to justify a new level of government involvement in the management of Corporate America.
His message amounted to an inversion of the relationship that helped define the rise of American manufacturing might in the 20th century. Now, Obama seemed to be saying that what is good for America will have to be good enough for General Motors.
Over the years the U.S. government has briefly nationalized steel makers and tried to run the railroads, with little success. In recent months it has taken control of AIG, Fannie Mae and Freddie Mac, firing their management, as well, at a cost that dwarfs what is unfolding in Detroit.
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But directing the fate of a vast manufacturing company, one that still looms over the Midwest, is an entirely different kind of enterprise. And at a time when economists are debating the merits of nationalizing sick banks and pouring more taxpayer money into the economy, it raised the question of whether deteriorating circumstances were leading the administration down a path to deeper intervention in the private sector.
Obama took pains to say that “the United States government has no interest in running GM.”
After his aides concluded that the latest “viability plan” was far too modest, far too optimistic, and far too late, Obama took a step that would have been unimaginable a year ago.
He forced out the chairman of a company that, in a previous era, would regularly send its executives to Washington to run the gears of government. He made it clear that the White House would oversee, and heavily influence, decisions about what plants to shutter, what brands of cars to abandon, and how much workers and managers will get paid.
He left hanging the threat that he might yet force GM into a quick, managed bankruptcy, if that proves to be the fastest way to remake the company. That message was directed at GM's reluctant bondholders, an unsubtle warning they must negotiate to get 16 or 20 cents on the dollar – or risk getting nothing.