February 17, 2009 at 2:12 pm

Daniel Howes: Commentary

Howes: Auto firms oversight also requires insight

Nearly two years ago, candidate Barack Obama used a prophetic Detroit Economic Club speech to urge the Motor City's automakers to radically change -- or die.

It didn't play well.

Today, President Barack Obama's administration expects to get its first glimpse of "viability plans" for beleaguered General Motors Corp. and Chrysler LLC, another step in a process likely to give Obama more power to dictate the future of Detroit's automakers than any president since FDR.

Talk about karma. Here's a president whose party is in solid control of Congress canning the idea of a single "car czar" to oversee the federal government's lifeline to GM and Chrysler -- which is the only thing keeping both of them from federal bankruptcy court. Instead, he's creating an inter-agency task force and leaving for himself any final decision on the fates of GM and Chrysler.

FDR would have loved it.

But, Mr. President, do yourself, your country and the half-dozen or so states here in the Midwest a favor: Demand from your staff a clear-eyed assessment of what these companies already have (and haven't) done on products, on fuel efficiency and on corporate restructuring -- scant understanding of which we saw in the circus called congressional hearings.

Demand that your people separate the recent drivers of Detroit's precipitous decline -- tight credit, plunging consumer confidence, imploding sales dragging down the entire industry -- from the broken business model they're scrambling to correct.

And demand to know what bankruptcy -- pre-packaged, traditional Chapter 11 or a government-financed plan -- would portend for auto sales, the national and Midwest economies, the country's industrial base, consumer confidence and even national security. (Countries that cease to manufacture become, well, Britain.)

For this president in these times, the decision is stark: Does he allow a cornerstone of American manufacturing to begin a collective march into bankruptcy? The process is designed to use the power of the federal courts to fix businesses by discarding what doesn't work, but it can prove a brutal instrument to the interests of unions, Wall Street and retirees -- all of whom vote.

Or does he make a political decision to keep funding GM and Chrysler and pressure them at the same time? The economic and social costs of bankrupting a big chunk of the Detroit-based auto industry are a big, maybe even intolerable, risk when the nation is shedding jobs at the rate of roughly 500,000 per month and market uncertainties are palpable.

Notwithstanding the tough talk from Obama, congressional leaders or the president's advisers on Sunday morning talk shows, I'd bet on option B. It's more defensible to jittery markets and consumers, whatever their reservations as taxpayers; it offers automakers cover to execute brutal restructurings; it uses the real threat of bankruptcy to muscle the process.

And, perhaps most importantly, it tightens political control of a major linchpin industry. That's an irresistible impulse for most politicians, namely those allied with organized labor, environmental groups and big-government Democrats.

In Washington, the old is new again. You can rhetorically smack "evil" automakers and denounce "porky" spending even as you have no intention of either letting the autos go under or barring pork barrel projects from a massive stimulus bill.

How Team Obama manages the fortunes of America's weakest automakers in the weeks ahead matters far more than what its people say -- except for the president, who will get the radical change he sought from Detroit, one way or another.

Daniel Howes' column runs Tuesdays, Thursdays and Fridays. He can be reached at (313) 222-2106 or dchowes@detnews.com">dchowes@detnews.com or detnews.com/howes.

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