Off into the SUV's Sunset

As I said earlier in comments at Eschaton, time for GM to ride off in the SUV it stove in on. In a world threatened for decades with pollution provably caused by inefficient engines, a company that dedicated a large part of its resources to producing mammoth polluting vehicles regardless of the environment and diminishing supplies of gasoline doesn't call for government support. It's record shows that overpaid executives cannot be trusted with the public interest. In the case of Ford, GMAC and Chrysler, the market has corrected.

I hate to think about the generations of workers who will suffer if the automakers are allowed to go belly up as they deserve. It is that prospect that has insulated those automakers from firm action by officials of the left, while corporate welfare orientation has kept the right from doing anything to curb self-destruction rampant in the automakers' executive ranks.

Here’s a chicken-and-egg problem staring at Barack Obama: How do you both save the auto industry in its existing form and make it part of the clean-energy revolution at the same time?

The president elect today voiced even stronger support than House speaker Nancy Pelosi for a second Detroit bailout. In his first post-election press conference, Sen. Obama said:

The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil. I would like to see the Administration do everything they can to accelerate the retooling assistance that Congress has already enacted. In addition, I have made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis, and succeed in producing fuel-efficient cars here in the United States. I have asked my team to explore what we can do under current law and whether additional legislation will be needed for this purpose.

Sen. Obama’s hopes for the U.S. auto industry are two-fold. He wants Detroit’s Big Three, with its hundreds of thousands of jobs and retirees, to make it through the crisis without any bankruptcies. That looks increasingly tough given the massive cash burn and mounting losses announced today by General Motors and Ford Motor Co. today. Those dire balance sheets make plain Detroit needs at least the $25 billion Washington has already pledged.

But at the same time, Sen. Obama wants to increase the pressure on Detroit to jettison decades of business trends and make more fuel-efficient cars more quickly. Washington already passed a more rigorous fuel-economy standard in last year’s energy bill; Sen. Obama wants to go even further. That’s part of his plan to both wean the U.S. off foreign oil dependence and also to limit greenhouse-gas emissions.

The fundamental problem, as Detroit keeps pointing out, is that new rules mandating more efficient cars cost money that the Big Three don’t have. Many analysts are worried that U.S. automakers are already stretched to the limit trying to meet existing standards, let alone Sen. Obama’s proposals.

Their record in self-destruction suggests that a responsible assumption of the automakers' debts must include concomitant assumption of the direction of the resources they will have. The difficulties involved in doing this are awesome. I am confident the right wing is sure that the incoming administration will fall off the cliff managing this crisis they've handed off to it. It will not be an easy task, but with an onslaught of public support, hopefully a satisfactory solution can be achieved. I am glad that we are not facing these next storms with the corporate trough still the executive branch's consuming passion.

The automakers deserve to fail, as did the banks. What can be done to keep them afloat should be directed toward keeping the public, and autoworkers, from the disaster they are threatened with because of malfeasance by auto executives.