Getting Tough with the Auto Industry

Today’s lead article in The New York Times is titled, “U.S. Moving to Overhaul Ailing Auto Industry.” The banner headlines across the front page describe President Obama’s decision to require the resignation of the head of General Motors, Rick Wagoner, and a deadline for Chrysler to merge with the Italian company, Fiat, if it wishes to receive additional assisance.

Finally, someone’s getting tough with corporate bosses who have led us into the abyss we currently face. Kudos to President Obama for his decisive action. It’s something we’ve all been waiting for.

Obama’s plan also shows thoughtful analysis of the situation. Instead of applying a one-size-fits-all strategy, so typical in the mindless, ideological days of the Bush administration, this approach indicates the government’s opinion that General Motors, who has worked hard to develop energy-efficient vehicles and cut costs since receiving taxpayer money, has a chance to survive intact, while Chrysler, who obviously has noted applied the same kind of effort, should not.

Let this decision show corporate bosses, so used to relying on a sweetheart deal during the Bush administration, understand that when the Obama administration, or President Obama, says something, he means it.

Politically, the article gives one other reason for the tough stance. After the bonuses paid to AIG, the public is in an unforgiving move regarding corporate bailouts. In my opinion, further taxpayer support for bailouts will still be needed for banks and the financial sector, but today’s actions should serve as a caveat to these institutions: don’t expect something for nothing.