In the wake of last week’s groundbreaking elections, much of the nation has been taken with President-elect Barack Obama’s refrain, “Yes we can.” But for those with a stake in the Domestic auto industry’s survival, the more appropriate turn of phrase might be, “Will George Bush?”
The reason is simple: 120. That’s how many days General Motors likely has left until its liquidity drops below what it needs to stay in business. Ford and Chrysler are doing scarcely better, and would be unable to escape the black hole of a GM bankruptcy.
Conceptually it’s mind boggling: the mighty U.S. auto industry – the one that won World War II and mobilized the middle class – is down to its last four months. Politically, it puts the automakers in a different, far more desperate situation than most businesses. Senator Obama does not become President Obama for another two months. Factor in the tumult of a new Congress and the generally glacial speed of the federal government, and it’s safe to say the new president will still be organizing his desk in the Oval Office and house training his daughters’ new puppy when the U.S. auto industry goes down in flames.
Obama has promised he will meet the heads of GM, Ford and Chrysler before inauguration day, and Congress is said to be considering some sort of stimulus package during its last “lame duck” session of 2008. But by and large, the industry’s survival lies with the lame duck in chief – George W. Bush. Only he can approve legislation for a bailout and/or direct his administration to make funds directly available from other sources (i.e. the $700 billion bailout package).
For GM CEO Rick Wagoner and his fellow auto execs, this might be a sobering thought. Beyond the questions of competence that have earned President Bush a 27 percent approval rating, the auto industry has had a rather rocky relationship with the outgoing president. Throughout his two terms in office, Bush has insisted the auto industry clean up its own mess (to be fair, Obama sang a very similar tune until he started campaigning through Michigan). Perhaps more tellingly, the Big Three were never included in the administration’s relaxing of environmental standards. Autos became subject to harsher greenhouse gas standards even as coal factories and other polluters flew under the radar. CAFE standards grew harsher even as drilling increased and inspections of refineries decreased.
None of this means the automakers’ woes are W’s fault. He was right (as was Obama) when he said GM, Ford and Chrysler needed to reduce their reliance on big gas-guzzlers. But this crisis – regardless of who or what caused it -presents our much maligned president perhaps his last best chance at improving his legacy. The idea of a bailout for the U.S. automakers is still largely unpopular outside of Detroit - where people are awaiting the government’s decision as a condemned prisoner might hold out hope for a stay of execution - but it will almost certainly be recognized as the right move in the long term, saving hundreds of thousands of jobs.
Latest indications on where Bush will fall are mixed. The treasury department rejected GM’s request for some of the $700 billion approved for banks. But industry analysts say discussions continue, and think there is consensus that something must be done.
“Neither the Obama team nor the Bush administration believes that you can just put this on hold for three months,” auto industry analyst Joe Phillippi told me last Wednesday, before GM released its even worse than expected losses.
Here’s to hoping Bush will make the right decision and make sure that the U.S. auto industry does not end with his presidency.