The bankruptcy and government takeover of General Motors risk tens of billions of taxpayer dollars, jeopardize thousands of jobs at put the Obama administration in control of a major chunk of the economy. It is a terrible low for a company that once defined the American dream of upward mobility and symbolized a great nation's industrial might. But it is, at this point, the best of a host of bad options.
Simply allowing GM to fail would be a disaster both for the company's past and present workers and for the nation's manufacturing and technological capacity. And continuing to prop the company up with treasury loans would only have kept GM on life support without forcing it into the structural changes it needs to survive.
GM's immediate problems mirror those of the nation as a whole: skyrocketing health care and retirement costs, the struggle to define an affordable, sustainable energy future and the difficulty of innovating and competing in a rapidly changing global economy. Not only will the restructuring require a huge amount of cash - that's where we, the taxpayers, come in - but GM and its workers will also need to make painful sacrifices to overcome those problems and create a car company for the 21st century. To his credit, President Barack Obama is not skirting that fact.
In a news conference Monday, Mr. Obama said more hard times are coming for those who depend on GM - in job losses, plant closures and health care and retirement concessions. His administration appears determined to see GM emerge as quickly as possible from government control into a car company that can make a profit building safe, reliable, energy-efficient cars, not one that's dependent on moving millions of gas-guzzling SUVs.
Those are important and laudable goals, but also ones that show the difficulty and inherent contradictions in Mr. Obama's approach. The president said he wants the government to act as a "reluctant shareholder," one that does not intervene in GM's affairs except in the "most fundamental decisions."
But it's hard to know if the government will really be as hands-off as Mr. Obama promises if it comes time to close plants in political swing states, or if the new managers of GM decide that building the kinds of cars the administration wants is not in the company's best financial interests. At the root of many of GM's problems has been an attachment to the past and an unwillingness to adapt, and there exists a real danger that politically motivated leadership would perpetuate - or even worsen - that dynamic by protecting favored interests. After all, the only entity guaranteed to do a worse job of running GM than its current executives is Congress.
The takeover can work if the Obama administration acts on a broad scale to remove obstacles that have impeded GM in the past. It has already helped bring about concessions from the United Auto Workers union, and its recent accord on fuel efficiency standards will help set the stage for all auto manufacturers, not just GM, to build more environmentally friendly cars. Health care reform could also remove a huge burden for GM - and for Ford and Chrysler, too.
The task is not impossible. If the government really can make decisions based on what's needed to make GM the car company of the 21st century, and not based on politics, then the nation, General Motors and the communities that have long relied on the company for their prosperity can emerge stronger than they were before.
