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Hurry or We’ll . . . We’ll. . . Just Hurry!

The car companies are pulling the now familiar hold up routine: Give us the money or else! And in fact we have to do it so fast, before their plans are fully spelled out, or something really bad will happen.

But this is sophistry, as others have figured out:

GM posits this $30 billion against what it says would be a $100 billion tab for bankruptcy financing, a figure calculated to frighten the Obama Administration into doubling down on the $13.4 billion already lent to GM in December. Predictably, however, the latest plans defer most of the hardest decisions about labor costs and retiree benefits. The United Auto Workers are right to look askance at retiree benefit contributions made in company stock at a time when it isn’t clear that the stock is worth much anyway. Likewise for bondholders, who are being asked to agree to a debt-for-equity swap to cut GM’s debt load by two-thirds.

The Obama Administration, meanwhile, has junked the idea of a car czar, perhaps because there’s no one willing to live that political nightmare. That alone should tell the Administration something. As long as this remains a political workout instead of a financial one, GM, Chrysler and the UAW will continue to postpone the hard choices. Only bankruptcy, painful as it may be, offers the tools and legal authority needed to force all stakeholders to change the habits that brought the companies to this ebb.

But, no, I don’t see this happening. The Obama administration seems no more courageous than the Bush team and no more willing to defend the taxpayers. No demand on the taxpayers is deemed too outrageous, even when it comes to Chrysler (which as, Paul Ingrassia explains, requires “constant government subsidies” and is demanding money “that neither Chrysler’s private-equity owners nor Fiat, which would get 35% of Chrysler’s stock, are willing to provide”).

It doesn’t take an “inter-agency task force” to say “no.” So I suspect we are in for the long haul –  spending tens if not hundreds of billions on a failed industry which employs fewer and fewer people. If there is a worse use of taxpayers’ money than the stimulus plan this is it.


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