Americans are still simmering about AIG’s misuse of bailout funds to give out employee bonuses, but when it comes to the bailed-out auto industry, the public may have reason to put down their pitchforks. President Barack Obama’s new tough-minded approach to dealing with the auto industry represents unprecedented government intervention in the private sector, but is the right way to make sure taxpayer money is being put to good use.
According to the findings of Obama’s auto task force, it has been determined that the current plans of both General Motors and Chrysler are ‘not viable.’ His plan for GM involves giving the company 60 days to significantly restructure, and if it doesn’t succeed, the administration will no longer provide GM with financial assistance. The administration is being even stricter with Chrysler, giving the company 30 days to reach a partnership agreement with the Italian auto company Fiat spA, or it will be lent no more government money.
Obama has finally struck the right balance between giving a hand to companies that are facing dire financial straits while preventing these companies from taking advantage of taxpayers. Unlike AIG and other major banking institutions, these auto companies are not ‘too big to fail,’ however, the government should do something to prevent thousands of Americans from losing their jobs if either auto company were to collapse. In rejecting GM and Chrysler’s request for billions in loans on top of the bailout they received last year, it is clear that the administration has realized that the American people will no longer tolerate their money being given away with no strings attached.
Many will argue that it is dangerous for the government to be interfering so heavily in the private sector, especially given how Obama essentially forced GM CEO Rick Wagoner to resign. Ordinarily, the government shouldn’t be telling private corporations what to do, but these are not ordinary economic conditions. There are billions of taxpayer dollars going to these companies that have been managing themselves poorly.’ With so many tax dollars being sent to these institutions, taxpayers have become equivalent to shareholders, and deserve a say in how their money is being spent. Therefore, it is not unreasonable for Obama to be taking these bold actions to hold GM and Chrysler accountable.
GM and Chrysler may not currently have a plan for their long-term future, but it is reassuring to know that Obama has one with specific deadlines and requirements instead of just talking points.
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