Obama Auto Task Force Leaves a Door Open for Chrysler, GM

Instead of a flat yes or no, the president’s auto task force shook the Magic Eight Ball of Washington politics and came up with a carefully crafted, “Ask Again Later.”

To be sure, there’s a flat “no” in the task force’s report submitted yesterday, March 30, in answer to the question whether Chrysler and GM submitted viable plans last month for returning to profitability.

What the auto task force did not do, even though it could have under the rules set down by the Bush Administration, was demand immediate payment of the government loans Chrysler and GM have already received. That would drive the companies straight into bankruptcy.

Instead, the task force gives Chrysler and GM more time to come back with yet another restructuring plan.

Love it or hate it, the response is good political gamesmanship. It’s all upside for President Obama. Everybody knows, it’s easier to start out tough and then ease up than it is the other way around.

In short, the task force said that the plans from Chrysler and GM don’t go far enough, don’t cut deep enough, don’t sufficiently take into account how low demand is and how thin profits are likely to be. The task force also rejects Chrysler’s sunny assessment that Chrysler can be viable as a standalone company.

“Based on extensive analysis and the advice of a range of financial and industry advisors, the Administration has determined that GM has not presented a viable plan that would succeed, even in an improved economic environment,” the task force report said.

“While GM has made progress in its turnaround to date, GM’s current plan will not result in a healthy company that is meaningfully cash flow positive in a normalized business environment and thus able to support its operations and obligations without continued government support,” it said.

Chrysler got a similar ruling, with additional remarks about the need for a partner, such as Fiat.

What’s slick about the task force’s “Ask Again Later” response is that if the companies end up in bankruptcy anyway, based on his tough initial response, Obama can say, “I told you so,” that the initial restructuring plans weren’t tough enough. If the companies pull through, he can take credit for being tough with the auto companies, and take credit for nursing them back to health, at the same time.

Photo: White House