…to the tune of some $16.6 billion more in federal aid. And along with that would come some belt tightening — or, perhaps more accurately, some corporate liposuction:
General Motors Corp. (GM) on Tuesday said it will need as much as $16.6 billion in additional aid from the U.S. government and could run out of money as soon as next month if it doesn’t receive at least some of that funding.
The largest U.S. auto maker, surviving on $13.4 billion in emergency loans granted in recent months, laid out a plan to close more factories, eliminate thousands of dealerships and slash 47,000 jobs this year around the world.
GM, however, said it failed to strike critical deals with the United Auto Workers union and bondholders to reduce labor costs and shrink its $47 billion debt load. Negotiations with both parties are expected to continue.
GM and Chrysler LLC, which received a $4 billion loan, faced a Tuesday deadline to submit viability plans intended to prove they could eventually stay afloat without government aid. Chrysler on Tuesday asked the U.S. government for $2 billion on top of the $7 billion it originally requested in December.
The deteriorating global economy has forced more-drastic measures to be implemented. U.S. sales in January fell well below the worst-case scenario GM laid out in its Dec. 2 request for funding. Meantime, global markets have weakened further with no signs of recovery.
Meanwhile, Chrysler is saying it needs $5 billion more in U.S. aid.
How will the public react? How will the government react? Blogosphere reaction has not been exactly favorable so far. A few reactions:
*Say Anything:
I’m not sure why the taxpayers or the government need to be involved in a restructuring of General Motors. Last week General Motors was talking about chapter 11 bankruptcy, something that would allow the company to restructure under the protection of bankruptcy laws? Why is that not good enough? Why do the taxpayers have to be on the hook for tens of billions of more in handouts, especially after the financial bailouts and the previous auto bailouts and the spending spree Obama and his fellow liberals just got passed into law?
I’ll tell you why it’s not good enough. Because chapter 11 bankruptcy would let General Motors re-negotiate all of its contracts with the unions. And Big Labor can’t have that. Much better to restructure under the guise of a government bailout where their paid-off Democrat buddies in Congress can help manipulate the proceedings to their benefit.
*The New York Times’ Room For Debate blog:
While many industry experts have long felt that the Detroit automakers were saddled with too many brands and too many models, lots of consumers have felt differently. Pontiac and Saturn have their loyalists. Why do brands still matter to consumers?
The Obama Administration is considering whether or not to continue helping the big auto companies stay afloat. We’ll have the plans shortly. But the headline very well may be that included in their plans for how they’ll get back to viability will be requests for more billions of taxpayer dollars. Do you think America should continue to prop up these companies? While you mull that over consider the counter argument — letting these companies go bankrupt will costs lots and lots of jobs, at a time when the economy is already on one knee.
Advocates of bailing out GM and Chrysler, and most likely Ford, say America can’t afford to lose “its” auto industry. But this argument leaves out the fact that foreign-owned automakers, already producing cars here in the United States, employ – directly or indirectly – hundreds of thousands of Americans. And at the rate the Big Three are shrinking, and plan to shrink even further — even if they get bailed out –foreign automakers may soon be employing more Americans than the Big Three.
Meanwhile, the Big Three themselves are global. A Pontiac G8 shipped by GM from Australia has less American content than a BMW X5 assembled in the United States. General Motors’ European subsidiaries include Opel and Saab; Ford’s include Volvo.
I’m not arguing against an auto bailout. But it ought to be focused on helping American auto workers rather than helping global auto companies headquartered in America. Why pay the Big Three billions of taxpayer dollars to stay afloat when, even after being bailed out, they cut tens of thousands of American jobs, slash wages, and shrink their American operations into small fractions of what they used to be?
Let them go bankrupt. We taxpayers are sick to death of paying for the mismanagement of the bankers and the automakers and the government. Let it crumble and once the devastation is over we can rebuild better, smarter, and stronger. Let the greedy reap what they’ve sown.
Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.