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E.J. Dionne

Overhaul the Big 3

WASHINGTON — It was a terrible omen: At the end of November, just as the American car industry was hitting a wall, my dear Saturn was totaled, around midnight, in front of my house.

Fortunately, no one was hurt. But it was the end of my 15-year relationship with "a different kind of company, a different kind of car." Like many Saturn loyalists, I was attracted to an excellent car made by members of the United Auto Workers under rules giving employees more responsibility. The approach was supposed to mark a new departure in the way General Motors made cars.

And now, it has come to this: Saturn dealers, who expect to be cut loose by GM as it folds the brand, are talking about selling cars produced by Indian or Chinese manufacturers as "Saturns" — not what we original devotees had in mind.

This story captures the dilemma confronting the Obama administration as it struggles to work out a plan to salvage the unionized car companies, most of them based in Detroit.

No matter what the administration does, the days of an American car industry that could support highly paid assembly line jobs with exceptional benefits are over. As someone who has seen the givebacks that the UAW is offering the car companies put it: "It's not progress, it's heartbreak." The dream that blue-collar work could provide a better-than-decent living is dying.

That does not settle the issue facing the president. There are many reasons why it makes sense to prop up our homegrown auto companies. The most important is that allowing GM and Chrysler to go bankrupt could be a triggering event that might make a very bad economy much worse.

On the upside, the industry is on the verge of breakthroughs in producing cleaner, more fuel-efficient cars. It is not in the country's interest to let its core companies go under before that new competition begins in earnest.

And the trouble facing our once Big Three — and it should be said that Ford, for now, is in better shape than GM or Chrysler — is not simply the result of their own well-documented mistakes but also of a sudden one-two punch. The American industry was leaning too heavily on gas-guzzlers when high oil prices hit this summer, and then came the credit squeeze. This has been especially damaging to car sales because they rely so much on consumer loans. A rare constellation of events should not be permitted to knock out such a large part of the country's Midwestern industrial base.

But how much taxpayer money should be put at risk, and how much of the old industry can be saved? The administration is searching for a midpoint between indefinite subsidies and bankruptcy, and Obama has taken control of the issue, having rejected the zany idea that our government needed a car czar. As one administration official put it, "The notion that President Obama was going to outsource decisions involving tens of billions of dollars of taxpayer money never made sense."

Here's the problem: While indefinite subsidies or sending the companies into bankruptcy are both flawed ideas, they are at least straightforward choices. Everything else is complicated.

The unions have made enormous concessions, and dealers are likely to do the same. But how hard a bargain will the banks and the bondholders drive? Will banks now being subsidized by the federal government make life difficult for the car companies being subsidized by the very same government? Do the taxpayers get nailed at both ends?

Free-market advocates would argue that such agonizing complexities inevitably arise once the government gets deeply enmeshed in the workings of the market. True, but I'd still rather accept the messiness involved in giving Detroit one more chance than risk the human and financial costs of letting the domestic auto industry implode.

I've put my own money where my columnist's mouth is. With my Saturn interred, I am now the proud owner of a 2009 Chevy Malibu LTZ. It is one of GM's comeback cars and the reviewers say it is thoroughly competitive with the Honda Accord and the Toyota Camry.

I'll never feel quite the same way about the Malibu as I did about my Saturn, even though the LTZ is a much nicer car. But as long as GM stays unionized, I'll drive with a clear conscience.

E.J. Dionne's e-mail address is postchat@aol.com.

© Washington Post Writers Group

Overhaul the Big 3 02/19/09 [Last modified: Thursday, February 19, 2009 1:00am]

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