Out of time and fresh ideas, President Bush acted appropriately Friday to stave off the loss of millions of additional jobs during this economic crisis that shows no signs of easing. The president agreed to loan up to $17.4-billion to General Motors and Chrysler to enable them to avoid bankruptcy for the moment, and he gave them three months to come up with a viable plan to stay in business. It is the equivalent of a last-minute Hail Mary pass, and the automakers had better catch it.
The loans buy some time, but they will not buy salvation. They give GM and Chrysler one last chance to save themselves and their workers by cutting costs and planning for changes to their cars that should have been made long ago. They give a bit of breathing room to President-elect Barack Obama, who will not have the fate of the auto industry hanging over his head on his first day on the job in January. And they force auto companies and labor unions to make one last effort to work together on a realistic plan for survival.
The conditions Bush outlined are similar to those in the failed legislation that Congress should have approved. The money must be used to become more financially sound, new limits must be set on executive compensation, and the government must be allowed to examine the automakers' financial records. There will be no government car czar, thankfully, but Washington can block transactions of $100-million or more made by the companies. All of these provisions provide some reassurance that the public money will be properly spent.
The deal in Congress collapsed because Senate Republicans and labor unions could not agree on the terms of lowering labor costs. The stalemate benefited no one, and now Bush has made the tougher wage concessions sought by Republican senators part of the deal he announced Friday. The unions are in even weaker negotiating positions and would have been better off hammering out an agreement with Congress a week ago.
With no help from Congress and Christmas just days away, Bush dropped his opposition to using money from the Troubled Asset Relief Program, or TARP, that was originally aimed at propping up financial institutions. There will be plenty of debate about whether using the TARP money is proper, but there were no other viable choices.
As the president acknowledged, his unilateral action also raises more questions about the balance between allowing private enterprise to succeed or fail on its merits and government's role in maintaining a stable economy. Given the depth of the economic crisis, Bush said, allowing the automakers to go bankrupt and eliminate so many jobs is not a viable option.
The president made the right call. Yes, Chrysler or GM still could fail. But the loans give the automakers a shot at surviving and avoid an economic catastrophe for families and communities across the country — for now.