Three Points. We'll take them one at a time.
1. General Motors is unwilling or unable to make the sacrifices and changes necessary to re-establish its viability.
2. General Motors really is too big to just fail.
3. The failure of General Motors provides President-Elect Obama the perfect opportunity to begin the transition to a green collar economy.
GM wants $18 billion. But they are still essentially in denial. Here is the new Restructuring Plan for Long-Term Viability.
Tellingly, discussion of fuel economy doesn't begin in earnest until page 21. Once it begins the focus is on fatally flawed flex fuels.
6.4 Fuel Efficiency Improvements--General Motors today offers 20 models with 30 miles per gallon or more on the highway--more than any other manufacturer. General Motors is also the world leader in flex fuel technologies, with over 3 million flex fuel-equipped vehicles on U.S. roads today. Flex fuels represent the fastest way for the United States to reduce its dependence on imported oil.
This is false. Driving less and ratcheting CAFE standards up would both work better in the short-term. Running our vehicles on the electric grid is the only sustainable long-term solution.
Here is their plan for improving fuel efficiency (page 21):
Improving by less than 10 miles per gallon over a 12 year period does not cut it. We don't want a 300% increase in models we want a 300% increase in fuel economy.
Here they are admitting mistakes in one breath and passing the buck in the next.
While GM acknowledges that it has made mistakes in the past, the company has been pursuing a major transformation of its business model for the past several years, and accelerating its plans to produce more fuel-efficient vehicles. This transformation has consumed a substantial amount of resources and accounts for a major portion of GM's current financial leverage. At this juncture, the company would not require Government assistance were it not for the dramatic collapse of the U.S. economy, which has devastated the company's current revenues and liquidity.
GM has posted almost $73 billion in losses since the end of 2004. Via Emptywheel we also know that the mere possibility of a bankruptcy is costing the company significantly:
According to very recent market research (conducted by CNW Marketing Research), more than 30% of consumers who considered a GM vehicle and purchased a competitive product instead cited the possibility of GM bankruptcy as the top reason for not buying a GM product. This is more than double the percentage of the next highest reason.
Given their history of lying about climate change and fighting efficiency mandates at every opportunity, it is difficult to take this bit seriously.
General Motors will continue to support efforts to adopt consistent, long-term national policies to address energy security and climate change that help accelerate the adoption, by the consumer, of advanced vehicle technologies.
As I said, the bottom line: General Motors is unwilling or unable to make the sacrifices and changes necessary to re-establish its viability.
I'm not going to re-create the argument that General Motors is too big to fail. Regardless of the economic implications of a GM bankruptcy both Congressional leadership and the incoming administration seem intent on not letting it happen. Rather than just throwing money at this thing, I tend to agree with Ian Welsh:
The government needs to stop giving money without getting either control or a reasonable chance of repayment of the money. If it doesn't do so, it won't be able to fix the economy.
After lamenting the mistakes in the Citibank deal, he continues:
the simplest thing to do is just nationalize GM. Buy out the shareholders for the 3 billion their shares are worth, or hey, be generous and pay them double--6 billion. In the current context, that's not even real money. Get the best auto people in the world and have them go in and restructure GM. Spend the necessary money and make the necessary cuts. Restructure the company to serve America's interests--get the Volt working, increase mpg ratings, restructure the dealer network. Do it all. Fix the company and make it viable again. Then, once it's working again in a few years, start selling it back to the private sector. Do it right and the government will make a significant profit.
I agree wholeheartedly. I would go one step further and say President elect Obama should nationalize General Motors and use it as a vehicle for the green stimulus. Van Jones says it best:
What's the best way to give Americans of all socioeconomic backgrounds a tangible stake in fighting for issues like global warming?
Easy: Make it their livelihood. Every day, about 135 million people go to work in the U.S. Imagine what would happen if millions of those jobs--plus new ones created for people who are currently unemployed--were in fields like renewable energy, sustainable agriculture, and green building.
All signals point to Obama investing heavily in green collar jobs. The labor force and manufacturing capacity of GM provides a perfect springboard for a national green jobs initiative.
The green recovery report lays out six key elements of a green recovery package. In addition to manufacturing and selling a small fleet of electric and hybrid vehicles, these are the types of projects a radically transformed General Motors should be undertaking.
- Retrofitting buildings to improve energy efficiency
- Expanding mass transit and freight rail
- Constructing smart electrical grid transmission systems
- Wind power
- Solar power
- Next-generation biofuels
Update: As I finished writing this Michael Moore showed up on Countdown and echoed what Ian said. He put on quite a performance. I'll update with video/transcript later but here are a few approximate quotes I caught.
"Any money given to the current management is money that is just going to be flushed down the tubes."
"They've been having this problem now for 30 years."
"Why would we give them 18 billion when their total value is $3 billion."
"I'm sorry, but this car thing isn't working out, you've gotta build trains and subways and light rail."
Keith closed the segment by saying, "As always it makes great sense, let's see if it has any chance of happening."
Late update: Here is the Michael Moore transcript.