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Barack and Me

We've agreed that keeping dying companies on life support isn't the solution. But when it comes to creating a plan for what happens next to the workers we also have no solution.
Image: General Motors workers leave the GM Powertrain Plant
But in picking the winners of the automobile industry, the government is also picking the winners and losers of the national economy. Where will auto workers wind up?Bill Pugliano / Getty Images file
/ Source: The Big Money

Does anyone still remember "Roger and Me?" Michael Moore's 1989 film chronicled the filmmaker's attempts to interview GM Chairman Roger Smith, whose efforts to streamline and downsize had shattered GM's hometown of Flint, Mich. Back then, shutting down plants, cutting benefits, and throwing workers on the proverbial street was depicted as the epitome of corporate heartlessness and greed.

Now it is the policy of the Obama administration. Twenty years after "Roger and Me," we are all heartless capitalists. We want efficiency, viability, and fast results, and we're not going to fritter away tens of billions of taxpayers dollars waiting for them. We've agreed that keeping dying companies on life support isn't the solution. But when it comes to creating a plan for what happens next to the workers displaced in the process, we are every bit as lacking in ideas as Roger Smith ever was.

General Motors is in as bad a position as you can imagine. You've read about GM's enormous losses — last year, they came out to about $14,560 for every single employee. The further you drill down into General Motors, the worse it looks. Numbers make the point more efficiently than words. Since last year, GM's U.S. sales are down an amazing 55 percent. Its production is down 61 percent. Its production of passenger cars is down 71 percent. (You won't find that number in GM's monthly sales figures; you need to do some math to get to that level of dreariness.) Even if GM made no more vehicles, the ones standing on dealers' lots right now would cover all of GM's sales for 161 days.

We've been told over and over again that the government doesn't want to run the U.S. auto companies, but what the government is doing is no different from what any buyout fund — such as Cerberus, which bought, to its regret, the equally hopeless Chrysler — would do. It is insisting on radical restructuring (the president used the words restructure or restructuring 10 times in Monday's address), a word that everyone understands translates to shutdowns and layoffs.

Ironically, that's what Wagoner, Roger Smith's successor, showed himself unable to do. Just last month, Wagoner announced a plan — selling Saab, shutting Saturn — that made the cliché about shuffling deck chairs on the Titanic almost unavoidable. In a month in which GM's truck business tanked and its passenger car business essentially disappeared — it sold a mere 37,000 cars in the United States in February, many of those to fleet operators — Wagoner talked, incredibly, about GM's commitment to the Pontiac nameplate.

Everyone now sees that what's in question now isn't the survival of Pontiac but the survival of GM — which at best will exist only in a substantially diminished form. There is no room anymore for three American automakers each building a full line of cars and trucks. And while the hopeful talk is about GM re-engineering for a new bright future of fuel-efficient and hybrid vehicles, the numbers tell a different story, with GM's total hybrid sales in one month running at a pathetic 1,087 cars and trucks, about one-seventh of Toyota's Prius sales. Sales for the new hybrid Sierra and Silverado hybrid models? Seven.

For the auto industry, the basic outlines of the restructuring that the Obama administration sees are becoming clear. For Chrysler, the hoped-for future is that Fiat takes it over and turns it into maker of European-style small cars for the American market. For GM, on the other hand, it will be — if not immediately then next year or the year after — goodbye to the passenger-car market. Not just no more Pontiac, but no more Buick and no more Cadillac and no more Chevy cars. That's what restructuring means: picking the winners and cutting the losers loose.

But in picking the winners of the automobile industry, the government is also picking the winners and losers of the national economy. And it's very clear who the losers are: It is the same autoworkers and their families who were the losers in "Roger and Me." Who have been the losers for decades, as the slow drain of the auto industry has sapped the benefits, wages, and, most important, the job prospects of the people who depended on the mid-20th-century industrial economy.

What does the Obama plan hold for them? Only the most amorphous of promises. In his speech today, Obama announced the appointment of a new "director of recovery for auto community and workers" — a title as long as the demands of its holder are vague. His job will be to direct a "comprehensive effort that will help lift up the hardest hit areas by using the unprecedented levels of funding available ... to create new manufacturing jobs and new businesses where they are needed most." Comprehensive, unprecedented, jobs: the words are there, but the plan is not.

The horrifically intractable problem of what to do with displaced workers is a big part of what has prevented the rebuilding of the U.S. auto industry for years. Workers have been offered buyout after buyout, and still many have chosen to hold on — to hold on even when "keeping their jobs" meant going to a grim cafeteria and doing nothing, rather than forfeit what is likely to be the last decent paycheck they get in their lives. "Restructuring" means that we have reached the endgame here. The administration has said, in effect, that it will no longer expect, or even allow, the auto companies to subsidize the failing rust belt economy.

What will determine the success of the Obama plan is not whether General Motors or Chrysler survive as going concerns. GM will in some form, Chrysler may not. The responsibility of government, however, is not to keep any particular company running. It is to keep the workers of the auto industry employed, and so far there is no plan. We'll hear about money for "education" and "retraining." But right now we have no answer for the autoworker who asks, "Retraining for what?" Retraining without the real prospect of jobs is a false hope that has been held out to autoworkers for years.

As the administration calls for radical innovation in the auto industry, it seems only fair to ask whether there will be equally radical innovation in government to accompany it. Just as the auto industry has put off "hard choices" (everyone's favorite words now) for years, so has the government. Training workers and the occasional tax subsidy are not even close to what Michigan needs. Michigan's problems are not unique. They are common to almost every one of the West's older industrial areas — from Slovakia to Saab's home on the west coast of Sweden. Yet so far no one anywhere has advanced a meaningful solution.

That's the real problem the administration faces. What will a solution look like? It will almost certainly have to involve major subsidies for the new industries to locate in the worst hit regions of the country (and that will mean making sure the new employers hire ex-union workers, as many new concerns have been unwilling to do). It will hopefully involve a real effort to transform major universities like the University of Michigan into tech-industry centers; they will never be Silicon Valley, but they can be small tech centers of the kind that have developed around Boston and Los Angeles.

It could involve the creation of government jobs — if we are to have a national health care plan, who says that its administrators and employees have to be based in Washington? And painful as this may be, a truly realistic plan would likely need relocation assistance, too, for people to move to areas of the country where the prospects are better.

The economy of the auto belt will shrink. That is a given. The question is how it will weather that shrinking with a minimum of pain. The Obama administration has taken the problem of answering that out of Rick Wagoner's hands. For this, maybe he should be grateful. Because if there's no answer, Michael Moore, or someone like him, won't be knocking on GM's door to find out why. He'll be knocking at the door of the White House.