So is there another way to get to the same place? I think there is, but it will require the active involvement of both Congress and the new Obama administration. Think back to the Chrysler bailout in the 1980s. In return for legislation that gave the company a $1.5 billion federally guaranteed loan — the number seems so quaint now, like Dr. Evil demanding a $1 million ransom! — Chrysler had to obtain serious concessions from its union workers. The union had resisted Chrysler’s efforts to negotiate a new deal, but with the federal guarantee at stake, it relented.
There is no reason the government couldn’t do something similar now, though it would dangle a much larger loan agreement in return for much more radical changes. Someone in the Obama administration, with both business savvy and a suitably tough-minded approach, could bring together the parties, including the dealers, the union and the company. He (or she) could force the union and the company to renegotiate their contracts. With his input, Congress could perhaps pass a law that dealt with the state laws governing dealerships. (Or the government could pay off the dealers itself, instead of having G.M. do it.) He could sign off on plant closings. He could force the companies to come up with real plans that would return them to profitability. And in return, the government would make federal loans that would give them the breathing room they need.
Come to think of it, this would be a perfect first job for Lawrence Summers, who is expected to become an economic adviser to the president-elect. If he can’t knock these heads together, nobody can.
