The New GM: Five Political Challenges

The economists and business writers will evaluate the GM restructuring with authority. From our vantage point, here are five political questions that the administration will no doubt be challenged by over the next few months.

1. Convincing the country that this restructuring -- and they'll call it a "restructuring" -- is an inevitable consequence of a process that began during the Bush administration. So far, the public seems to believe this, but the longer the government fiddles with the industry, the more Obama will be seen as the fiddler.



2. There is "an inevitable tension" between taxpayer protection and the length of the government's ownership, an administration official told reporters last night. Put plainly: the longer the government owns GM, the better the chance that taxpayers will see the money put in GM recouped.  (BTW: Bankruptcy is scheduled for "60 to 90 days."  It will most certainly take longer, perhaps even into 2010.)

3. In big companies with unions, it's not possible, really, to go through an orderly bankruptcy without involving the unions. The challenge for the administration: explain to Americans why the unions deserve the concessions they're getting and sell the concept that UAW has already given up a lot.  So far, the public, in an anti-corporate mood, is OK, but I suspect that since this issue still hasn't forced itself to the forefront of the public attention span, the public hasn't been given the chance to evaluate the deal on fairness terms. 

4. How hands-on will the government be? In theory, it'll leave all but the corporate governance decisions up to GM -- the nameplates to end, the dealerships to close, the shops to keep open etc -- but in practice, the government will have veto power, and will have the ability to help appoint a corporate board that reflects Obama's view of the economy.

5. What's happening to my warranty? No doubt that GM car owners will want to know the answer. The media will help by giving the government's answer:  nothing. It's still valid.  But there are lots of other consumer questions, like -- when GM closes dealerships and service centers and when associated manufacturers shut down, will it take longer -- and cost more -- to fix my car?  The answer is: yes.  (Here's a great Q and A on this subject.)