That Bush, man, he's a straight-shooter:
President Bush said General Motors Corp. and Ford Motor Co. should develop "a product that's relevant" rather than look to Washington for help with their heavy pension obligations, and hinted he would take a dim view of a government bailout of the struggling auto makers.
That's uh, fairly true. I mean, relevant may not be quite so sound an adjective as "good," but blaming GM and Ford for producing middling vehicles (at best) strikes me as a surprisingly honest statement in a debate that's spent a lot of time dancing around unpleasant truths. I own a Ford -- a Focus, in fact -- and that's quite the last time I'll buy domestic.
That's not to say health spending isn't a serious factor in their company's costs and they wouldn't be better off with universal insurance, but the domestic auto producers made a conscious decision to focus on fuel-guzzling muscle cars (and eventually, SUVs) while foreign companies lasered in on smaller, more technically elegant, environmentally friendly, and fuel-efficient compacts, and have now replicated the technologies perfect in the smaller cars across their fleets. Honda and Toyota, in fact, are light years ahead of Ford and GM in the next market, hybrids, while Detroit's behemoths keep promising to lead in the currently non-viable fuel cell market.
On a related note, Daniel Gross has an interesting capsule history of what happened last time the government did bail out a domestic auto producer:
President Bush may have only foggy memories of the late 1970s and early 1980s. But he might want to read up on what happened at Chrysler. The loan guarantees actually worked out quite well. Chrysler avoided Chapter 11, restructured many of its debts and got concessions form its workforce. Chrysler paid back the loans in 1983, seven years ahead of schedule. In exchange for the guarantees, taxpayers got warrants in the company, which it later sold at a nine-figure profit. Not bad for a bit of misguided industrial policy.
Interesting. I've argued that the government should effectively bail out Detroit by contracting out with domestic producers for a huge fleet of fuel efficient cars that could function as a ZipCar service for the poor, but that's sort of a different approach.
