GM, Chrysler Task force: Big repairs needed for automakers
2/21/2009WASHINGTON - Leaders of President Obama's auto industry task force said yesterday that the industry urgently needs an overhaul.
The task force, led by Treasury Secretary Timothy Geithner and White House economic aide Larry Summers, met for the first time to review a multibillion-dollar bailout package given to General Motors Corp. and Chrysler LLC and requests for billions in more funding.
Mr. Geithner and Mr. Summers "emphasized the urgency of the issues affecting the American auto industry and the need for fundamental restructuring," the Treasury Department said.
The panel "discussed issues including financial and operational restructuring, improving competitiveness of wage and benefit structures, and progress toward creating clean, competitive cars of the future," the Treasury said.
Mr. Geithner and Mr. Summers asked panel experts for additional analysis and initial recommendations for the group's next meeting, which hasn't been announced.
In a related development, Mr. Obama rejected his transportation secretary's suggestion that the administration consider taxing motorists based on how many miles they drive instead of how much gasoline they buy.
"It is not and will not be the policy of the Obama Administration," White House Press Secretary Robert Gibbs told reporters, when asked for the President's thoughts about Transportation Secretary Ray LaHood's suggestion, raised in an interview a day earlier.
LaHood spokesman Lori Irving said that the secretary was speaking of the idea only in general terms, not as something being implemented as administration policy.
Mr. Obama formed the auto industry task force this week after deciding not to appoint a director to supervise the auto companies' restructuring.
General Motors Corp. and Chrysler LLC have received a combined $17.4 billion in federal loans and submitted requests on Tuesday for an additional $21.6 billion.
The new requests were included in progress reports required by the government.
The administration said the task force will be composed of other members of Mr. Obama's Cabinet including the secretaries of Transportation, Commerce, Labor, and Energy as well as the heads of the President's Council of Economic Advisers, Office of Management and Budget, Environmental Protection Agency, and the director of the White House Office of Energy and Climate Change.
Task force designees include Ron Bloom, a steelworkers union official and adviser to Mr. Geithner; Diana Farrell, Mr. Summers' deputy at the National Economic Council; Gene Sperling, a former White House economic adviser to President Bill Clinton, and Jared Bernstein, chief economist to Vice President Joe Biden.
They will work with GM and Chrysler, the United Auto Workers union, bondholders, suppliers, dealers, and others to force concessions and craft an overhaul of the companies by March 31.
If the companies fail to make a convincing case, the Obama Administration could pull the loans, which could force the companies into bankruptcy and threaten hundreds of thousands of jobs.
Rep. Sander Levin (D., Mich.) said this week that he believes the task force has enough time to review the plans and achieve results short of forcing the two into bankruptcy.
"There is time. I think what is happening is the closer we come to the cliff, the more determined everyone is to pitch in so we don't go over," he said.
Martin Zimmerman, a former Ford Motor Co. chief economist who teaches at the University of Michigan, said the panel will try to determine how the concessions will mesh with the companies' projections for market share, cost reductions, and changes to their distribution networks.
"The real issue is not every individual mark but the totality of the thing," Mr. Zimmerman said. "Does it make sense?"