Aw, Forget The Headline, GM Can't Afford It

So Congress has for the moment told the auto companies to drop dead--and that's after Nancy Pelosi's half hearted claim that bankruptcy wasn't an option. A few days ago in this story for The Big Money I wrote about how the crisis in Detroit gave ideologues on both sides--right wingers who hate unions and left wingers who hate big cars--a chance to remake the auto industry in their preferred image. I'm not sure there's much to add now: is it any wonder that the deal fell apart when it goes straight to the most fiercely held fixed ideas on both sides? You can't really split this baby in half.

There is one thing that both sides have right: the "other guy's plan" sucks because both plans suck. Yes, we can let them rot and go bankrupt. But then who's going to figure out what to do with their laid off workers and busted pension plans? Or, yes, we can mandate that they limit their production to compact hybrids. With gas back down below two dollars a gallon, there's no need to worry: if Ford stops building F150s, Toyota can pick up the slack with the Tundra. I said a few weeks ago that with the auto industry in the shape it was in, the federal government couldn't ignore the "battleground state" of Michigan once the election was over. I was wrong.