DETROIT FREE PRESS: President Barack Obama took charge of Detroit’s auto industry Monday, vowing to
transform it into a world leader in fuel-efficient vehicles — but demanding a plan of action within two months. Obama compared the decline of Detroit to a natural disaster, saying it deserved the same kind of emergency attention. But he warned that, within 60 days, General Motors Corp. and Chrysler LLC would either be on a path to independence or on their way out. MORE
NEW YORK TIMES: President Obama struck an acceptable compromise on Monday between two unappealing options: letting General Motors and Chrysler go bankrupt right away or giving them tens of billions of dollars more while hoping for the best. Instead, he decided to finance their operations for just a matter of weeks while forcing them to come up with a better plan to overhaul their businesses.Now that the government is in control of the process, it must stick to its stated objectives and deadlines. If Chrysler can’t reach an acceptable merger deal with Italy’s Fiat in a month, the government must let go, even if this means certain liquidation. MORE
CONSUMER REPORTS: Clearly, $56.1 billion is a lot of money. That’s what General Motors and Chrysler say they will need to stay afloat through 2012. They say getting government loans to see them through their restructuring will cost less than if the government had to finance bankruptcies for the companies. So we decided to see what taxpayers would have to contribute to keep the companies solvent.Citizens for Tax Justice, a taxpayer watchdog group, says there are 117 million taxpayers in the United States—a figure the IRS struggled to provide. Using that number, GM’s $22.5 billion bailout proposal would “cost” each of those taxpayers $192.31, or that is effectively their contribution to the aid. The company said it might need an extra $8 billion, by 2014, which would bring the tab to $260.68 per. So much for that new iPod Touch. Adding in the cost to bail out GMAC, GM’s former finance company would bring the total to $303.42. No songs for the iPod for a while, either. And that’s before we get to Chrysler. Chrysler has asked for $9 billion, and its finance arm, Chrysler Financial, received another $1.5 billion in December. (In its plan, Chrysler says Chrysler Financial needs more money, but didn’t specify how much, so we’ll just count the $1.5 billion.) That amounts to another $89.74, or a total of $393.16 counting GM’s bigger potential need. Counting the $18.1 billion auto parts suppliers have asked for brings the total to $547.86. MORE
LOS ANGELES TIMES: President Obama’s plan to save failing U.S. automakers — and make them the instruments for creating a cleaner, greener transportation system — marked a major step across the line that traditionally separates government from private industry. His announcement Monday of a new position on bailing out Detroit went beyond a desire to be sure tax dollars were not wasted in bailing out struggling companies. It put the Obama administration squarely in the position of adopting a so-called industrial policy, in which government officials, not business executives or the free market, decided what kinds of products a company would make and how it would chart its future. His automotive task force concluded, for example, that the Chevy Volt, the electric car being developed by General Motors Corp., would be too expensive to survive in the marketplace. It declared that GM was still relying too much on high-margin trucks and SUVs, and that Chrysler’s best hope was to merge with a foreign automaker, Fiat. Judgments like those are usually rendered in corporate boardrooms or announced in quarterly reports. But this time they were coming directly from the White House. MORE