Government Motors?

" GM might soon stand for government motors have the latest plan to save the carmaker goes through the US treasury could end up with a controlling interest in the company. By converting loans and equity. GM faces a June 1 deadline to cut debt and slash costs. Let's talk about it is this a good idea Douglas Holtz Aiken is a former director of the Congressional Budget Office he was a senior policy adviser for the McCain campaign. Robert Shapiro was undersecretary of commerce for economic affairs during the Clinton administration. Robert let's start with -- view under this plan as I understand it. The US government could end up owning basically 89%. Of General Motors is that a good thing."

" Well not the US government alone the US government plus a health care trust managed by the United Auto Workers. So the auto workers have also given enormous concessions in their health care plans. Together they would own about 89%. Is -- a good idea it's a dismal idea except for all the alternatives as Churchill famously said of democracy. The government is actually imposing on GM. Pressures which are leading to the kinds of restructuring that you would see in a normal bankruptcy. GM over the next two. Twelve months or so will shed 13 of its workforce will shed 28% of its plants. It's going to close the Pontiac line Saturn and Hummer are likely to follow 40% of its dealership network. GM it's already had fallen to number two in the world behind Toyota. By the end GM if it survives. Will probably be number three in the United States in four or five in the world which is where the performance actually the position its performance merits."

" You know Douglas. Win back in September October when people were saying you gotta bail out GM there are all these predictions and if you don't they're going to be huge job losses and plant closures and lions are disappearing. It sounds like that's happening anyway. It is happening anyway I think Robert Lexus more than I do bomb. You know that had President Obama run on a platform this that I want to deliver one car company to union ownership and -- taxpayer ownership we have all laughed but. That's exactly where we find ourselves right now and you have to ask what does it accomplish. The original justification for the government getting in this was well credit markets are all tied up -- you can't get auto loans -- just got to get him through. That in turn into no no they really need to restructure but we'll let the government do its are we going to do bankruptcy bankruptcy would. -- a lot of money for creditors and why jobs for the unions and be terribly painful for slot these factory towns. It's all happening anyway so what have we gained by having the government in the driver's seat. And in a way that no one likes I think they should be in chapter eleven and use normal bankruptcy procedures Robert the government often you know criticized for the way it basically runs and owns Amtrak. Is GM the next Amtrak."

" Let me try to explain the difference to dog. The differences is the difference between this process and the enormous crisis and economic catastrophe the last administration produced. By ignoring the impending. Bankruptcies of Bear Stearns more than a year ago and then Lehman Brothers. Rather than managing in an orderly way there are other downsizing or their failure. The difference between you're saying all of the Bush Administration. No what I'm saying is that it's the responsibility. Of the government to protect the overall economy from events which will have dire cascading affects across the economy. And it's a very small price to pay in order to. Protect the overall economy from another enormous blow to the confidence of the economy but also. GM like the financial giants. Operates a global network and so its failure has these. Very serious cascading effects that drive down the overall economy's well the responsibility. Of the government which the last administration ignored. With respect to the financial system. To protect. Americans not auto workers in the auto companies but all Americans from. The cascading effects. And on managed an abrupt failure in a company that. Operates an enormous global network."

" Obviously it's it's a huge story a huge issue we can't finish in the discussion today but we want to get you both back on another time. Robert Robert Shapiro Douglas -- Douglas failure the last word next time. Thank you -- think we."