The pleas have already started for Obama to move swiftly to speed such things as a merger between General Motors and Chrysler. GM must get government aid because "time is very short," Roger Altman, the former treasury official advising GM in its talks with Chrysler, told Bloomberg. "The consequences of a collapse by GM or all three could be very severe," he said.
General Motors issued a statement on the "historic win," saying that Obama "will assume office at an extraordinary time, with a number of national priorities that will require his and Congress' immediate attention." "GM welcomes President-elect Obama's pledge to support our nation's domestic auto industry in its ongoing efforts to transform its business and develop new technologies. This support comes at an especially critical time as our industry confronts one of the most difficult economic periods in our nation's history, caused by the global financial crisis. And this support will enable a competitive U.S. industry to contribute significantly to our nation's economic revival, in employment, technology, energy security, and other important areas."
Financier Wilbur Ross told CNBC.com that Obama should pump money into Detroit immediately to stave off disaster. Ross said GM and Chrysler "need something like $10 billion to pay the one-time cost of merging, that's a very cheap investment." GM asked the government for about $10 billion last month, but was turned down.
Stability for the auto industry would have a ripple effect throughout the economy. "I can't imagine a cheaper way to protect a very, very large number of jobs," Ross added.
But not all of the pundits are pressing for help for Detroit. In an e-mail message received by Inside Line on Wednesday entitled "Obama's First Moves," analyst Peter Morici warns against "an ill-conceived merger" between GM and Chrysler. "The unfolding mess at AIG should indicate that giving broken institutions cash without compelling meaningful changes in management strategy and compensation incentives for executives does not generate results," said Morici, a professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission.
Prior to his win, Obama had promised to help Ford, GM and Chrysler by doubling a recently approved loan program to $50 billion to help the auto industry develop more fuel-efficient vehicles. During his campaign, Obama said he wanted to put at least 1 million plug-in hybrid vehicles on the road by 2015. He also said he would give consumers who buy such vehicles a $7,000 tax credit.
Inside Line says: Detroit appears to have a strong ally in Barack Obama. But can it survive the interregnum? — Anita Lienert, Correspondent
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