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Obama sent the auto industry reeling today when he suddenly ousted General Motors’ longtime chief executive G. Richard Wagoner Jr. and announced that GM and Chrysler will need to fulfill strict conditions to receive more of the federal aid that has been keeping them afloat. As Obama prepares to leave for a major overseas visit, he scores a 55 on the Change-o-Meter.
Obama’s tough-love policy for the automakers essentially asks all parties involved to suffer some substantial losses. The Wall Street Journal says the companies’ bondholders and lenders will be the “clearest losers” in this deal, as the government will pressure GM debtors to convert the money owed to them into undesirable company stock and anticipates “extinguishing the vast majority of [Chrysler’s] secured debt and all of its unsecured debt and equity.” Members of the United Autoworkers Union will have to convert some of their retiree benefits into stock, too.
But they don’t call it tough love for nothin’. A major shake-up of the companies’ structures is about the only thing that can feasibly rescue these two failing auto giants, and they sure didn’t appear to be making many lifesaving changes on their own. Given recent outrage over AIG bonuses from a public with a bad case of bailout fatigue, Obama couldn’t have picked a better time to make a show of forcing the resignation of a stalwart executive. Not that Wagoner didn’t deserve the sack. For pursuing a course that should hold automakers responsible for reform, Obama gets 40 points on the ‘Meter.
Meanwhile, Obama is preparing for a whirlwind tour of Europe, which guarantees equal helpings of criticism for his economic policies and the “O come let us adore him”-style crowds that turned out for his July trip to Germany. The tour will also include encounters with leaders whose countries have been at odds with U.S. foreign policy in the past, like Turkey and Russia. For preparing to engage with—and not just pooh-pooh—the criticisms of foreign friends and sometimes-foes alike, Obama gets five on the ‘Meter.
On Sunday, U.S. Secretary of Defense Robert Gates pretty much confirmed that the United States will do nothing militarily to deter the missile test launch North Korea has planned for next month. The ‘Meter thinks it’s best to refrain from showing U.S. strength until Kim Jong-il has something other to say than “na-na-na-na-boo-boo.” For this small but significant departure from pre-emptive plunges into international conflicts, the ‘Meter awards 10 points.
T here’s a lot to cover, so we want to hear your thoughts on what the Change-o-Meter should be taking into account. No detail is too small or wonky. E-mail may be quoted by name unless the writer stipulates otherwise.