Having ousted the CEO of America’s fourth-largest corporation this weekend, President Obama finds himself walking a tightrope between good stewardship and intrusive corporate boss.
For consumers, the president is balancing his stern tone toward General Motors Corp. and Chrysler LLC with trying not to destroy buyers’ interest in their cars. Meanwhile, for Wall Street Mr. Obama promised Monday he does not think the government should be running major corporations, even as he pushed Rick Wagoner out as chairman and CEO of GM.
“Let me be clear: The United States government has no interest in running GM. We have no intention of running GM,” the president said even as he announced government-imposed requirements on the two companies, such as forcing Chrysler to join with another company to become viable and requiring deeper cuts and debt restructuring from GM.
The White House wouldn’t say how Mr. Obama made the decision about Mr. Wagoner, and deflected questions about why he was ousted when executives at top investment banks that have also taken bailout funds are still in place.
Republicans charged Mr. Obama’s meddling in the economy reached new levels by removing Mr. Wagoner, which the Obama administration made part of the conditions for the company getting an extended lease on life. But Democrats said it was right for Mr. Obama to give GM and Chrysler another window to prove they can survive.
“When did the president become an expert in strategic corporate management?” said Rep. Tom Price, Georgia Republican and chairman of the conservative Republican Study Committee. “The federal government is famous for its mismanagement, yet this administration continues to demonstrate its certainty that Washington always knows best. The notion that the federal government is capable of dictating efficient business models for large global corporations is absurd.”
Sen. Bob Corker, Tennessee Republican, said the firing is “a sideshow” designed to convince the public the administration is making progress. But Mr. Corker said so far, Mr. Obama’s team has not been able to win any real concessions.
“The administration is hoping the media and the public will stay focused on Wagoner and fail to notice that negotiations have not progressed since December,” he said.
The White House said Mr. Wagoner’s firing should not be viewed as a precedent, but didn’t close to door to asking for management changes when the government gets involved.
Further blurring the line between stewardship and control, Mr. Obama seemed almost to be delivering an advertising campaign for American autos when he touted GM having the 2008 North American Car of the Year and pointed to Buick tying for first place as the most reliable car in the world.
And the president announced that in a bid to boost consumer confidence, the U.S. government will use taxpayer dollars to back warranties for cars sold by GM and Chrysler during the reorganization window.
Despite the critics’ questions, for now, Mr. Obama retains a free hand.
His administration says it has enough money under the Troubled Asset Relief Program to cover any of GM’s or Chrysler’s short-term needs, and Democrats appear ready to let the president continue to negotiate, even as they say government aid will have limits.
“I share the president’s commitment to these objectives, and commend his administration for showing a firm resolve in its negotiations with GM and Chrysler. We will not give these companies a blank check,” said Senate Majority Leader Harry Reid, Nevada Democrat.
• Andrea Billups in Detroit contributed to this report.