The Auto Writer

Barack Obama’s ascendancy to the role as America’s 44^th commander in chief is already underway with the president-elect meeting with advisers to help him choose his cabinet and to hammer out policy.

The leading issue of our day is the economy, with Obama left with the task of unraveling a mess that has built up over several years but came to a head this past September with the collapse of the stock market. Likely, when all is said and done trillions of dollars of taxpayer money will be spent to rescue banks, prop up home mortgages, and bail out much of the American automotive industry, perhaps having an impact on generations of Americans to come.

Heavy Lifting, Obama Style

Obama and the new Congress will be doing a lot of heavy lifting on behalf of the economy in the first few months of his Administration, pushing mostly everything else to the side. Indeed, the brain power that will be tapped to resolve the problems of the auto industry will
have little time to focus on much else, especially if the woes of Chrysler, General Motors, and Ford continue to worsen.

It is too early to tell just what kind of business climate an Obama presidency will help to create, notwithstanding his “Joe the Plumber” comments about spreading the wealth. This famous encounter involving an Ohio plumber revealed a side of Obama that many hadn’t known about previously – that Obama has no problem with taking from the pockets of one group of Americans and giving it to another group. Charges of “socialism” didn’t seem to bother the electorate who helped push Obama to a historic win.

With An Eye To Serving Two Terms

But, as elections come and elections go, what a candidate says on the campaign trail is often different from the policy implemented and for Obama, who has an eye on serving two full terms, his rightward shift likely has already begun.

Will Obama and Congress forsake the auto industry? Probably not, but a wholesale bail out with few strings attached doesn’t seem likely either.

Instead, Obama may go straight down the middle and craft something along these lines:

• General Motors will be allowed to purchase Chrysler, but in exchange for low cost loans, the automaker will be required to keep much of the automaker in tact, at least for the short term. A few factories will be closed from the outset and thousands of workers will be given golden parachutes, but the Obama Administration will stretch out layoffs and plant closings as long as it can. A bulky GM with eleven brands may seem ridiculous, but with government backing they’ll be able to pull it off.

• Ford may gain some key federal assistance as it renegotiates union contracts. Expect the UAW to be surprised that the Obama Administration isn’t as friendly as expected to the union, backing Ford management as the company seeks to find more favorable terms in which to operate. In a bid to save jobs, Congress will readily back whatever Obama plan is drafted — rust belt politicians may chaffe but they’ll have little choice but to go along with whatever is decided.

• Like it or not, the federal government will continue to push for stronger EPA regulations, but instead of offering unfunded mandates – such as requiring higher gas mileage without assistance – the feds will expand hybrid rebates and offer other incentives (or taxes) to compel drivers to switch to buying cars using other fuel sources. Expect virtually all vehicles to have a biofuel capability within the next three or four years.

The Economy, Courtesy Of The Democrats

Of course, if things get truly desperate, look for the Democrat Congress to clamor for even more extensive federal intervention which could put it at odds with the Obama Administration. If Obama goes too far to the left and the economy stalls, he’ll fuel a political backlash in 2010 that will undermine him. Everything that Obama does from this point forward will be under the leadership of the Democrats, something Republicans will quickly seize upon if things quickly worsen.

2009 promises to be a critical year for America’s auto industry, a year when automakers will regroup and move forward, or continue their slide to oblivion. Look for the Obama Administration to play a significant role in reshaping the industry, developing a comprehensive and far reaching plan that will be paid for with higher taxes and fees.