After more than half a century the biggest car manufacturer filed bankruptcy.The GM bailout probably will cost close to $100 billion, counting money from the governments of the U.S., Canada and Germany. The new company should emerge and be able to compete in the brutally competitive auto industry. Whether it will actually prosper is far less certain, but some things are beyond dispute. Bankruptcy didn’t have to happen and the fact that it did happen is incredibly sad given GM’s many contributions to American society and culture.
The question for Presidents George W. Bush and Barack Obama was whether to stand by and watch, or instead to use the public purse to shape the bankruptcies of both Chrysler and GM to mitigate the damage to a shaky U.S. economy. They intervened, which was the unpleasant but correct decision. Mr. Obama’s automotive task force has done its job pretty well, forcing the companies to make difficult decisions that they should have made themselves long ago. GM will shed four of its eight U.S. brands — Saab, Saturn, Pontiac and Hummer — thousands of dealers, 11 factories, and much of its debt. It is no small irony that a Democratic administration brought in a bunch of private-equity types to impose rational management on big business.