For many Americans of a certain age, the notion of General Motors going bankrupt in their lifetime was unthinkable.
But GM did file for Chapter 11 bankruptcy protection yesterday, and the federal government stepped in to claim a 60 percent ownership stake in the automaker. Once again, taxpayers were required to come to the rescue of private industry.
This painful development was a long time coming. Shortsighted management, poor-quality cars, and bloated union costs have been slowly dooming the company for years.
And the pain isn't over yet. GM plans to eliminate an additional 21,000 jobs (about 34 percent of its workforce) and close 2,600 dealerships.
It will close nine plants, including the Boxwood Road plant near Wilmington, Del., where 450 autoworkers will lose their jobs. At its peak, the Wilmington factory employed about 2,000 workers.
The government's propping up of GM is the best of a bad set of options. To simply walk away from the auto giant in the midst of this severe recession would be an even bigger blow to the economy. The lost wages and disruption among makers of car parts would have staggered a wide swath of the nation.
Now that taxpayers own GM to the tune of $50 billion, the challenge for the federal government will be to give the restructured automaker the best chance to succeed. That means Washington shouldn't try to micro-manage GM. President Obama said he understands this concept. He promised a "hands-off" approach.
"What I am not doing, what I have no interest in doing, is running GM," Obama said. "Our goal is to help GM get back on its feet ... and get out quickly."
But will Congress get the message? This deal could be undermined if lawmakers get into the act to stop plant closings, much as they fight to save military bases that the Pentagon wants to close. Policymakers must have the sense to let auto executives run the auto company.
Will the new auto executives run GM any better than the deposed ones? That's no guarantee, either. This is truly the company's last chance, and they must treat it as such.
The unions, too, must continue to recognize that their costs need to be trimmed if GM is to become competitive again. The United Auto Workers did give GM a new deal last week with concessions that should put the company on more level footing with Toyota and Honda. With the agreement, GM will be able to cut overtime, supplemental employment, and other costs by about $1.5 billion per year.