What's good for GM is good for the country, and vice versa (pace Charlie Wilson)

General Motors drove itself into a deep ditch after a decade and more of bad product strategy. Should the federal government haul it out with a multibillion-dollar bailout?

For both short- and long-term reasons, the answer has to be yes.

Without more federal aid -- the company is seeking $25 billion in loans on top of billions already approved by Congress for retooling -- GM very likely will be forced into bankruptcy. The Washington Post's savvy, Pulitzer prize-winning business columnist Steven Pearlstein contended recently that "pre-packaged bankruptcy" would actually help put GM back on a path to stability. But many experts who follow Detroit closely -- more closely than Pearlstein -- agree bankruptcy would have disastrous consequences -- not just for the whiplashed U.S. auto industry but the reeling national economy. My initial impulse was to punish GM for its bad product decisions. But think back to investment banker Lehman Brothers' bankruptcy in September. More than any other single event, that hasty U.S.-decreed liquidation triggered the financial crisis that went global within days.

Pearlstein argues that a bankruptcy judge could quickly dismantle GM's obligations to the United Auto Workers. But GM has already offloaded $51 billion in retiree health-care obligations, and by 2010 it will start saving billions more with implementation of its two-tier, union-approved compensation schedule that halves hourly wages for production workers and slashes fringe benefits. Together, the two moves lower per-car production costs by close to $3,000.

That cost reduction, plus GM's continuing strong gains in productivity, plus retooling for higher-mileage cars and trucks (including super-hybrid electric "plug-ins"), should, finally, put the company in the same market fast lane as Toyota and other internationals that build vehicles in the U.S. But GM needs a $25 billion bridge to get to the turnaround year of 2010.

That doesn't mean that the federal government should just drop $25 billion in GM's lap. The loan should be accompanied by conditions -- not ones that encourage bureaucratic meddling, but promote the long-term health of the huge auto-related industry in Detroit, the tri-state area of Michigan, Ohio and Indiana, and throughout the U.S.

The conditions should ensure that GM implement its public pledges to pursue fuel-cell propulsion systems and the all-electric vehicle, and, shorter term, accelerate production of a stable of "plug-ins" (beyond the Chevy Volt due out in 2010) that would be transitional to the completely electrified car. The U.S. should also demand that Michigan take immediate steps to increase the number of new state engineering students, which was down more than 13% between 2000 and 2007, as mass boomer retirements were leaving big gaps among those critically important knowledge workers. These conditions should be prominently folded into President-elect Obama's strategy to produce 5 million "green collar" jobs over the next decade.

The demand for cars won't disappear with petroleum reserves. Beth Lowery, GM's vice president for environment, energy and safety policy, says global ownership by 2020 will increase to over 1 billion vehicles from the current 820 million. Many of those extra 180 million vehicles will be "green" ones. Most of them will be produced by international makers if GM goes under or is crippled by bankruptcy. The end result would do far more than mar the prestige of the U.S. as an industrial giant. It would devastate this country's ability to keep its already precarious technological lead as industries and entire national economies struggle to make the all-important transition to a post-petroleum future.

We should be careful that any damning epitaph we wish to chisel for GM doesn't become an RIP for the entire American economy.

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Postscript: For what "Engine Charlie" Wilson, the president of GM who became Dwight Eisenhower's secretary of defense, was famously misquoted saying at his confirmation hearing, check out his obituary from Time magazine.

Tuesday's turnout sets record, with more than 133M casting ballots

The drive to register voters, particularly young ones, apparently paid off. Tuesday's turnout was 133,275,000, smashing the record of 122 million voters set in 2004. Tuesday's turnout percentage of eligible voters -- 62.6% -- was the highest since the election of 1964 -- 62.8%.

Obama, JFK, the Chicago riots -- and the two Richard Daleys

To appreciate how much America has changed, look at these two images of Chicago police reacting to groups expressing their political views. The first image (from the Chicago Tribune) shows an officer autographing the T-shirt of a participant during Barack Obama's victory celebration at Grant Park. The second image shows police autographing protesters' heads during a protest outside the Democratic National Convention in 1968 that rammed through the nomination of Hubert Humphrey, who chose to support Lyndon Johnson's prosecution of the Vietnam war against the opposition of many Democratic delegates.

The Chicago mayor on Obama's victory night was Richard M. Daley. Forty years ago the mayor was his father, Richard J. Daley. The current Mayor Daley is a huge supporter of Obama, and helped pave the way for his political success (even while the impatient Obama pushed boldly against the levers of Daley's Chicago machine). Daley's father was a staunch supporter of John F. Kennedy, and unquestionably helped Kennedy squeak to victory over Richard Nixon in the extremely close 1960 presidential election, where Illinois put JFK over the top. Eight years later the senior Daley encouraged the excesses of the anti-Vietnam movement by running the Democratic convention like the boss he was of his city and overreacting to the the Yippies and other anti-war protesters who decided to draw their line in the sand as Humphrey's nomination was rammed against antiwar candidate Eugene McCarthy.

Historians will argue over whether the Boss Daley of 1968 could have prevented the head-crunching protests that besmirched his and his city's name. When I look at the slideshow of the Grant Park Obama victory celebration decreed by his son, I marvel how times could change so epochally within two generations in one geographical space.

Of course Obama is pivotally in the middle of this sea change.

Obama's election and the swing of history's hinge

Last night America stepped into a new era. It was a sure step, accompanied by 52% of voters casting their ballots for Barack ("Yes, we can") Obama. Many forces came together to swing this hinge of history, but the biggest push came from the junior Senator from Illinois who in January will be the 46th President.

For many people, in the U.S. and in other countries, Obama fulfills their so-often-frustrated hopes -- for a more harmonious world, for racial reconciliation, for anything and everything that helps us see that each of us is part of a human community that is as small as our family and friends and big as the world.

In their speeches last night, Obama and John McCain recognized that elemental truth, each in his own way.

Let's hope what they said continues to echo, particularly in Washington, and starting on Jan. 20, 2009.

Wall Street's "raging bull" calls for tough reform of outdated global financial system

This is the best proposal I've seen for reforming a 21st century financial system that's regulated by 20th century rules. It comes from Stephen Schwarzman, the high-living founder and CEO of the global private equity firm Blackstone Group. When Schwarzman emphasizes the need for transparency and more and centralized regulation in today's often-opaque system of financial instruments, he knows whereof he speaks. Blackstone, among other things, manages hedge funds, the secretive, little-regulated entities in which the very rich invest ("speculate" might be a better description). Highly leveraged hedge funds are part of the global financial web that's been snapping strand by strand. I notice that Securities and Exchange Commission Chairman Christopher Cox makes a similar case for transparency and centralized regulation in an op-ed article in the Washington Post. But the call for reform means more coming from the Wall Street player who happily describes himself as the "raging bull" of private equity -- Stephen Schwarzman.

The final hours of the McCain-Obama campaign: Closing thoughts

Some last pre-election thoughts:

* McCain was (mis-) served by a team of small minds and hacks who created a campaign cutout McCain who was a pale shadow of the McCain who became an admired national political figure. The cutout McCain chose Palin as VP candidate, did a closely watched pratfall when the financial crisis burst open, and spent the critical last weeks of the campaign throwing futile glancing blows at his agile opponent.

* Obama got a huge boost from the financial crisis, which, following historical precedent, would be blamed on Republicans, including maverick McCain.

* The press was indeed biased toward Obama. It did not, for example, get to the root of how Obama could maintain that he himself had never heard his pastor, Jeremiah Wright, deliver wild invective from the pulpit (e.g., "God damn America!"), even though he sat in the pew of Wright's church for 20 years' worth of sermons (the most damning of them available for purchase in the church gift shop).

* Obama developed and sustained a powerful tax message ("Everybody making less than $250,000 a year won't pay a dime more in taxes") that made more sense than McCain's frantic "Joe the Plumber" message based on the hypothetical huh? threat from Obama's plan to raise the tax on present $40,000 earners when their income exceeded $250,000.

* Obama, whatever his weaknesses in experience, was seen as a young, temperamentally steady leader, while McCain was seen as an old, temperamental maverick.

* The electorate, even die-hard Republicans, was fed up with the Bush administration. Any Republican would have had an enormous handicap trying to overcome that eight-year legacy. Obama couldn't help benefit from the GOP wreckage. But wouldn't any other Democrat, particularly Hillary Clinton, have achieved the same? Maybe. Possibly. We'll never know for certain.

Election Day question: Will mathematical odds prevail over volatile feelings?

The polls point toward an Obama victory. But what if the polls are wrong, asks Slate's John Dickerson. The most famous wrong poll, of course, was Gallup's in 1948, which said Dewey would defeat Truman. But Gallup's last tracking in the 1948 race was more than a week before the election, after which Truman gained a lot of ground and, of course, ended up winning.

Sixty years later, polls are more finely tuned. There are also more of them, and they track opinion closer to the Election Day. Still, Obama has not succeeded in pushing his percentage that much above 50% -- except in the last Gallup poll -- from Nov. 2 -- where he is given a 55 to to 44 lead when undecided votes are allocated.

McCain's problem is that he has to come from behind in so many states that used to be reliably red. Mathematically, the odds are way against him. But the potential for surprising results in this election is high.

Will a Republican base energized by McCain's pick of Sarah Palin as his running mate offset a big turnout by young voter weighted toward Obama? What about the "Bradley effect" where white voters, once they're in the secrecy of the voting booth, supposedly decide not to back a black candidate? Will the disproportionate high percentage of Catholics who are reportedly undecided -- as many as 11% -- tend toward McCain, whose pro-life position mirrors the church's? What if voters who initially leaned toward Obama as the financial crisis exploded, express their swirling fears in a sudden new direction -- toward McCain?

So many questions, for which, before the votes are counted, there are no sure answers.