Definitive

Carmakers Ask for $34 Billion

Why GM’s plan is the best.

Yesterday, the Big Three automakers beseeched Congress for $34 billion in exchange for industry reforms. So whose rehabilitation plan is best? Steven Pearlstein picks GM, which, in exchange for $4 billion, will negotiate for the next three months for a deep restructuring like the one that many argue a pre-packaged bankruptcy would allow. The remaining $18 million GM is requesting would then be contingent on the effectiveness of its reforms, which a government board will oversee. GM would effectively ditch Saab, Hummer, Saturn, and Pontiac, and reduce its dealership network by 27 percent. "There is real pain in the GM plan," Pearlstein writes, "and the prospect of real gain." Lawmakers need to approve it quickly: "General Motors and Chrysler both acknowledge that they will effectively be out of cash by the end of the month and will have to file for bankruptcy if they don't get a government loan."