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Political Stakes High in GM Bankruptcy Plan

The political stakes are high for the Obama administration in guiding General Motors into bankruptcy -- and allowing the government to take a majority stake in the company. Analysts examine the political and economic implications of the decisions.

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    And some thoughts on the economic and political stakes now from Megan McArdle, business and economics editor for The Atlantic, and Harold Meyerson, editor-at-large at the American Prospect and op-ed columnist for the Washington Post.

    Harold Meyerson, how big a gamble is it? And was it one that had to be taken?

  • HAROLD MEYERSON, The American Prospect:

    Well, it's a big gamble, but I think the administration felt that the bigger gamble was simply to let G.M. go under and deal with economic chaos in the Middle West, in particular, since it's not just G.M. employees, but there are all kinds of folks working at parts factories, people in the supply chain. And in the middle of the worst economic downturn since the '30s, that was a possibility they just did not wish to face.


    Megan McArdle, how do you define the gamble and the economic stakes here?

  • MEGAN MCARDLE, The Atlantic:

    Well, I think there are two different questions. The first is the political gamble of letting G.M. fail, which I agree would have been catastrophic.

    Economically, I think it's a little easier decision to make. It certainly would have been catastrophic had you let all of these suppliers and plants go under with no plan for dealing with any of the fallout, but there are probably better ways to deal with unemployed workers than to buy a company and keep operating it in order to provide them with jobs.