By Daniel Politi
The New York Times leads with news that President Obama has decided to drop plans to name a single “car czar” to oversee the restructuring of General Motors and Chrysler. Instead, Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers will oversee the Presidential Task Force on Autos, which will work with a number of government agencies on the issue. Ron Bloom, a restructuring expert, would also be named as a senior adviser to Treasury on the auto industry. USA Today leads with a look at how state and local governments have pretty much failed to set aside any money to pay for at least $1 trillion in medical benefits to retired civil servants. States have $445 billion in unfunded obligations to help retirees pay for health insurance, and local governments have obligations that surpass the $500 billion mark. Governments may now be forced to cut benefits or raise taxes in order to deal with the issue.
The Washington Post leads with a look at the political stakes in the massive stimulus package that Obama will sign tomorrow. The partisan vote means the package will be accompanied by a public-relations battle that will see Democrats trying to convince the public that the plan is working. Republicans, on the other hand, are betting that it will fail and that they’ll be able to gain from that in the 2010 elections and beyond by focusing on the deficit. The Los Angeles Times leads locally with the inability of California’s lawmakers to pass a budget that would help the nation’s most populous state reduce its $41 billion deficit. After a weekend filled with tense, all-night negotiations, lawmakers were still unable to get enough support from Republicans for a package that includes $14.4 billion in temporary tax increases.
The news that the administration will abandon plans for a “car czar” comes a day before General Motors and Chrysler are required to file restructuring plans to the Treasury. Most predict that the two companies will be asking for more loans from the government in order to stay afloat this year. But even as the two auto giants rush to finish their plans, they still haven’t reached pivotal agreements with bondholders and the United Auto Workers.
The LAT fronts a look at how many industry experts believe that simple cost-cutting and debt reduction won’t be enough to save GM, a company that is beset by “deep-rooted structural problems.” The paper focuses on telling the story of the Chevrolet Malibu and the Chevrolet Impala to illustrate the hard choices that the auto giant faces. While GM has spent hundreds of millions of dollars advertising and promoting the Malibu, the similarly sized and priced Impala remains a bigger seller, even though the company barely mentions it in its advertising. Many see the Impala as representative of the old GM, but it’s difficult for the company simply to turn its back on such a huge seller. The two cars are just one example of how GM “produces essentially identical vehicles under different nameplates,” notes the LAT. There are signs that GM is ready to make hard choices it has been avoiding and focus on fewer brands, but some doubt that will be enough unless the company goes through a complete overhaul. “Unless they totally restructure from top to bottom, I mean throw out everything, GM will fail,” an expert tells the LAT.
The WP fronts word that after the Mumbai attacks, the CIA oversaw “back-channel intelligence exchanges” between India and Pakistan that allowed the two countries to share sensitive information quietly. The United States acted as a neutral authority in these exchanges, which began soon after the attacks. Officials from both countries say this cooperation helped overcome initial suspicions and was instrumental in Pakistan’s decision to acknowledge that some of the planning for the attack occurred within its borders. The question now is whether this cooperation will continue and whether it will help discussions over Kashmir’s future when “domestic politics in both countries often dictate hostility rather than cooperation,” notes the Post.
All the papers go inside with news that President Hugo Chávez won yesterday’s referendum to eliminate term limits, which will allow Venezuela’s president to remain in office indefinitely after his term ends in 2013. A little more than a year ago, Venezuelans rejected a similar measure that tied presidential term limits with other constitutional changes. But Chávez won with 54.3 percent of the vote this time around. The LAT says analysts believe that Chávez was helped by simplifying the vote, making it solely about term limits and extending the benefit to all elected officials, which encouraged politicians across the country to push their constituents to support the measure.
Everyone notes that the Japanese government announced that its country’s economy contracted at the fastest pace in 35 years late in 2008. In the fourth quarter of last year, Japan’s gross domestic product plunged at an annual rate of 12.7 percent, the steepest drop since 1974. “There’s no question that this is the worst recession in the postwar period,” Japan’s economic minister said.
In the WP‘s op-ed page, Carl Icahn writes that while regulators and executives have been held to the fire for their failures to foresee and plan for the current financial crisis, boards of directors have largely escaped criticism. A company’s board is supposed to represent the shareholders, but it’s clear that “many were just not doing their jobs,” he writes. “In this global meltdown we are seeing that many board members were demonstrably unqualified, abjectly remiss or simply too cozy with management.” The current crisis should be used as an opportunity to “strengthen boards at public companies” and carry out “lasting changes to make them more accountable to stakeholders.”
The NYT‘s Paul Krugman continues to beat the bad-news drum and points out “there has been basically no wealth creation at all since the turn of the millennium.” Americans thought they were getting richer, but it turns out that was an illusion while the “surge in debt had been all too real.” Now the private sector as a whole is suffering from “too much debt and too few assets.” So, even if the government eventually takes the necessary steps to rescue banks, it would be solving only part of the problem. “The odds are that the legacy of our time of illusion,” writes Krugman, “will be a long, painful slump.”