Friday, April 24, 2009

So Much for Plan “B”

Another day over and another day closer to once mighty General Motors® declaring bankruptcy. All the king’s horses and all the king’s men, along with billions of our bailout dollars, can't seem to put GM® together again.


In 1953, at the peak of its dominance, GM president, Charles Wilson, declared before Congress that “what was good for the country was good for GM”. By contrast it’s not a stretch to say what’s bad for GM is bad for the country.




Bankruptcy could come as soon as June 1. Maybe earlier. Maybe tomorrow.


So what you say? In a GM bankruptcy everyone feels the economic pinch. A federal agency, the Pension Benefit Guarantee Corporation, will take over responsibility for the pension money.  $16.5 Billion. Retired employees could end up with far less than what they’re owed. Perhaps pennies on the dollar.


Denver auto dealer, John Medved, told me that the average life expectancy was around 75 when those agreements were struck years ago. It’s well beyond that age now. Those retired autoworkers are living longer, and we’ll be paying even longer.


A bankruptcy doesn’t last a few weeks. It’s anything but neat and tidy. It doesn’t create jobs. It’s quite the opposite.


Dealers, to their credit, are trying everything they can to survive. The government is offering to guarantee your warranty. Wow.


Have you bought a new car yet? Didn’t think so.


Plan “B”, aka bailouts, isn’t working.


My idea still stands. A $10,000 tax credit when you buy a new car. Car dealers need to sell cars. This sort of incentive will get people back to showrooms. Buy today, claim that $10,000 tax credit when you file next year. John Medved told me straight out that it will work. He’s listening. The government isn’t.


Meanwhile, GM, in business for 101 years, is heading toward bankruptcy.


This helps the economy how? It’s a question I keep asking the government. So far, they have no answer; their hands remain firmly over their ears.


It’s not too late. This doesn’t have to happen.



John W. Scherer

John Scherer is CEO & Founder of Video Professor, Inc.

You can reach him at