As General Motors and Chrysler race to submit plans for assuring their long-term viability, President Barack Obama's decision to make his top economic advisers responsible for the multibillion-dollar auto bailouts demonstrates how high the stakes have become - for Detroit, for Washington and for the nation's economy.
With jobs disappearing in large numbers and the just-passed $787 billion economic stimulus bill only today being signed into law, the last thing the president or the economy needs is for one or more of the U.S. automakers to collapse.
And the problems that forced President George W. Bush reluctantly to agree to a $17.4 billion short-term bailout for GM and Chrysler in December - plummeting car sales and the deepening overall recession - have worsened since Obama took office.
The plans being submitted today represent the automakers' response to a deadline Congress imposed when it approved the short-term financial aid. The blueprints are intended to show how GM and Chrysler will put themselves on a sustainable financial footing, which means shedding labor costs and the debt burden that the automakers must carry into the future.
Under the terms of the government loans, GM and Chrysler must also show that they are developing a more competitive mix of vehicles.
Talks between the carmakers and the United Auto Workers over jobs and benefits costs were reportedly making progress, though the union was resisting making major new concessions before bond holders and other creditors also agree to accept cuts. Progress was also reported on the negotiations with bond holders.
Whether final agreements could be hammered out before today's deadline for submitting the long-term blueprints remained unclear, but some officials suggested that the requirements laid down by Congress did not require such final agreements.
If they fail to meet those conditions, the loans must be repaid immediately, almost certainly triggering bankruptcies for both companies.
Not only does Obama need to worry about the impact of major auto industry bankruptcies just as he hopes the stimulus package will start to work, but he has strong political concerns. Union workers were major supporters of Obama's campaign, and states with U.S. auto assembly plants such as Michigan and Ohio were crucial to his victory.
"I think the administration wants there to be a plan that will work," said Rep. Sander Levin, a Democrat from Michigan. "The situation has become more difficult, and the urgency of success has become all the greater."
GM is ready to deliver "a very full and detailed report" on its recovery plan, spokesman Steve Harris said. Chrysler spokeswoman Shawn Morgan said the company was committed to meeting the deadline as well. UAW officials did not return calls for comment.
Ford, financially the strongest of Detroit's Big Three, has thus far chosen to do without government rescue loans and so is not subject to the deadline.
Harris said GM has accomplished a lot already. The company is reviewing the possible sale of its Saab and Hummer units, and it is evaluating the future of its Saturn division. It has also announced the closure of a controversial "jobs bank," which allows laid-off autoworkers to receive much of their regular pay.
The UAW has signed off on the jobs bank plan, but GM and the union were still trying to work out an agreement on how the auto company would fund retiree health care benefits.
The bailout agreement allowed Obama to name a "car czar" to analyze the restructuring plans and decide by March 31 if they will work. But Obama opted for a panel of experts. He chose to appoint his top two economic advisers, Treasury Secretary Timothy F. Geithner and Lawrence Summers, director of the National Economic Council, as well as restructuring expert Ron Bloom.
The bailout agreement said the plans from GM and Chrysler must contain "specific actions" to repay the government, achieve financial viability and meet fuel efficiency and emission requirements.