The Note, 3/30/09: Driving the Lane -- Obama puts new stamp, spin on bailouts

By RICK KLEIN

The era of big government handouts is over. Welcome to the era of lean and mean -- maybe with an emphasis on the mean, so far as the lean guy is concerned.

President Obama’s first sale of the week starts with a fresh incentive: GM CEO Rick Wagoner is tossed under the Yukon, and his company and maybe Chrysler could be headed there with him.

It marks a new phase in the Obama administration’s turnaround efforts -- a carefully calibrated, starker-than-expected move that the president owns completely.

The president is integrating some tricky moving parts here -- there’s a critical piece of the US economy, public anger over bailouts, and battleground-state politicians who want to save a domestic industry that cannot save itself.

(And the president has a wide variety of buyers to sell to this week: the American public, on help for automakers; members of Congress, on a budget that looks better than it sounds; residents of an upstate New York congressional district, in a special election that gives them way too much say in judging a presidency; and -- almost an afterthought until the auto announcement comes -- the world community as Obama heads abroad for a summit-filled week.)

The automakers announcement, coming Monday at 11 am ET, marks “one of the most dramatic government interventions in private industry since the economic crisis began last year,” Neil King Jr. and John D. Stoll report in The Wall Street Journal.

“In a summary of its findings, the task force added that it doesn't believe Chrysler is viable as a stand-alone company, and suggested that the best chance for success for both GM and Chrysler ‘may well require utilizing the bankruptcy code in a quick and surgical way,’ ” they write. “The move also indicates that the Treasury Department intends to wade more deeply than most observers expected into the affairs of the country's largest and oldest car company.”

Plus: “The ouster by the government of General Motors Corp. Chief Executive Rick Wagoner could put pressure on the Obama administration to deal more aggressively with the management of banks receiving federal aid,” King and Naftali Bendavid write.

The surprise was part of the play: “The decision to ask G.M.’s chairman and chief executive, Rick Wagoner, to resign caught Detroit and Washington by surprise, and it underscored the Obama administration’s determination to keep a tight rein on the companies it is bailing out -- a level of government involvement in business perhaps not seen since the Great Depression,” Sheryl Gay Stolberg and Bill Vlasic write in The New York Times. “In deciding to urge Mr. Wagoner to step down, the Obama administration seemed mindful of the public’s growing outrage over bailouts of private companies, as well as the bonuses paid to employees of A.I.G.”

“U.S. Shreds Auto Plans,” reads the banner in the Detroit Free Press.

“The do-or-die ultimatums delivered today to two of Detroit's pillar companies come with promises of additional aid, including up to $6 billion for a Chrysler-Fiat partnership,” Justin Hyde and Tim Higgins write. “But senior administration officials also say even successful plans could require a so-called quick rinse in bankruptcy, and warn that without Fiat, Chrysler will get no aid in or out of court.”

“If the viability plans that General Motors and Chrysler submitted to the Obama administration in February were cars, they would be -- at least as far as the president is concerned -- Edsels,” ABC’s Jake Tapper and Charles Herman report. “In neither instance -- GM or Chrysler - would the administration specify how much capital it might entail to keep the companies going for another 30-60 days.”  George Stephanopoulos is wondering which storyline will take hold today.

Precisely how the White House wanted this to be viewed: “Wagoner doesn't get to be the boss anymore because the President of the United States acted like one and fired him,” Mike Lupica writes in the New York Daily News.

But why Wagoner and not, say, bank CEOs? “Can anyone explain the differing treatment of auto companies and Wall Street firms?” David Sirota asks at OpenLeft.com. “Is it just that there are far more Wall Street worshipers like Tim Geithner and Larry Summers in the Obama administration than auto industry representatives? Or is it something else?”

Will Congress be on board? “The White House held a Sunday night conference call with members of Congress from auto-producing states, and the lawmakers were far from satisfied,” Mike Allen and Josh Gerstein report for Politico. “ ‘Tough love hurts,’ said a source familiar with the discussions. ‘The members received the briefing with a sense of anxiety.’ The source said the timeline and funds to be announced Monday are ‘not good enough.’ ”

“President Barack Obama held a 30-minute conference call Sunday night with Michigan's two senators and its two senior House members. Michigan members held conference calls late into the night trying to figure out a response but held off at the White House's request,” David Shepardson reports for the Detroit News.   

Said Rep. Thaddeus McCotter, R-Mich: The announcement “sends a very ominous signal that this administration believes the existing viability plans aren't painful enough.”

More on the topic and the rest of the day’s politics Monday at noon ET, with the debut of ABCNews.com’s “Top Line,” a daily political Webcast hosted by Rick Klein and David Chalian. First guest: Rep. Maxine Waters, D-Calif., on the administration’s bailout efforts and the first 10 weeks of the Obama presidency; Politico’s Jonathan Martin joins us in the back half to preview the politics of a busy week.

One impact that can’t/won’t be avoided: “Rescue or no rescue, the Detroit Three are going to keep getting smaller. That means more layoffs in parts of the country that are already suffering,” The New Republic’s Jonathan Cohn writes.

Softening the blow: “The Treasury Department plans to sponsor a program to insure the warrantees on any new GM or Chrysler car purchased during the restructuring period, even if the companies collapse,” writes Time’s Michael Scherer. “In a Monday morning speech, President Obama is also expected to announce the appointment of Edward Montgomery, a labor economist, as the new Director of Recovery for Auto Workers and Communities to help direct government aid to those areas most effected by the fallout, from plant closings to salary and benefit cuts.”

It’s more than just a blow: “In laying out his strategy for addressing the challenges facing America's automakers, Obama is standing up for an industry that is as huge -- with 240,000 automaker employees in the U.S. and many times that in companies such as parts suppliers -- as it is unpopular among critics from all sides of the political spectrum,” the Los Angeles Times’ Ken Bensinger and Jim Puzzanghera report. “And though the president's plan is decidedly tough, it also displays a deep desire to keep the industry alive and avoid the economic calamity that could come from its collapse, despite the increasingly long odds against it.”

Checking those foreign tracking polls: “Stocks fell sharply in Europe and Asia on Monday, amid fears that the Group of 20 meeting this week will fail to come up with a plan to restart global growth and signs of chaos in the auto industry,” per The New York Times.

Per Dow Jones wire (can this help a merger?): “Fiat SpA (F.MI) shares tumbled in Milan Monday after the U.S. government's surprisingly tough assessment of Chrysler LLC's standalone survival prospects made Fiat's planned investment in the U.S. automaker look a bit riskier.”

The next very big worry? “Just months before the start of last year's stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks,” Michael Kranish writes in The Boston Globe. “The [Pension Benefit Guaranty Corporation] refused to say how much of the new investment strategy has been implemented or how the fund has fared during the downturn. The agency would only say that its fund was down 6.5 percent -- and all of its stock-related investments were down 23 percent -- as of last Sept. 30, the end of its fiscal year. But that was before most of the recent stock market decline and just before the investment switch was scheduled to begin in earnest.”

He’s still got a budget to sell, too:

“This week's congressional budget fight will reveal a lot about how Congress is likely to proceed this year on President Barack Obama's agenda,” McClatchy’s David Lightman reports. “As long as Obama remains popular, most Democratic members of Congress will likely be loyal and only occasionally show flashes of independence, while most Republican lawmakers will be shut out of any meaningful role.”

The Washington Post’s Lori Montgomery provides a budget-watcher’s guide: “Reconciliation is probably in the cards. Though Senate leaders have yet to officially declare their intention to use reconciliation, all but a handful of Senate Democrats support using the maneuver for health-care reform, as do senior administration officials. The powerful procedural maneuver creates a privileged bill that cannot be filibustered in the Senate.”

The polls aren’t looking so great on the policies the president is pushing -- and that’s with the sales job. “Imagine what could have happened to U.S. public opinion on the president's budget if he hadn't invested all that salesmanship,” Andrew Malcolm writes on his Los Angeles Times blog. “Can he keep it up? And is some public caution creeping in?”

The administration tone: “I think Americans should be optimistic about the future of this country,” Treasury Secretary Tim Geithner told George Stephanopoulos on ABC’s “This Week.” “We are a strong, remarkably resilient country. We are still the most productive economy in the world by many measures. We have a university system that is the envy of the world. People with an idea still want to come to the -- America to grow business, build on that idea. That’s a great source of strength for our recovery. But we need this government, though, to do a better job of doing what governments have to do.”

Bloomberg’s Al Hunt predicts that Geithner stays: “Imagine Obama facing today’s crisis without a Geithner or [Larry] Summers. Whatever mistakes were made, they bring unsurpassed credentials to deal with the worst financial meltdown since the Great Depression. . . . Even with the political pounding Geithner has taken, he commands loyalty from those around him, who praise his work habits, demeanor, personal grace and calming confidence.”

Then there’s the world stage: “The president plans to push for a new approach to the war in Afghanistan, aggressive action to stop the proliferation of weapons and a more united European effort to combat the global recession,” Michael Shear writes in the Sunday Washington Post. “But if the U.S. president thought his popularity would cause foreign governments to fall quickly into line behind a new American leadership, experts warn, he could be in for a rude awakening.”

“This time, no one will accuse Barack Obama of acting like Paris Hilton,” John Harwood writes in The New York Times. “Mr. Obama returns to Europe this week as president, against a backdrop of crisis. He has no alternative but to try coaxing partners in the Group of 20 industrial and emerging market nations to help stimulate the global economy and to assure them he is shoring up an American financial system that shoulders substantial blame for the damage. Add the challenge of promoting a new strategy for the war in Afghanistan, and political strategists say there is no danger that Americans will confuse this trip with an escape from Mr. Obama’s principal responsibilities.”

Said David Axelrod: “The world has a lot of problems right now. It’s much more than a political event.”

No time for “Wally World”: “White House press secretary Robert Gibbs jokingly referred to President Obama's trip to Europe for the G-20, NATO, and EU summits as ‘our European vacation,’ and it's clear that little soothing or relaxing awaits the young president as he prepares for his flight to London,” per ABC’s Jake Tapper.

Los Angeles Times headline: “G-20 Summit Could Mean 19 Headaches.”

Judging his sway in the world: “These days foreign leaders are in no mood to be lectured by American officials, even when -- as in this case -- the Americans are right,” Paul Krugman writes in his column. “The financial crisis has had many costs. And one of those costs is the damage to America’s reputation, an asset we’ve lost just when we, and the world, need it most.”

Judging his sway in upstate New York: “Democrat Scott Murphy and Republican Jim Tedisco attempted to energize their political bases Sunday in the sprint before Tuesday's special election to fill Democrat Kirsten Gillibrand's 20th Congressional District seat,” per the Albany Times-Union’s Lauren Stanforth and Scott Waldman. “The race is being viewed as a political gauge that may indicate if Republicans can regain strength or if Democrats are still riding the momentum of President Barack Obama's election.”

Obama is playing -- but his army isn’t. “The president is hanging back in the game,” John Fund writes at WSJ.com. “Should Republicans win, he will try to chalk it up as no big surprise. If Democrats prevail, you can bet the White House will herald it as evidence of grass-roots support for its agenda. What's strange is how little confidence the White House seems to have in a Democratic candidate tailor-made for a district Barack Obama carried just five months ago.”

“The DNC spent a meager $10,000 on the ad [for Murphy], according to reports filed with the Federal Election Commission -- a pittance in the world of political television. So very few actual voters in the Albany media market will ever see the Obama ad,” Chris Cillizza writes in The Washington Post.

The insight that will be ignored in the post-election analysis: “Given the compressed schedule of the race and low turnout common to special elections, organizers on both sides say get-out-the-vote efforts will be the determining factor in the race,” CQ’s Emily Cadei writes.

Did Vice President Biden just put himself in the 2016 mix? “We’re not ruling anything in or out,” Biden spokesman Jay Carney tells The New York Times’ Mark Leibovich.

“I can’t believe that he won’t think about it,” said Sen. Ted Kaufman, D-Del.

Should this make Rep. John Murtha, D-Pa., nervous? (And is he the only one who should be nervous?

“[Paul] Magliocchetti’s generosity is coming to an abrupt halt: his firm, the PMA Group, is closing its doors next week, after reports that federal prosecutors had recently raided his office and his home,” David Kirkpatrick and Charlie Savage write in The New York Times. “And many on Capitol Hill, recalling the scandal that mushroomed around the lobbyist Jack Abramoff, are wondering who else will be ensnared in the investigation as prosecutors pore over the financial records and computer files of one of K Street’s most influential lobbyists, known both for the billions of dollars in earmarks he obtained for his clients and for his open hand toward those he sought to influence.”

Very much related: “A trickle of defections has Democratic House leaders wondering how long they can hold off calls for an investigation into the PMA Group and its ties to Pennsylvania Rep. John P. Murtha,” Politico’s Patrick O’Connor and John Bresnahan report.

Monday marks the debut of “Top Line,” the new ABCNews.com and ABC News NOW political Webcast, weekdays at noon ET. Hosted by Rick Klein and ABC political director David Chalian, if The Note’s your breakfast, this should be served before lunch.

Be part of the conversation at Twitter: http://twitter.com/thenote

The Kicker:

“I didn't see it, but my kids saw it. They thought it was pretty funny.” -- Tim Geithner, on being spoofed by “Saturday Night Live.”

“Never make it in the major leagues.” -- Dick Cheney, assessing President Obama, in private communications with the Israelis, according to Seymour Hersh in The New Yorker.

Follow The Note on Twitter: http://twitter.com/thenote

For up-to-the-minute political updates check out The Note’s blog . . . all day every day:http://blogs.abcnews.com/thenote/

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