Possible Reduction of Government Share in GM Would Be Healthy

General Motors Co. is in the final stages of acquiring a $5 billion line of credit that will assist it in a new stock offering by the end of the year, says CEO Edward Whitacre Jr. If all goes well, the stock offering will reduce the federal government's share in the firm to below 50 percent. That's good news for both taxpayers and GM.

Whitacre's statement to The Detroit News that the government's share in the firm would fall from its current 61 percent to a minority holding depends on the government's willingness to sell 11 percent of its equity in the first stock sale.

We hope that happens. It would be a major boost for GM and could help the firm's marketing. And it would help President Barack Obama make good on his statement this spring that "I don't want to run auto companies."

Earlier this year, GM returned some of the funds it had been loaned by the government with other funds that it had been loaned by the government. Still, it got close to $6 billion back to the U.S. and Canadian treasuries five years earlier than scheduled.

The sooner GM can begin to divest itself of government financial aid, the better. As an analyst told The Detroit News, "it's important from a financial standpoint but it's also important from a PR standpoint." That may well by why Whitacre told The News: "We want the government out.

Whitacre said the unpopular government bailout of the firm cost it sales. We have argued that the government aid and "quick-rinse" bankruptcy was necessary to assist the firm in getting back on its feet. And the aid and restructuring that came with it appears to be paying off. Whitacre said the company expects to report a second-quarter profit this week, which would follow a first-quarter performance in the black.

While it may take additional stock offerings to complete the liquidation of the government's holdings in the firm, the company will have more credibility with potential auto buyers and more ability to be an autonomous player in the economy. A GM that isn't a subsidiary of the government could more effectively make a case against unrealistic demands for government regulation in the areas of product development or fuel economy.

Remaining economically independent and viable, of course, will require a more tough-minded management that is more willing to confront a newly militant UAW leadership. It will also require it to continue to improve the quality and attractiveness of its products — where it still lags behind Ford Motor Co. and some foreign rivals.

But the firm appears to be on the road to independence. That's not only good for the nation's taxpayers, but a psychological boost for the people of this state, whose own history and fortunes have been intertwined with those of GM for close to a century.

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