President's tough love hits GM, Chrysler

Call it tough love.  President Obama Monday said no to more bailout money for Chrysler and General Motors, unless the two ailing auto giants make bigger cuts.

The White House has already forced GM to cut loose CEO Rick Wagoner. And both carmakers might have to accept bankruptcy.

But President Obama also acted to boost US car sales. But first, he said Chrysler and General Motors' reorganization plans did not go far enough.

We know, if they want long-term bailout funds, they'll have to agree to his plan. "The path I am laying out today is our best chance to make sure the cars of the future are built where they've always been built - in Detroit and across the Midwest," said President Obama.

Under the Obama plan, Chrysler gets 30 days to merge with Fiat of Italy. GM gets 60 days. But it must cut productions costs, and dump brands like Saturn and Hummer.

GM CEO Rick Wagoner is out, fired, in effect by President Obama.   Obama says his goal is saving Detroit and the planet at the same time.

"The United States of America will lead the world in building the next generation of clean cars," vowed the President. To drive worried buyers back into showrooms, Obama offered a deduction for car excise and sales taxes, and said the federal government will back car warrantees.

Union autoworkers will asked for more givebacks "Everyone knows we'll be taking concessions. Nobody wants to but we're willing to do what we have to to help this company out this time," says James Kendall, president of UAW Local 23 in Indianapolis.

The President warns jobs will be lost and plants will close. "If all of us are doing our part then this restructuring, as painful as it will be in the short-term, will mark not an end, but a new beginning," he said.

Bankruptcy would help Chrysler or GM dump bad debt and stay in business, but management would lose even more power to the US government.