NEW YORK (Reuters) - Democratic White House hopeful Barack Obama has not taken a position on a possible merger of automakers General Motors Corp and Chrysler LLC, a senior economic adviser said on Tuesday, declining to say whether he backed a deal that could lead to heavy job losses.
An economic adviser to Republican candidate John McCain said any merger should be evaluated on the basis of its competitive implications.
GM’s initial attempts to secure financing for the controversial merger have been rebuffed, raising new doubts about whether it can be completed without government aid.
Sources say a cash-strapped GM needs between $4 billion and $5 billion for payouts for the estimated 30,000 to 40,000 jobs that would be cut through a merger and to close most of Chrysler’s 14 assembly plants. The job losses would hit voters in important electoral states Michigan and Ohio.
Asked whether Sen. Obama would support government financing for GM to back the merger, his economic adviser, Austan Goolsbee, told Reuters that Obama supported the existing plan to guarantee $25 billion of low-interest loans for the auto industry but had not taken a position on a GM-Chrysler merger.
“Are you saying does he favor a merger or no merger? He hasn’t taken a position,” Goolsbee told Reuters on the sidelines of a meeting at the Council on Foreign Relations in New York. “Obviously you’ve got to look at the antitrust implications and you’ve got to look through where the companies are financially.”
Douglas Holtz-Eakin, economic adviser to McCain, said he was not privy to how private merger talks were going or what requests had been made for financing.
“You should assess mergers on the basis of their competitive implications,” he told Reuters at the same event.
“As in all cases you want to make sure they’re consistent with good competition, the market delivering quality products to consumers.”
He said McCain also supported the loan guarantees already proposed for the auto industry and thought they should be pushed forward faster than currently planned.
“We’re going to need some fairly profound intervention to move away from conventional gas-powered fleet and this is part of financing the construction, particularly in this credit crunch, ... of facilities to get that done,” he said.
U.S. auto sales have slid to 15-year lows this year and are expected to drop further in October as credit tightens for consumers. GM’s sales were off 18 percent through September. Chrysler’s sales were down 25 percent.
Editing by Steve Orlofsky