Is GM Today's Version of Amtrak?

Some analysts are looking at the government's plan for GM and seeing striking similarities to what happened with the nation's passenger rail system in the 70's:

General Motors is trying to prove itself the little engine that could. But if Amtrak is any example, the bankrupt automaker may never ride straight again.

Some analysts say they are concerned that the federal government's effort to prop up the nation's largest auto manufacturer is eerily similar to a 40-year effort to revive the nation's ailing railroad system.

But billions of taxpayer dollars later, Amtrak still needs the government to survive. And General Motors appears to be headed down the same track, critics say.

"I see no hope whatsoever for the situation," said Wendell Cox, a policy consultant who sat on the government-appointed Amtrak Reform Council a decade ago and draws parallels to the GM intervention today.

The Obama administration is committing $50 billion to General Motors -- $30 billion on top of the $20 billion it has already invested. Administration officials will not speculate on when taxpayers might see a return on the White House-engineered investment, but insisted that Washington is cutting off Detroit after that and will be a "passive" investor.

President Obama said Monday the U.S. government, which now owns 60 percent of the company, wants to prop up GM and then "get out" of the auto business. Under the restructuring plan, the Canadian government will take a 12.5 percent stake, and the United Auto Workers will have a 17.5 percent stake. Bondholders receive 10 percent.

Critics, though, say this looks like Amtrak all over again.

Analysts said the government's hope of creating an efficient mass transit service through a partial nationalization of the rail system was stymied by its inability to get tough on unions and rein in labor costs. The same could hold true as the current administration deals with the UAW.

Amtrak has fielded criticism over the years for being guided by officials with little or no transit experience. Today, Obama's Auto Task Force has a combined experience of zero years in the auto industry.

With Amtrak, the government also got too involved in decision-making, leading to inefficiencies in the system that would never be corrected, say analysts. Since its creation in 1970, Amtrak has sucked up $30 billion in taxpayer money, and the money is still flowing. The original aid package from Congress in 1970 was $340 million with an expectation the railroad would make a profit in five years.

I was reading earlier today that the person in charge of restructuring GM is a 31-year old almost graduate of Yale law with absolutely no experience or knowledge of the auto industry.

Makes you feel better about that $50 billion, doesn't it.