Obama Aides Take Axe To Chrysler's Budget


The Obama administration appears to have reminded Chrysler about the cost of accepting government bailouts: with federal funds comes federal control.

A report this week in Advertising Age said that Chrysler wanted to spend $134 million in advertising over the nine-week duration of its bankruptcy. But Mr. Obama's auto-industry task force sliced that figure in half.

Robert Manzo, executive director of Capstone Advisory Group and a Chrysler consultant, testified at a May 4 hearing in bankruptcy court that the task force "believed that it was not feasible to not spend anything on marketing and advertising for fear of eroding the image of the brand." But, Ad Age said, the task force overruled the car maker. (Chrysler's factories will be shuttered for those nine weeks.)

Mr. Obama's Presidential Task Force on the Auto Industry includes Treasury Secretary Tim Geithner and officials from the Commerce, Transportation, Labor, and Energy departments, plus representatives of the EPA, White House, the Economic Recovery Advisory Board, and the National Economic Council. It includes no professional marketers.

Expect bailout-recipient General Motors to be paying close attention.

This is part of a series of moves by Mr. Obama and his aides -- specificially, to exert more control over American businesses -- that has alarmed free-market and conservative thinkers.

One example is the attempt to find ways to regulate pay in the financial services industry -- even at companies that accepted no federal bailout cash. Then there's Mr. Obama's pressure on the health care industry to cut costs (which may be difficult to measure), and the administration's unusual legal assault on Chrysler creditors.

Mr. Obama and his aides soon may have more opportunities to demonstrate how far they're willing to go. As the New York Times reported on Tuesday, men's suit maker Hartmarx is in bankruptcy, and its workers are pressuring creditor Wells Fargo to keep the company intact -- a choice that might not bring in as much money.

Their leverage? Wells Fargo received $25 billion in tax dollars as part of a bailout. So Hartmax employees, as the Times notes, see an opening: "The workers and their union are arguing that Wells Fargo, having received $25 billion in the bank bailout, should keep a 122-year-old American company like Hartmarx in business and preserve some 3,600 jobs."

  • Declan McCullagh On Twitter» On Google+»

    Declan McCullagh is the chief political correspondent for CNET. You can e-mail him or follow him on Twitter as declanm. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.