For U.S. and Carmakers, Many Potential Pitfalls

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In the past, the United States government had briefly nationalized steel makers and tried to run the railroads, with little success. In the last nine months it has taken control of the American International Group insurance firm and Fannie Mae and Freddie Mac, firing their management as well, at a cost that dwarfs what is unfolding in Detroit.

But directing the fate of a vast manufacturing company, one that still looms over the Midwest, is an entirely different kind of enterprise. And at a time when economists are debating the merits of nationalizing sick banks and pouring more taxpayer money into the economy, it raised the question of whether deteriorating circumstances were leading the administration down a path to deeper intervention in the private sector....

Mr. Obama did not nationalize the company, at least in any technical sense. In that respect, his action on Monday differed significantly from Harry Truman’s decision in 1952 to take over the nation’s steel makers, at the end of the Korean War, rather than allow a United Steelworkers strike to bring production to a halt. That action was quickly overturned by the Supreme Court, which ruled that Mr. Truman did not have the authority to order the takeover.

But Mr. Obama is not relying on a statute. His powers derive from the fact that the White House and the Treasury control the last piles of cash available to keep G.M. a going concern.

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