No Free Lunch

Last Thursday, Treasury Secretary G. William Miller announced the Carter Administration's plan for salvaging Chrysler, the nation's third largest auto-maker, with a whopping $1.5 billion federally guaranteed loan. The Carter proposal, however, fails to insure that Chrysler will not once again choose the road to ruin.

Historically, Chrysler has played weak sister to General Motors and Ford, suffering from a combination of financial mismanagement and lack of foresight. Chrysler still has not quite admitted that the Age of the Big Car has ended. This fall, Lee lacocca, chairman of Chrysler, insisted that the auto industry's biggest profits were to be found not in small, but in intermediate-sized luxury cars, loaded with special options.

Chrysler has, however, been showing some signs of financial sanity recently. For example, it has abandoned its policy of building cars on speculations. (This year Chrysler had 80,000 new models that nobody wanted. Enter Joe Garagiola and his brilliant sales pitch: Buy a Chrysler, get a check.) And Friday, Chrysler decided to stop giving out dividends to preferred stockholders.

For practical reasons, Chrysler should be rescued. Its bankruptcy would throw hundreds of thousands out of work, and would cost the public many millions of dollars in unemployment compensation and welfare payments and lost tax revenues.

However, if the public is going to risk a billion-and-a-half on Chrysler. Congress should toughen Carter's proposal, and make granting the aid conditional on a commitment from Chrysler to use the money to retool for production of small, fuel-efficient cars, and also, as Rep. Henry Reuss (D-Wis) has advocated, for buses and rail equipment.

In addition, the government should follow the United Auto Worker's lead and put a public representative on Chrysler's board of directors, providing access to Chrysler's financial operations and giving the public a voice in its investment decisions.

Chrysler's troubles are part of a deeper problem that will undoubtedly recur in coming years--the decline of the nation's traditional heavy industries, largely a product of the energy crisis and changing national needs. Congress and the nation must begin thinking of how to achieve an orderly transition away from aging industries, to where the future industrial potential of the United States lies. Salvage jobs may not be the long-term answer.