President Obama, announcing the nationalization of General Motors–one of the more dizzying recent developments in American capitalism–sought to soothe startled free-market sensibilities by promising to “get GM back on its feet, take a hands-off approach and get out quickly.” This was not enough to appease his rabid critics on the right, such as Republican National Committee chair Michael Steele, who condemned the move as “another government grab of a private company” and a “handout to the union cronies who helped bankroll his presidential campaign.” The alternative course Republicans apparently prefer is the liquidation of the company, a position galling in its indifference to this country’s economic and human needs.

At the same time, however, Obama’s message, coming only nine weeks after his administration demanded that GM “slim down” in order to qualify for federal help, must have been hard to hear for GM workers, 21,000 of whom are slated to lose their jobs as the firm closes US plants and shifts production to low-wage countries. As Robert Reich observed of the government’s stick-’em-up stance toward the auto companies, “Having General Motors or Chrysler cut tens of thousands of jobs in order to be eligible for a government bailout reminds me of ‘saving’ Vietnam by bombing it to smithereens.”

It is more than clear by now that the goal of this intervention is not to help the workers who are suffering the effects of this devastating downturn. It is not even about saving Detroit: when pressed on whether the “new GM” would move its headquarters, the president reportedly responded that it would be a “commercial decision” and he “wouldn’t get involved.” Nor is this part of a bold new industrial strategy, let alone a step toward a more ecologically sustainable economy. It is a company bailout. As such, it is not only a letdown for American workers but a missed opportunity for the Obama administration to live up to its transformational rhetoric.

Some believe that the $50 billion taxpayer investment in GM is merely buying time–that the once-mighty auto giant is bound for the scrapheap, taking its remaining 60,000 jobs with it. They might be right. To be sure, the half-million-plus middle-class jobs GM used to provide as the bedrock of the economy are unlikely to return. And after the economic meltdown of the past year, we are facing a national unemployment crisis. By the administration’s own estimate, the stimulus will create or save 3.6 million jobs over the next two years. But 28.5 million workers are already effectively unemployed, and 3 million more are likely to lose their jobs over the next twelve to eighteen months. Because the government has responded to this crisis by addressing the needs of companies first and foremost rather than those of workers and communities, we appear to be headed for a jobless recovery.

A smarter government policy on manufacturing could be the starting point for a long-term solution to the jobs crisis–and protect the planet at the same time. There is little question that the auto industry needs retooling. In the past decade, Americans bought more than 17 million new cars a year, many financed through home-equity loans and easy consumer credit. That economy is gone; even the rosiest of estimates puts new sales at less than 10 million a year through 2010. And even if consumer lending ultimately bounces back to pre-crash rates, the combined effect of the recession and the climate crisis may be to jolt Americans into breaking their addiction to the car culture.

Greater fuel efficiency and a transition to new green technologies are clearly in order. This doesn’t just mean building smaller cars or even electric ones. Detroit could be manufacturing city buses, wind turbines, light rail, high-speed trains and solar panels. Such a shift would require an infusion of resources and ingenuity–and abandoning the free-market fanaticism that is still pervasive–but it is not unprecedented. In the 1940s, thanks in large part to the leadership of President Roosevelt and the United Auto Workers’ Walter Reuther, idle car factories began building fighter planes for World War II, thereby simultaneously aiding the fight against fascism and helping to pull the country out of the Great Depression.

But today, for a variety of reasons, such leadership is lacking. The Obama administration certainly isn’t providing it. And the voice of the UAW has become difficult to distinguish from that of industry management. Part of the problem is simply that the union has been hemorrhaging members as US manufacturing jobs evaporate. The fact that the union has swallowed concession after concession and still seen jobs disappear has led to profound demoralization among the rank and file. Today the union’s membership is less than a third of what it was just thirty years ago, and its future is more uncertain than ever. As GM and Chrysler shed workers and plants, the nonunion firms and auto parts suppliers that largely dictate labor standards in the industry will wield even greater influence. And the Obama administration’s plan for the industry, exacting painful concessions from the union on jobs and pay, only reinforces this downward-trending logic.

The challenge facing the UAW is to look beyond the financial health of the GM and Chrysler brands and steer an innovative course toward preserving well-paid manufacturing jobs and promoting environmental sustainability. But even if it crafts such a visionary message, in order to get a hearing for it the union must regain the leverage it has lost by organizing the unorganized, much as it did at its birth in the 1930s. Back then, the UAW’s model of social movement unionism put it at the vanguard of progressive politics, and it used its clout in Detroit and Washington to pull up wages for workers in all industries, building a broad middle class. It won’t be easy to get to that place again. Yet today there are fleets of nonunion workers–in newer Toyota and Honda plants in states like Kentucky and Alabama; at small independent parts makers that dot the industrial Midwest; and even in thousands of car dealerships in towns and cities across the country–who could be the key to the union’s resurgence.

GOP fantasies aside, the Obama administration is not conducting its auto industry policy with the interests of organized labor in mind. The Wall Street brain trust that ran the president’s auto task force spent months deliberating over the fate of the automakers in near isolation from workers, Congress and the people, and arrived at a solution notable for its timidity and callousness in the face of economic calamity. The lesson, for the UAW and for progressives, is clear. If there is to be another course for the domestic auto industry–and there must–it will have to be charted outside the Beltway by concerned citizens and emboldened workers ready to say, “What’s good for us is what’s good for GM,” and not the other way around.