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A senior House Republican lawmaker said Monday that President Barack Obama's announcement that General Motors Corp. (GM) Chairman and Chief Executive Rick Wagoner had agreed to step down makes sense giving the enormity of the challenges facing the troubled auto maker.

Rep. Dave Camp, R-Mich., the senior Republican on the House Ways & Means Committee, said that GM must undergo massive restructuring in order to survive, and that it may be easier to do under new management.

"It was well known that GM's restructuring plan would have to be significant," Camp said. "It was going to be difficult for the current management to carry that out."

Camp was speaking in an interview with Dow Jones Newswires.

He was reacting to the president's announcement made Monday that the administration had concluded the plans the two companies are set to submit as part of their case for more federal funding do not go far enough.

Obama said taxpayers would continue to fund GM's day-to-day expenses for 60 days as the company worked to come up with a viable way forward, but he said that Chrysler was not viable as a stand-alone entity.

He said that Obama's statement that the federal government will back warranties on new GM and Chrysler LLC car sales was a "stunning announcement" that is "paving the way" for the companies to go into a managed bankruptcy in the near future.

Camp called the administration's assessment about Chrysler "fairly significant," and said he hoped that the company would be able to reach an agreement with Italian car maker Fiat, which it is currently in negotiations with.

He said that, in many ways, the companies were already in bankruptcy in all but name, giving the restructuring they are undergoing.

Rep. Pete Hoekstra, R-Mich., another member of the House GOP Michigan delegation, said that he agreed with Obama's decision not to keep writing blank checks to the companies.

"I do believe that you can't just keep putting money into the autos," Hoekstra said. "You do need to have a viable plan. The question is whether the president is putting up benchmarks that are obtainable."

Hoekstra said the administration should be doing more to stimulate demand for new cars, and let the consumers decide whether the companies are viable.

Obama said he would instruct the Internal Revenue Service to promote a new tax break that allows people to deduct the sales and excise tax on any car purchased this year.

He said also he would work with Congress to develop a program that would provide a generous tax credit to people who turned in older less fuel efficient vehicles and bought newer vehicles that are more environmentally-friendly.

-By Corey Boles, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com