We’ve been told General Motors must get smaller. In the old days we saved companies by making them bigger.

In the 1960s, CEO George Romney grew American Motors with the Rambler, a cheap small car that found a sweet spot in the market. In the 1980s, Chrysler CEO Lee Iacocca increased sales with new products such as the Chrysler K-car and minivans. CEO Sergio Marchionne has been doing the same at Fiat the last few years.

Automotive strategies are changing now that the Obama Admin. has a new department, identified by New York Times columnist David Brooks as the President’s Office of People Who Are Much Smarter Than You Are. The POPWMSYA says smaller is better.

How much might GM shrink? Last year GM sold 2,954,819 cars and trucks in the U.S., 22.3% of the market in a 13 million-unit year. In March, with overall daily sales down 34%, GM’s share was 18.7%.

Let’s start by eliminating Saab, with U.S. sales of 21,370 last year, Hummer (27,500 units), Saturn (188,000 units) and most of Pontiac (256,600 units). I’ll keep Solstice in the mix and save 10,740 Pontiac sales, because the attractive little roadster is a niche product GM might save. That gets us down to about 2,460,000 annual U.S. sales.

But Buick, Pontiac and GMC dealers are linked. With Pontiac all but gone, Buick fading fast in the U.S. and California regulators pushing to reduce light-truck sales by setting high corporate average fuel economy targets, assume GMC will lose even more ground.

In this scenario, I doubt Buick-Pontiac-GMC dealers can survive. Of the two brands, Buick sold 137,200 last year and GMC sold 361,740. If the dealers can’t stay viable, that brings GM sales down to 1,960,000 in a hypothetical 13 million-unit year, a volume number the U.S. likely will not see again for a couple of years.

That leaves Chevrolet and Cadillac. Incorporate a more realistic lower market share of less than 19%, instead of 2008’s 22%, and we lose another 300,000 units, which brings us down to 1,660,000 light vehicle sales in a 13 million-unit year.

With government bureaucrats calling the shots and super-tough fuel-economy requirements, it is possible big pickups and SUVs could be off 50% in the future from 2008 levels. That would be another 300,000 units lost. Now we are down to 1,360,000 vehicles. That works out to about a 10% market share.

If GM formally goes into bankruptcy, consumer concerns could further negatively impact sales. We know the POPWMSYA thinks its warranty guarantee will help, but then we all know the government reimbursement form will be 21 pages and require more documentation than our income-tax deductions.

And scratch a few more sales if the bureaucrats fail to introduce more exciting models, such as the Chevy Camaro, because government wonks are even worse than graduates of the Harvard Business School when it comes to understanding the need for fun cars, pickup trucks and utility vehicles.

A fair guess for a smaller GM in the future might be 10.2%. So in a 13 million-unit year, the new GM might be selling fewer than half as many vehicles as it did last year.

Is that small enough for you?

Ultimately, survival won’t depend on the POPWMSYA. It will rest on the shoulders of a new breed of entrepreneurial executives in the mold of GM’s early heroes, such as Billy Durant and Alfred Sloan, who can lead a lean new company into the future, without taxpayer support. I hope they are coming.