The Brother-in-Law of All Bailouts

While the nation's attention was focused on that other bailout, Congress and the President awarded automakers $25 billion in taxpayer-subsidized loan guarantees. The money is supposed to pay for up to 30% of the costs of retooling factories to make vehicles that get at least 25% better gas mileage than similar cars.

But this auto industry salvage package lacks some of the features of the Wall Street bailout. There is no financial equity for taxpayers, no CEO pay caps. And there is no requirement that automakers improve their fuel economy beyond the 35 miles per gallon by 2020 that Congress passed over industry objections last year. In fact, there is nothing to prevent automakers from offsetting the taxpayer-funded improvements in one vehicle by making another guzzle more. Indeed to qualify for the money, a company's fleet-wide average need only be better than it was in 2005. Oh, and new companies that want to put advanced technologies into production needn't apply.

When the government bailed out Chrysler in 1980, it required major concessions including giving up fuel inefficient rear wheel drive cars, providing an equity interest in the firm which was later sold for a profit and sale of the corporate jets.

Environmental and auto safety advocates have battled automakers for years as Detroit claimed that they couldn't or shouldn't have to make clean, safe cars that sip gas instead of guzzling it. Should taxpayers be called upon to bail irresponsible auto companies out of their mistakes? Certainly not if they are going to repeat them. But with the ink barely dry on the $25B loan guarantees, auto industry lobbyists and their friends in Congress have already announced that they are planning another $25 billion bailout for next year.

So let's be clear. Not another nickel for automakers without dramatic improvements in fuel economy, emissions and safety beyond current law.

Cutting cars' thirst for gas to average 40 mpg by 2015 will slash both oil addiction and global warming pollution while saving consumers billions of dollars at the pump. Improved fuel economy has a further plus. By transforming their fleet from gas hogs that sit unsold on car lots into efficient vehicles that people want to buy, Detroit won't have to come back shaking its tin cup again.

It is instructive that at the same time that Congress was passing this bailout, the European Union Parliament's Environment Committee voted to require a nearly 50 mpg average by 2015 or sooner. Europe knows that this is auto mechanics, not rocket science: No $25 billion bailout and 15 MPG more to boot.

Hybrids like the Toyota Prius, Honda Civic and Ford Escape are rolling proof that automakers have the technology to make 40 mpg average vehicles. What's missing is the will to act.
The taxpayers who have just invested billions in saving GM, Ford and Chrysler deserve better. When the auto industry comes back for more, Congress must condition such handouts on the production of a 40 mpg fleet that has a 25% lower fatality rate than today's. That would be an investment that would really pay off.

Comments

[Russycle]

This money should be dedicated to developing plug-in hybrids and subsidizing their price so they're competitive with other vehicles.

[JuniorNorman]

We need a car industry. Hyundais are made with 90% KOREAN PARTS! Korea subsidizes steel. Korea is a one way trading partner like the rest of the world. Lets go back to tariffs on imported cars.

[spambrando]

Here's a quote for ya:

"I believe that banking institutions are more dangerous to our liberties than standing armies.
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.­'


And exactly WHO was it that made this statement?


Thomas Jefferson 1802

I sure hope O has some good ideas after he (hopin, hopin') gets in. You really can't put a 100% specific plan into action UNTIL you're Prez...

[feo]

Dan
insider info
I worked on documentation of the Chrysler package. The biggest sticking point was dispensing with the corporate jets. Man alive, did those execs whine and cry and roll on the floor and pee their pants. Ultimately they set up what they called a private company, Navistar Aviation, which was supposed to compete with small, regional air carriers. Oddly enough, the only customers Navistar ever had were Chrysler execs! Still, as far as anyone can tell, the bailout never actually costs the taxpayers a dime, though in the process Chrysler chopped its workforce by 50%.

[Seamus]

Screwed and not kissed. I saw it on Internet after it happened and never saw it on television.

[Scarabus]

So we're borrowing money from China in order to protect the executives of the auto giants from being held accountable for their incompetence and callous disregard for the health of our planet or the suffering of our children and grandchildren? Nice! Legislators should have imposed conditions, and even demanded equity. That would have protected the workers, the taxpayers, and the planet. Why didn't they? I want to see the roll call on this vote.

[WritusMaximus]

Well, McSame did tell Michigan (paraphrasing of course) to drop dead.

[Northernmom]

Today I bought a new Lincoln MKZ, the first Ford product I've bought since 1974. Here in Michigan, my friends and neighbors are all affected by the health of the auto companies and their suppliers in one way or another. At least this "bailout" will be invested in real, American jobs. Yes, it should be tied to better fuel economy, and the management compensation should be tied to real performance of this and other benchmarks. But let's not forget that the vast majority of workers (hourly and salaried) in these companies go to work every day striving to make a product that people will buy. Their jobs (and families, and communities) depend on that. Given an equal choice, I decided to buy a car from an American car company.

[LeonBNJ]

The possible collaspe of GM, Ford or Chrysler, all in their USA operations have unionized workers (unlike Nissan, Toyota, Honda and Hundai) would hurt many politicans and he country if it happens. We spend many billions for farm subsidies, so why not for our car companies? Many countries including in Japan and Europe do various 'subsidies' including government ownership, tax deals and so on the give them huge advantages in the world market. We need to keep the 'big 3', American based companies alive, profitable and making the huge changes needed and to be mandated by government.
I agree that there be conditions as to caps on executive pay, keep all current benefits, especially current retiree benefits, end the production of the worst fuel mileage vehicles or engines for them as well as mandate higher fuel and safety standards.

[vietveter]

Why wern't the taxpayers given stock

for their [our/my] money?

More 'something for nothing'

for the asshats that can't

compete in the auto bizz

[Paul]

The money should have gone to building mass transit.

Forget about mandating milage in new cars: you don't give an oil addict more money if he promises to "reform".

Tax imported oil and build mass transit. That way people won't even need cars to get around.

We can't afford the automobile as a transportation paradigm.

[proreality]

It is now always was and always will be poor about poor management. Millionaire's are more worried that the janitor might be getting paid a buck to much to scrub their toilets then they are about realizing where their incompetence leads. The big 3 had thirty years to make themselves competitive with asia and they failed, because they are incompetent. Look at how much they have payed out in executive compensation over the past decade and ask yourself why they don't have adequate capitol. Look at the vehicles they have refused to build for the past 2 decade's and ask why they can't compete. We are living in the Fascist States of America. The rich incompetent bafoons that have ruined it are now telling us that we have to bail them out or things will get worse. The unaccountable thieves that have gutted American industry now tell us that we must give them the money it takes to keep it running, where is all the money they made and say can't be taxed on or they won't be able to invest it and spur the economy? It is time for these malevolent reprobates to hang!

[KillTheMessenger]

Yep. The tax payer got royally screwed on that one.

:-)