Auto bill clears House; Should it pass the Senate, too?

And now, it's on to the Senate!

The House today passed, 237 to 170, HR 7321, the automotive loan bailout bill, and has sent it on to the Senate.

Here's my conundrum, and maybe it's shared by others (not a bad name for a car, either, this conundrum, "Yes, I'm driving the blue Conundrum, right over there..."): As a card-carrying progressive (and an actual card-carrying member of the ACLU), the Brooklyn-born, conservative Jewish, progressive Buddhist, volunteer for progressive causes including for Allard Lowenstein's first Congressional campaign in 1968 where I shook Robert F. Kennedy's hand at age 14, yeah, that part of me, the bleeding heart part, naturally wants the Detroit Three to succeed and prosper, no matter the cost.

But after 35 years writing about the auto industry and its management, I just don't see a reasonable chance of any of the Detroit Three, in the next 14 weeks (the bill's in effect only until March 31st), restructuring their corporations so we'd all be comfortable expecting products we'd really want to buy coming anytime soon. These companies are already, at best, about a decade behind their competition, especially that from Japan. And many say Chrysler's failure is a foregone conclusion.

So, should I go with my gut Jingoistic patriotism? Or do I follow Alabama's Sen. Richard Shelby? Perhaps neither.
(Is that where Palin got the idea?)

Shelby is not only against any bailout or loans for GM, Ford and Chrysler now, he even voted against the 1979 Chrysler bailout. At least he's consistent. A classic phony populist demagogue, when it suits his needs, but consistent.

The biggest industry in Shelby's Alabama, and throughout much of the non-unionized Southeast, is now the auto industry, not American-owned carmakers, but "foreign transplants" and their factories and suppliers.

Alabama has given its own transplants (Toyota, Mercedes-Benz, Hyundai and Honda) more "incentives" than any other state in the union. These incentives, aka legal bribes, often include help, if needed, with financing, no state taxes for a lengthy period, long-time breaks on utility costs (those factories use a lot of gas, water and electricity), building roads, freight train sidings, interstate off-ramps as needed and expediting (or forgiving) all the scores of necessary permits, just to mention a few. This amounts to hundreds of millions, perhaps billions, of dollars lost every year for Alabama residents.
(Famed motor racing photographer Bernard Cahier snapped this shot of the Mercedes-Benz "Silver Arrow" racers at the 1954 French Grand Prix. Today, Mercedes-Benz builds cars and trucks in Richard Shelby's Alabama).

Those 1979 Chrysler loans Shelby opposed came from the private sector, and Washington guaranteed them. Chrysler repaid its creditors, early and with interest, and it all cost the American people nothing.

The really weird thing is that while Democrats and the White House have agreed on this bill, it's Senate Republicans, having had their fill of President Bush's "help" in the 2008 election, who are standing their (phony) ideological ground.

Nancy Pelosi and Harry Reid have signed onto a bill which appears to have, as one of its main goals, the destruction of the UAW. Why? Their low self-esteem and inferiority complex should be over; their party won the election, so someone give them a clue.

This bill says the money will come from a $25 billion Energy Department fund (signed by President Bush a year ago) which was created to help Detroit make more fuel-efficient cars, so now that fund will be worth only $10 billion.
(Mark Fields, seen here at last year's Detroit Auto Show, is a young, top exec at Ford; he oversaw the renaissance of Mazda in Japan after Ford bought a 33% interest in it, though their Mazda holdings are now around 10% of that company. Fields is being talked-about as a possible participant if one or all of the Detroit Three are formally reorganized).

It also creates the Car Czar (to be hired by Bush, with, some reports say, the pre-approval of Obama).

This "overseer" (the Czar's title in the bill, which seems even creepier to me) will have the power to:

- "Shape a restructuring of the companies, withholding further loans if progress toward a turnaround stalled,"

- "Obtain the necessary concessions and make other changes to prove they (the carmakers) can survive and compete," and,

- "Recommend a bankruptcy as an incentive for labor and other stakeholders to agree on givebacks" (this one aimed right at a bull's eye over the UAW's heart).

What are these "necessary concessions" and "givebacks?" At this point, no one knows. Wouldn't you also like to have "recommend a bankruptcy" defined?

The White House also insisted that Cerberus Capital, which owns Chrysler and is headed by John Snow, one of Bush's ex-Treasury Secretaries, would not have to pay back any of the money if Chrysler fails. Democrats agreed. Sweet, huh?

The draft bill also insisted that the Detroit Three would have to end any lawsuits against states (read: California) with stricter emission standards than those in federal law. The Bush Administration warned that if the wording was not struck, that alone would be a deal-breaker.

Showing the typical courage and leadership we've come to expect from them, Pelosi and Reid dropped the provision from the bill. What is it with these people? They won, for cryin' out loud!
(This dog-loving driver is a bad example, because he has the pet on his lap, interfering with his driving, and he doesn't seem to be wearing his shoulder har ... oh, wait. If the president does it, it's not illegal, right?).

I'm feeling better about my "Three into One" formula, though it appears that's not going to happen. It would merge the Detroit Three into one large company, with the best-qualified, most exceptional people from around the world hired to run it. Any ideas? Roger Penske? Ross Perot? Ford's Mark Fields? A single person or a board?

Could this bill keep the Detroit Three alive beyond March 31st? Are these companies capable of making the necessary changes? If they keep their current management, are we just putting off the inevitable?

Or is it smart to spend the $15 billion now, keeping Detroit Three doors open, their employees paid, and spend the next three months planning for their closing and readying for how that would impact the American and world economies?

Follow Steve Parker on Twitter: www.twitter.com/autojourno

Comments

[mcj3691]

"These companies are already, at best, about a decade behind their competition, especially that from Japan. And many say Chrysler's failure is a foregone conclusion." - I couldn't disagree with the preceeding statement more.

GM outsold Toyota by 1.2 million vehicles in the U.S. last year, and iis 560,000 ahead this year. J.D. Power rated the Chevy Malibu the highest quality mid-size sedan - better than Honda Accord or Toyota Camry. The most fuel-efficient Ford Focus has the same highway fuel economy ratings as the most efficient Toyota Corolla. The most fuel-efficient Chevrolet Cobalt has the same city fuel economy and better highway fuel economy than the most efficient non-hybrid Honda Civic. The most productive automotive plant in North America is Chrysler's Toledo Supplier Park. Republican Richard Shelby, one of the most vocal critics of the auto industry bail out, has managed to secure billions worth of tax breaks, concessions, and give aways to Mercedes Benz in his home state of Alabama. I guess he doesn't want to help out any American companies though. This whole thing stinks. The American companies are playing against a stacked deck, and have still done a fantastic job. Now that things are really getting tight throughout the economy - we should help them out.

[midknightryder13]

I normally don't have too many problems with HuffPo's headlines -- even the more sensationalistic ones -- because I understand that the idea of a headline is to get someone to read the story.
However, THIS one I cannot let pass.

Repeat after me: "Congress" is the unbrella term that describes BOTH the House of Representatives and the Senate.

It is therefore IMPOSSIBLE for a bill, ANY bill to "clear Congress" and THEN "pass the Senate". If it "cleared Congress" that means BY DEFINITION that it "passed the Senate".

The correct terminology is "clears the House".

[Steve Parker - Huffpost Blogger]

Okay, okay! This is what happens when I post at 2am, and being on the west coast, I try to do that so people on the east coast can see the posts first thing in their mornings, if they like.
I appreciate the criticism --- and changed the title.
Here's how posting works with the blogs, at least as I've experienced it: We write our own posts and headlines, then editors -- somewhere out there in the ether -- can make suggestions to improve the post. In over six months after creating and now writing and moderating this blog, editors have made, maybe, at the outside, six or seven suggestions, and each one was a question on a point of fact, not on any opinions, either from you folks or me. Also, one or two of my headlines were either not in the appropriate format or were too long.
Don't want anyone to get the idea that the Huff Post censors us in any way at all, apart from asking for some fact-checking on my part. Keeping things consistent throughout the Huff Post is very important, as important as that is in a daily print newspaper (remember those?).
Having worked at many magazines and a few newspapers, I believe what they've created here is the 21st century's first (and so far best) online version of the traditional American print newspaper. There really is something here for everyone. And a lot of Letters to the Editor!
Thanks again.

[w8aminute]

I think the smartest thing to do would be to pass the loan.
With the latest unemployment numbers out - why wouldn't anyone that says they love their country try to do whatever they could to slow down unemployment, which in turn slows down foreclosures, which in turn stabilizes housing prices?

I just don't get the mentality that says foreign car manufacturers are better. We Americans and our tastes are fickle. We are not 'all size fits one'. We need trucks & many families think they need SUVs.
We have places in this country that will never get mass transit - we're too big.

The bottom line isn't quality or mpg - the bottom line should be stopping more Americans from losing their jobs and slowing down this economic crash.

[w8aminute]

make that 'one size fits all'.

[krabby]

That was a good post. It has become clear that the republican Congressional leaders from the deep south are trying to protect their constituents. So are the Congressional leaders from the north. In the midst of the deepest economic crisis in decades, we need to support our manufacturing base. After all, without it, what was the Wall St, bailout all about? We as a country cannot afford to write blank checks to the financial institutions when nobody will have jobs left to invest in the banks. The loss of 3 million jobs in these times will be hard to over come. The total fix for the US auto industry will take years to accomplish, but under these conditions, the immediate loss of that manufacturing base will surely send the US economy into a deep depression.

[Steve Parker - Huffpost Blogger]

Thanks for the comment.
What about mandating whoever may be left of the American auto industry when this is all over, that they also, in addition to high-mileage cars and trucks, must also develop and build interstate, cross-country Bullet Trains, local light-rail, vans and busses of all types and sizes running on fuel cells, etc? And all the necessary infrastructure for them. That'll do a lot to keep Americans working and create hundreds of thousands of new jobs, too.

[rickmbari]

"Three into one" is exactly the wrong direction. Better to break these companies up into smaller entities, probably along brand lines, creating more nimble companies that can innovate, compete - and fail, if they so deserve, without wrecking the economy.

We're in this mess because we've allowed these corporations to become "too big to fail." And the solution is to make them even bigger? I don't think so.

[Steve Parker - Huffpost Blogger]

Thanks for the comment.
Not too make them all bigger, but to merge all three into one. One company led by the best people in the world (we'll get headhunters to find them) and we already have many of the best minds in R&D developing new technologies. Their ideas have never gotten the respect they deserve inside the Detroit Three; nothing has ever been more important than production, sales and quarterly profits.
That must change, and that's why the current management of all three companies must go - and go now. You can give them all the billions in the world, but without people at the top completely dedicated to being better than Toyota, better than Audi, better than Hyundai, it will all be wasted.