THE BLOG
01/10/2009 05:12 am ET Updated Dec 06, 2017

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.
2008-12-11-bushwinking.jpg(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.
2008-12-11-Cahier54FrenchGPmercedessilverarrows.jpg(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.
2008-12-11-markfieldsdetroitintro.jpg(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!
2008-12-11-bushdrivingtruckbarney.jpg(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?