Editore"s Note
Tilting at Windmills

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December 6, 2008

DEAL NEAR ON AUTOMAKER AID.... As automaker executives pleaded with Congress for a rescue with increasing desperation, it appears policy makers are nearing a deal.

Jolted by news of the worst job losses in more than 30 years, congressional Democrats were near an agreement with the White House yesterday on a plan to speed at least $15 billion to the faltering Detroit automakers in hopes of averting the collapse of an industry that supports millions of U.S. jobs.

In talks with White House Chief of Staff Joshua B. Bolten, House Speaker Nancy Pelosi (D-Calif.) dropped her long-standing opposition to tapping a loan program created by Congress to fund the development of fuel-efficient cars. Pelosi agreed instead to use the money to provide immediate cash to General Motors and Chrysler. Without government help, GM executives have said their company may not survive the month.

Pelosi is insisting, however, that money pulled from the loan program be "replenished in a matter of weeks so as not to delay that crucial initiative," she said in a statement. The White House has yet to agree to those terms, senior congressional aides said, but Democrats believe President Bush would be unlikely to veto a bill over those provisions.

Based on the plans on the table, the Big Three won't get what they've asked for. The Democratic leadership is reportedly proposing a short term investment package of $15 billion to $17 billion. This would, one hopes, get GM and Chrysler through the end of the first quarter of 2009, at which point Congress and an Obama administration could craft a more long-term solution.

The news came in the midst of more bad news for the industry. Yesterday, Chrysler hired a bankruptcy firm, and GM announced another 4,600 layoffs.

So, a deal's a deal? We'll see. The Washington Post noted that rank-and-file House members in both parties remain skittish about an aid package for Detroit. What's more, the New York Times reported that Senate Republicans may block the deal, while some House Republicans "have called for allowing one or more of the auto companies to enter bankruptcy."

Policy makers are expected to work through the weekend, and Harry Reid said senators "aim to have votes next week on a responsible plan to help the millions of Americans who rely on a healthy auto industry for their livelihoods."

Stay tuned.

Steve Benen 8:00 AM Permalink | Trackbacks | Comments (10)
 
Comments

CNN Opinion Research had a poll that showed 78% thought Obama would improve the economy. Assuming the poll to be somewhat accurate, Republicans would be wise to hold off threats of filibusters for a while.

Meanwhile, Congress is merely doing some kind of kabuki dance around this issue. They know they can't let the car industry disappear. They know that bankruptcy would be different for a car maker than an airline, for example. What kind of trade-in value could you get five years down the road for a car, if its manufacturer folded? And what would the cost be of the government absorbing pension plans in the long haul? There is simply too little of our economy that is based on production.

Posted by: Danp on December 6, 2008 at 8:22 AM | PERMALINK

Of the Big Three, the one most likely to survive this mess is Ford. Chrysler wants capital infusions to make it more attractive as a merger acquisition, and GM is too top-heavy ---in brands, dealerships, self-defeating interplant competitions, and upper management--- to live out the coming year.

Ford has the better R&D engineering for rebuilding our long-lost rail transit system, as well.

Tough times call for tough choices. Right now is a tough choice---send Chrysler and GM to the poorhouse now, or send ourselves there as the advance team to prepare for their triumphant, grand entrance by the end of '09.

Personally and professionally, I'd have to go with Curtain Number One....

Posted by: Steve W. on December 6, 2008 at 8:29 AM | PERMALINK

These big 3 have spent 25$ Billion on advertising every 2.5 years. GM spent 1.5 Billion on Internet ads this year.
We spend trillions on infrastructure to support the use of their products.
The average cost for a mile of roads is 1 million dollars. One traffic light runs about $50,000.
Once we add: medical expenses for accidents, police surveillance, coroners,court costs, rehab for the injured, crime,street cleaning and clearing,oil spills, parking spaces,pollution and Noise control and monitoring, etc.,etc., we are into TRILLIONS of dollars.
Just how many more automobiles are we going to allow on a planet already over congested with them?
The Noise,Stress and pollution are unbearable.
Fuel efficient cars will not reduce the 46,000 deaths from auto accidents. Each year we are killing each other that many times.

Posted by: Oemissions on December 6, 2008 at 9:44 AM | PERMALINK

Ford??? Not likely.

Most of the Ford R&D (Hybrids anyone?) was done by others. The Triton truck diesel is actually made by International. The aforementioned hybrids use Toyota technology, and Ford buys its hybrid parth from Toyota's suppliers. The hi-performance V6 is from Yamaha. All of the small cars and trucks are Mazdas.

And their financial health is quite shaky. They are the ones about whom it was first said, "they are really a financial company with a money-losing car subsidiary attached".

No, they are in the same dire straits that GM is, and just a little better than Chrysler.

Posted by: CN on December 6, 2008 at 9:53 AM | PERMALINK

Ford??? Not likely.
I have a little faith. I bought a thosand share at 1.71. We sall see.

Posted by: EC Sedgwick on December 6, 2008 at 11:11 AM | PERMALINK

After 30 years of bribing congress to keep mileage standards low automakers now want our $'s to raise mileage.Why does this solution seem appropriate?

Posted by: tom on December 6, 2008 at 11:17 AM | PERMALINK

Is McCain suspending his campaign for this? That's all I need to know.

CN is right. Ford's whistling in the dark. That said, its philosophy may be that of two people out in grizzly country, or three in this case.

You know, one starts running and the other two say, "You can't outrun a grizz," and he replies, "All I have to do is outrun you two."

Posted by: SocraticGadfly on December 6, 2008 at 11:42 AM | PERMALINK

CN said re Ford small cars: "All of the small cars and trucks are Mazdas."

Newsflash CN: Until Nov 18, Mazda was Ford, as Ford owned a controlling share. Ford is now selling part of its stake in Mazda to raise more capital. This is probably unfortunate, as the alliance between Ford, Ford Europe, and Ford Japan (Mazda) was considered one of the most effective in the industry. Ford Europe and Mazda have generally shared the more sophisticated chassis platforms, while the American Fords tended to use cheaper simpler platforms for what has been viewed up to now as the less sophisticated American market, where many people can't even notice the ride and handling differences between a car and a truck.

Posted by: J. Frank Parnell on December 6, 2008 at 5:39 PM | PERMALINK

The real question isn't if the Big Three are worth saving - they are not.

The real question is what happens to the economy if the Big Three go Chapter 11. Do 2 to 3 million people lose their jobs, their pensions and their healthcare? Do we death spiral into a depression?

Are the Republicans willing to let all this happen just to bust unions? They've been handing out hundreds of billions to bankers with no strings attached. Whay do they hate middle class Americans?

Posted by: Glen on December 6, 2008 at 9:00 PM | PERMALINK

We already bailed out Chrysler once. The feds should force Ford or GM to buy them. They've spent billions buying other brands and driving them into the ground or selling them at a loss, so they can't complain about one more.

Posted by: Tentakles on December 7, 2008 at 1:16 AM | PERMALINK




 

 
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