The big three stooges

What are we to think of the Big Three automakers plea to Congress (and each of us) for a $25 billion bailout, euphemistically known as a bridge loan or rescue package?

During the disastrous trip to Washington by the auto companies’ three CEOs (stupidly arriving on private luxury jets), the three men were unable to say exactly how much they need and how it would be spent, provide assurance they wouldn’t be back in a few months demanding more money and, finally, explain why Americans won’t buy their products.

You don’t give your last tourniquet to a dead man, said one lawmaker. What is at the end of the bridge, another demanded. Why are Toyota’s U.S. operations able to sell its cars, and you can’t sell yours, another congressman asked.

General Motors claims it could run out of operating money by year’s end. At one point GM CEO Rick Wagoner testified his company might need $5 billion a month. Five billion dollars a month!

The three CEOs rejected filing for Chapter 11, a form of bankruptcy that would let them restructure and rewrite contracts. Even though Delta Airlines did it and emerged able to buy rival Northwest, the automakers said that flying passengers is not the same as building cars. They argued they might never emerge from bankruptcy.

The arguments against letting the domestic auto industry go under are powerful. A total of 3.3 million jobs could be lost. Every state would be adversely affected. Sales of $156 billion in supplies and raw materials would be lost. The government would have to pick up pension obligations for hundreds of thousands. The country might go into full-scale depression.

This is not a matter of labor giving more concessions. Workers gave back significant wage and health care gains in 2005 and 2007 for active workers, new hires and retirees. Scott Paul, head of the Alliance of American Manufacturers, warns against a cultural bias in giving white collar workers a bailout for their industries while denying it to blue collar workers.

There is also the argument that the 1979 Chrysler bailout worked. The loan was paid back, the government got an additional $500 million and the nation got the family minivan.

Along that line, a bailout could give Detroit time to revolutionize itself. For example, the arrival in 2010 of the Chevy Volt, a viable electric car, could be a huge boon. Detroit insists it’s learned that green is not a bad word.

Few dispute that the auto makers have been mismanaged. Their long resistance to standards for more fuel efficient cars is the biggest example. Alan Mulally of Ford says the companies need a new business model. Wagoner said they don’t. Mulally is closer to what the country believes.

When Rep. John Dingell, D-Mich., the auto industry’s best friend, lost his powerful post heading the House Energy Committee after 28 years to environment-oriented Democrat Henry Waxman of California, it was a significant indication of how important energy efficiency has become.

True, the credit crunch is hurting auto sales. And the deplorable cost of health benefits is disastrous to many companies, including automakers.

Ford, Chrysler and GM chairmen say they would accept congressional conditions for a bailout, giving the government an equity stake in their business, putting limits on executive compensation, ending golden parachutes and accepting higher fuel efficiency standards.

They have to convince lawmakers they know what they are doing and will make sufficient sacrifices to make their companies viable.

We don’t know how deep this recession will be. Everyone is frightened. But that does not mean Congress should pass out taxpayer dollars to every industry that comes begging, particularly when they arrive in private planes.

While nobody wants Detroit to fail, the Big Three do not have their act together. They went in one week from talking merger to seeking a bailout. Congress will revisit the issue after Thanksgiving. What happens is up to Detroit.


(Scripps Howard columnist Ann McFeatters has covered the White House and national politics since 1986. E-mail amcfeatters(at)