Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid held a joint news conference today where they made it clear that the auto industry has to come up with a viable plan to reorganize or they will not get a dime of federal money.
“It is all about accountability and about viability. Until we can see a plan where the auto industry is held accountable and a plan for viability on how they go into the future, until they show us the plan, we cannot show them the money… So, for reasons of our national security, for reasons that relate to the health of our financial community, and for reasons that relate to the needs of the workers who will be affected by this, it is essential that we see some restructuring, some path to viability, from the auto industry.” Pelosi said.
Reid stressed that currently there is no plan that could pass Congress and be signed by President Bush, “Unfortunately, the sad reality is that no one has come up with a plan that can pass the House and Senate and get signed by President Bush. And the main reason is what we have all witnessed in congressional hearings this week: The executives of the auto companies have not been able to convince the Congress or the American people that this government bailout will be its last. And they have not provided a plan that will ensure accountability from and viability for the industry.”
Pelosi said that Democrats reject the idea of bankruptcy for these companies, “The Leader addressed what that meant in a timetable. I know Leader Hoyer will adjust that as well so I won’t go into that. But again, we reject those who are advocating bankruptcy for the industry. We reject that. But we do want to work together, and I don’t think we saw very much in the hearings of the last few days that gave us the confidence that we can act upon it legislatively.”
It was an insult for CEOs to come to the Hill with hats in hands, asking for a blank check while taking no responsibility and offering no concessions. Judging from what I heard during the hearing yesterday, Democrats and Republicans agree that there is no chance that Congress is going to blindly throw taxpayer money at the auto industry. They only agreed to the first bailout because the financial system was on the verge of collapse.
Even if Congress does pass a bill, the odds of President Bush signing it are slim. His administration is firmly opposed to an auto industry bailout. It makes no sense to use taxpayer money to keep the industry a float if they are going to stick with the same business practices that have them getting pummeled by foreign competition now. I think something will get done for the auto industry after Obama takes office, because the nation can’t afford to lose 1-4 million more jobs.
The plan that will probably pass will follow the blueprint of the plan used to bail out Chrysler in 1979 when government loan guarantees and corporate restructuring was used. The taxpayers ended up making a profit in that deal, and any future will be looking to protect any public sector investment.
The automakers need to come to Congress and take responsibility for their own greed and shortsightedness which led to their current situation. Another issue is that the auto industry has been lobbying against fuel efficiency and technological mandates for years. This will have to change before they get any government help.