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Personal About Politics: To Bail or Not to Bail the Big Three Auto Makers; and Paulson Just Bails.

By       Message Cheri Cabot     Permalink
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It was pretty grim for the Big Three automakers of Detroit on the Hill Wednesday. After flying into D.C. in their private jets, C.E.O.’s Rick Wagoner of General Motors, Robert Nardelli of Chrysler, and Alan R. Mulally of Ford were no longer in the friendly territory of Detroit, but on the hot seat during a hearing before the House Financial Services Committee.

In fact according to an industry lobbyist reporting to, “It was a bloodbath.”   

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The Big Three came to town on Tuesday along with the United Auto Workers (UAW) to plead for a government bailout of $25 billion for the automakers, and an additional $25 million for the UAW. 

Thinking their chances were pretty good since money had been handed out so freely and easily to Wall Street, they were a bit shocked at their harsh treatment. After all, over the last 10 years, according to, Detroit’s Big Three have expended $228.4 million in lobbying costs in Washington. Out of this quarter-of-a-billion dollars, GM spent $92.9 million, Ford spent $78.6 million, and Chrysler, $56.9 million.

That would include $20 million in support of various candidates in the last five presidential elections, with 60 to 70 percent going to Republican candidates.

In the first half of 2008, GM spent $7.3 million on Washington lobbying activities. Ford shelled out $3.8 million, and Chrysler another $3.3 million in gaining the ears of those who redistribute taxpayers’ wealth. (American Institute for Economic Research)

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In other words, they feel they have helped buy  a bailout.

So, what were they lobbying so heavily for up until now? The carmakers fought hard in recent years against two Congressional efforts to raise fuel economy standards, at a time when Americans were struggling with more expensive gasoline and had become more environmentally conscious. They won the 2005 fight, saying they did not have the technology to meet a modest increase. (NY Times)

If they are granted a bailout, and at this point that is anything but certain, it will most certainly come with stipulations. Not only accountability after the lack of oversight on the Wall Street bailout, but a promise of making cars more fuel efficient and environmentally friendly.

In the past The Big Three have come to the Hill as bullies, demanding and usually getting their way. Now the tables are turned and they have few friends in their corner. Instead of spending money to fight technology, they would have been better served to spend that money retooling their plants to produce advanced fuel-efficient cars. 

Senator Chris Dodd, chairman of the banking committee seemed to have little sympathy for the executives. “Their discomfort in coming to the Congress with hat in hand is only exceeded by the fact that they are seeking treatment for wounds that are to a large extent self-inflicted,” he said. “No one can say they didn’t see this coming.”

The chief executives of both General Motors and Chrysler say their companies are facing bankruptcy without the bailout.

Ford on the other hand has taken bold steps by investing billions in future products. They will be unveiling six new vehicles this week at the L.A. Auto show, all hybrids to be released in 2010. GM and Chrysler canceled their plans to attend the auto show.

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Even though Ford seems to be taking bold steps trying to control their own destiny, their chief executive, Alan Mulally lobbied for a bailout because he feared “the prospect of further deteriorating conditions in 2009.” (L.A. Times)

Mulally also pointed out that all the automakers are integrally involved with one another, and the demise of any would effect them all.

Lawmakers did not seem impressed with the pleas of The Big Three. However, while Congress may lack sympathy for the automakers and want

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Cheri is a single, freelance writer living in Southern California. She has two grown children, one in Iowa and one at Columbia University, and is the proud grandmother of two. Cheri is also a purveyor of fine coffee, warm chatter and dry (more...)

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