Filed under: Government/Legal, Chrysler, LLC., Ford, GM
Auto Rescue/Bailout Bill ready to go, GOP could still block in Senate
Rescue, bailout, whatever you want to call it, the bill that would shovel about $15 billion in gov't loans to General Motors and Chrysler is being finalized as we speak. The stumbling block between Congressional Democrats and the White House has been the breadth of power that will be given to a Bush-appointed Car Czar and whether or not automakers will be able to continue their legal fight against the state of California, 17 other states and the EPA over stricter emissions standards.
It appears as if Democrats have conceded to the White House that the Car Czar will be given the power to force either GM or Chrysler into bankruptcy if they're unable to get additional concessions from the UAW and creditors on their own. Likewise, the administration also appears successful in getting Democrats to drop language in the bill that would force any automaker accepting government loans to drop their lawsuits against nearly 18 states pushing for stricter emissions standards.
The bill could be voted on in the House of Representatives as early as today, though may not be voted on in the Senate for several days until Democrats are certain they have the 60 votes required to block a filibuster by Republican senators who oppose it.
Stay tuned folks, as this thing is far from a done deal despite Democrats and the White House coming to an agreement. Senate Republicans now hold the fate of the Detroit 3 in their hands, and we'll know the outcome when the Rescue/Bailout bill hits the Senate floor.
[Source: The Detroit Free Press, Photo by Brendan Hoffman/Getty]
Reader Comments (Page 1 of 2)
Seminole 11:01AM (12/10/2008)
Haha, love the mall bubble.
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Jim 11:04AM (12/10/2008)
hah, the captions you guys are putting in this photo are hilarious,
TrojanMan 11:43AM (12/10/2008)
Jesus Christ, enough of this picture already... You guys are making a caption contest out of this.
Mobius_1 12:18PM (12/10/2008)
Which they are winning... Maybe we should make this officially a contest.
"So when do you think we can come back for more?"
"I dunno, but it would be much quicker with those jets, could save us days..."
"I don't get it, why are they cancelling Knight Rider again? I'm gonna miss the Autoblog liveblogs."
Randy 1:25PM (12/10/2008)
It's brilliant.... LOL
Kaptain75329 2:00PM (12/10/2008)
"I don't get it, why are they cancelling Knight Rider again? I'm gonna miss the Autoblog liveblogs." - Mobius_1 12:18PM (12/10/2008)
Gold. *thumbs up*
Tim 11:11AM (12/10/2008)
The car czar will force a GM-Chrysler merger come March. Shareholders will also be wiped out. Brands will be sold or dropped. 100's of Dealers will also close. The government can seize property and cancel contracts of any business. Dealers will be forced to liquidate their inventories
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Devin 11:18AM (12/10/2008)
I agree. No Car Czar (unless they appoint Bob Lutz, but something is telling me that won't happen). The current management, at least at GM (maybe not Chrysler) is a good group who have already done a lot with turning the company around. Rick Wagoneer, Bob Lutz, and Ed Welburn all know what they are doing, it's just that turnarounds take a long time, especially when the market hits rock bottom and no one can afford to buy a new car.
Brian 11:29AM (12/10/2008)
...so we might as well just go through a Chapter 11 restructuring with the government providing part of the debtor in possession financing. It would be better to have the process overseen by an experienced bankruptcy judge than a 'car czar' who's never administered and guided a large corporate restructuring....in my humble opinion.
Cameron42985 11:19AM (12/10/2008)
GOP may keep it from passing, but they're not the only ones who oppose it. Some are even for it. Same goes for Dems.
Fact is, it will pass in both houses and Bush will sign it.
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Smegley 11:23AM (12/10/2008)
Bet the UAW is sorry now it dissed repubs for so long.
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Cameron42985 11:32AM (12/10/2008)
Devin, dude... Lutz is to blame for all of this. When I think conservative micromanagement, I think Lutz. Of course GM has always been about following, not leading. From the time they cheated Ford in the 1910's to their current bid to copy Toyota. Put out something original already.
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ronnie schreiber 6:44PM (12/10/2008)
More automotive urban legends. Exactly how did General Motors "cheat" Ford?
ronnie schreiber 11:37AM (12/10/2008)
If the politicians really were interested in the survival of the domestic automakers they wouldn't be using the bailout to push their own agendas. The reason why all the automakers, including imports and transplants, are suing those states is not so much that the automakers are opposed to stricter emission controls. During the congressional hearing the Detroit CEOs made it pretty clear that the problem with California and those 17 other states is no so much that the standards are stricter. The automakers, including Honda and Toyota, object to the fact that they will have to develop cars that meet 19 different standards, for those individual states and for the rest of the country. Obviously one uniform nationwide standard, though stricter than current emissions standards, would be significantly cheaper to meet than developing nineteen different versions of each drivetrain. As some of the congressmen mentioned, there are states rights issues, so it's not so simple as congress mandating a single standard, but this is politics and the basis of politics is horsetrading. If the members of congress from those states want the lawsuits to end and for the domestic automakers to not have unneeded financial burdens while trying to restructure, maybe the best thing is for those 18 states to get together and come up with one uniform standard.
One of the dirty little secrets of the domestic auto industry is that government regulations and product liability issues, both mandated by politicians and enforced by lawyers and courts, are bigger components of the cost of manufacturing and selling cars in the US than labor costs.
While you're blaming the UAW and management for Detroit's ills, don't forget to pass around some blame to politicians and bureaucrats. You can add DOT, EPA and CAFE to the UAW alphabet soup.
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G-Meister 12:00PM (12/10/2008)
The big stink in the room is not so much the reduction of traditional pollutants- The proposed CARB rules call for a reduction in CO2, effectively forcing higher fuel economy. Since this is different from the new fuel economy standards, its a real problem. The automakers should collectively offer only their most fuel efficient models in CA- see how long that lasts when you can't buy anything but a compact car.
Big Rocket 12:47PM (12/10/2008)
@ronnie schreiber:
• Not 19 different standards. Just 2 standards: the federal version, and the stricter CAFE standard. If it is too expensive to develop vehicles for 2 different standards, the automakers can choose to develop vehicles for the stricter CAFE standard, and sell the same vehicles in all 50 states.
• The stricter CAFE standards, if passed into law, apply to all automakers equally. In other words, the Detroit Big 3 and the rest of the world would be competing on a level playing field here.
• The un-level playing field comes from much higher UAW labor costs that the Big 3 has to shoulder, compared to foreign automakers building cars in the US with non-union labor. Take home pay is roughly the same, but the Big 3 has had to pay enormous health care costs, job bank costs, and other benefits for decades. In the words of the UAW president himself, union labor eats into the profits of the Big 3 to the tune of about $1,000 for each vehicle.
Bloomberg, 2008: "UAW President Ron Gettelfinger... estimated that new contracts at [Big 3] will save the automakers 'somewhere in the neighborhood' of $1,000 per vehicle."
http://www.bloomberg.com/apps/news?pid=20601209&sid=aRxTHKjUeS7w&refer=transportation
Cameron42985 11:37AM (12/10/2008)
They're still 'dissing' them, bro. Make no mistake about it. That's because the GOP almost always votes against minimum wage and proper benefits for decent, hardworking people.
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JZeke 12:09PM (12/10/2008)
I've always wondered why that is. I mean, it was the party of Lincoln in a bygone era. Yet people who fear change and society progression love the GOP, even if they are poor.
Seems the Repubs only tactic now is to simply go against everything, whatever is, they're against it. The auto bailout may or not be bad for the taxpayer, and it may or may not be good for domestic industry. Yet they never offer constructive alternatives, just a string of negatives.
Big Rocket 12:57PM (12/10/2008)
@Cameron: I find it hard to describe UAW members as "decent, hardworking people." Unless you consider striking against an ailing company as decent, hard work.
Autoblog, Apr 17th 2008: "This morning, UAW workers at General Motor's Lansing Delta Township plant in Michigan have began a work stoppage, halting production of the Saturn Outlook, Buick Enclave and GMC Acadia."
http://www.autoblog.com/2008/04/17/uaw-strike-halts-gms-cuv-production/
Autoblog, May 5th 2008: "Local UAW contract negotiations aren't going well for General Motors, and today they took a turn for the worst as union members at the automaker's Fairfax assembly plant in Kansas walked off the job at 10AM EST. The bulk of GM's hot-selling Chevy Malibu are produced at the Fairfax plant..."
http://www.autoblog.com/2008/05/05/uaw-strikes-gm-malibu-plant/
Big Rocket 1:10PM (12/10/2008)
@JZeke: The auto rescue/bailout/bridge loan is bad for the taxpayers, bad for the auto industry, and bad for America.
1. Bad for the taxpayer: There is a lot of talk about how it would cost more to let the Big 3 fail, and cheaper to offer bridge loans to them right now. Here is the problem. How can anyone say X < Y if X is unknown? Nobody knows how much it would really cost to bailout the Big 3. They were approved $15 billion so far, but no one knows how much more they will be getting when there is a new administration in the White House. With that in mind, all claims of being cheaper to bail them out is nonsense.
2. Bad for the auto industry: If GM, Ford, and/or Chrysler enter Chapter 11 protection, they can get rid of the UAW and unaffordable union benefits, which will allow the Big 3 to be more competitive. Changing from union to non-union jobs shouldn't be a net loss of jobs -- at least, not much of a net loss if inefficient union workers are replaced by a smaller number of efficient non-union workers. And, as the Big 3 re-emerge from Chapter 11 protection and become lean, mean organizations with world-class vehicles, they will see an increase in market share and profits. In contrast, a bailout can arguably have the effect of prolonging the status quo, which in recent years has meant shrinking market share for the Big 3.
3. Bad for our country: Our country is over $10 Trillion in debt. Which means every man, woman, and child living in this country owes about $35 thousand. Now, when our country is already in debt, where are we going to find the money to pay $700 billion here and $15 billion there? If we keep printing out money without the means to back them up, we will plunge our country deeper into debt, further devalue our dollar, and lead the economy into a second Great Depression.