Stupid, stupid folks. I understand there are parts of the bill that members of the Senate, mostly Republican, did not agree with, but have these same people been paying attention? There is no time to “go back to the drawing board.” There is no time to retool the bill and then spend more days discussing and voting, discussing and voting, ad nauseum. The auto companies may not even last until the new year.

Why can we not get important measures accomplished at the state and national levels? Partisanship, I would argue, plain and simple.

South Carolina Sen. Lindsey Graham, who played caddy for John McCain through much of the presidential election, said automakers

“… need to make significant, structural changes before they receive federal assistance and those changes should be made in the private sector, ” he said. “No one wants to see these companies fail and workers displaced. I feel for the car dealers and their employees who are being hurt by years of bad decisions made by the leadership of the Big 3. But I also realize that unless major, fundamental changes are made in the way the Big 3 operate, they will likely find themselves right back in the same situation.”

That’s all well and good. And if it happens a second time, no one will be waiting in line to bail these folks out. But right now, not only the fate of the industry (in an incredibly shaky economy), one that exudes the very concept of “Americana,” is in jeopardy, but thousands of jobs in that industry and other associated fields. Sen. Jim DeMint, also of South Carolina, seemed even more adamantly opposed.

DeMint came out early and harshly against the plan, joining four other conservative senators in calling for a business solution, not a “political solution.”

“This is a business and financial problem,” DeMint said, adding that existing bankruptcy laws are designed to allow companies to come out of these situations healthy.

He said consumers would much prefer to deal with auto firms that have survived a “pre-packaged bankruptcy” than and “temporary bailout.”

DeMint’s cohort Sen. Richard Shelby of Alabama told reporters he intended to slow the legislation down, adding, “No one knows what’s in it.” — The Associated Press

First, how can we deal with an auto industry that may or may not survive a ‘pre-packaged bankruptcy?’ Do we have some assurance that the industry could survive bankruptcy given the negative stigma associated with filing Chapter 11? We have nothing of the sort. Second, why on earth is Sen. Shelby claiming “no one knows what’s in it (referring to the auto loan bill)?” The text is right there in plain view. I quote a portion of it in a previous post. I, in my limited capacities, was able to access it. Is Shelby not? I certainly hope he read it before voting on it. Is he too lazy or unconcerned to bother with its details? To claim that “No one knows what’s in it” is at best, sarcasm, and at worst, a lie.

Fortunately,

Bush officials made clear that if Congress didn’t act, the White House would have to step in to save Detroit from collapse with funds from the Troubled Asset Relief Program, according to the sources familiar with the conversations.

Heck, in this regard, Bush and his administration have their heads on straight in standing in opposition to his own party. What are folks in the Republican camp thinking? Are they just being ornery? Are they upset about the forthcoming Democratically controlled House and White House and are just playing naughty? What’s the nature of their abject dissent? Perhaps that’s a subject for a subsequent post.

The Associated Press yesterday reported that the House of Representatives passed 237-170 a $14 billion bailout package for the ailing car industry, which, interestingly, amounts to $4 billion less than what GM was requesting by itself and a whopping $ 11 billion less than what all three were seeking together.

Senate Republicans (and some Democrats) are expected to fight for the bill’s defeat based on the grounds that the automakers should be allowed to go under bankruptcy protection and then restructure from that point or face “hefty concessions” as a condition of federal help, according to the AP. This latter plan would on the surface sound viable to me, except for the fact that the situation at this juncture is so dire. Can we really allow the automakers to fall into bankruptcy, thus taking a chance that the market will still find favor and help the industry thrive again once the self-admission is made that economically, they are in the toilet? Can we take the chance that the general public will still want to buy Fords, Chryslers and GMs, knowing that those companies have tanked and may or may not be able to fulfill warranty and service agreements? Will the general public want to purchase cars from companies that may, in a matter of months, be defunct? I’m not so sure. One only has to take a cursory look at Wall Street from day to day to know how fickle the market is. As I pointed out previously, the Big Three’s market shares are just barely teetering above the surface. Forcing them into bankruptcy just may be the death knell.

Of course, if Republicans and some Dems are right, I’m all for pushing them into bankruptcy. Part of me thinks the higher-ups deserve what they get (But certainly the workers and the everyday folks deserve the opposite) for their faulty decision-making and failure to make the highest quality cars possible. But I don’t think opposing lawmakers are right, and perception is all we need to prove why. Bankruptcy has, and this is probably an understatement, a negative connotation to most in this country. While the Tribune Co., which owns the Chicago Tribune and the Los Angeles Times, recently declared bankruptcy and will continue to operate as normal for now, few in the general public see it this way. The general public, I would argue, sees bankruptcy, not as a government protective measure, but the death knell itself, a final round of “Taps.”

The House-passed bill also includes provisions for a so-called “car czar,” unfortunately named, that would reside over the distribution of the loans and make sure the automakers were playing by the pre-determined rules.

Perhaps the most perplexing part of the plan is “an unrelated pay raise for federal judges.” Say what? How does that relate to the auto industry crisis? I’ve often wondered this about a lot of legislation that comes up for vote. Proposed bills are often littered with extraneous, unnecessary, and worse, unrelated material. This is one of those instances. It’s as if lawmakers take the roles of poor storytellers. They sit down to write a bill with a clear plot or topic in mind (Say, one that provides assistance to ailing automakers) and somewhere in the process, they slip a disc and get off track. Here is that portion of the text from the bill on judges located in Section 19(c) of the bill:

(c) AUTHORIZATION OF FISCAL YEAR 2009 COST OF
5 LIVING SALARY ADJUSTMENT FOR JUSTICES AND
6 JUDGES.—Pursuant to section 140 of Public Law 97–92,
7 justices and judges of the United States are authorized
8 during fiscal year 2009 to receive a salary adjustment in
9 accordance with section 461 of title 28, United States
10 Code.

That’s all well and good, but couldn’t this have appeared in a separate bill? Even the AP admitted that it was “unrelated” to the issue at hand.

Regardless, the Senate could possibly take up a vote as early as later today and have this thing pushed through, completed with unrelated language, by the end of the week. Still, as much as I loathed seeing our friend Rick Wagoner and Co. blast into Washington in their private, luxury jets, and seemingly reformed, in hybrids they didn’t pay for weeks later, this, I’m afraid is necessary if we don’t want to find ourselves on a downward slope from a recession to a depression. We can only hope the auto execs or the boards they represent have the wherewithal to get their formally inadequate operations turned around, no matter the cost to executive egos. The workers and the economy they help prop up are largely dependent on it. If huge companies are allowed to grow to nearly unregulated proportions (as we in this country allow them to do), they should be willing to go through a self-evaluation, take responsibility, clean house managerially or whatever else needs to be done to right the ship.

The Big Three automaker execs have apparently learned only a minor lesson after their disastrous appearance on Capitol Hill in November, when lawmakers torched GM Chief Executive Officer Richard Wagoner, Alan Mulally, head of Ford Motor Co. and Chrysler head Robert Nardelli for arriving in Washington in corporate jets. This time around, the three took the nine-hour trip from the Midwest in hybrids.

A detailed article from The Associated Press recounts one of the reporters, probably Tom Krisher, trailing Wagoner’s train for a portion of the trip and recording average speed, if it went over the speed limit and by how much. While these details are seemingly irrelevant to the bailout issue at hand, I think it’s at least interesting to note, just in a small way, how the folks who are asking much of the American people conduct themselves on the road and in their lives. And this is important because it speaks to a larger point.

The CEOs cost-cutting efforts might be a step forward for three men who are accustomed to living as far removed from averages Joes as possible — and especially far removed from the scrunchy sedans in which they drove to Washington — but I don’t think the American people are quite ready to ring the redemption bell on these guys yet. CNN reports that six in 10 are against the $34 million bailout plan. And while failing to bailout the automakers could have catastrophic implications for the economy, even globally, I think the personal face that we have put on this particular cry for help may affect its result.

The $700 billion bailout enacted into law on Oct. 3 called for money for Bear Stearns, AIG and numerous other institutions. Though these corporations were devvied up large sums of money with largely conflicted opinions from the public, lawmakers agreed 228-205 in the House and 263-171 in the Senate to pass the law. The automaker bailout proposal is different because, in part, the character and personal traits of the auto execs, perhaps more so than the banks’ leadership, have been called into question. Many have said that a bailout of the industry, while necessary, isn’t enough. An executive and managerial restructuring is crucial to rebuilding companies that have made errant decisions and produced subpar automobiles for years.

One such errant decision that, perhaps, speaks to an ability to make concessions but not sacrifices? Driving hybrids to Washington was a nice gesture, but at $399 per hotel room (at a minimum), it appears Wagoner and company haven’t fully enacted their thinly veiled ruse in Washington:

Wagoner’s group arrived in Washington, D.C., during rush hour in heavy traffic on the Capital Beltway. They took the George Washington Memorial Parkway into the city, and stopped for the night at the JW Marriott Hotel, just blocks from the White House.

Wagoner and his colleagues got out of their cars and told a photographer they were tired and were planning to retire for the night, just a little after 5 p.m. Some members of the party did eventually go to the hotel restaurant in the evening but Wagoner wasn’t among them.

The cheapest room at the JW Marriott goes for $399 per night. A suite goes for just under $800. A guest in the restaurant can buy a glass of Kendall Jackson Sauvignon Blanc for $15 and eat a $15 club sandwich with turkey, bacon and lettuce for the same price. A crabcake sandwich is the most expensive on the menu at $21.

GM’s Snyder said Wagoner plans to drive back to Michigan, though he didn’t say when. Driving round-trip cost about $100 per car, including gas and tolls. — The Associated Press, Dec. 3, 2008

Essentially, Wagoner will spend twice as much or more (depending on how long he stays in Washington) on just the hotel room, wine, crabcake sandwiches or whatever $20 sandwiches he decides to buy than on the car trip. Driving hybrids was an example of how one might set an example and show Americans you’re willing to do things differently to save money. Paying upwards of $400-500 or for one night in a Marriott is not. Apparently, the lesson hasn’t fully been learned and likely never will be. Even pretending to be a layman is beyond these folks’ grasp, and that’s why they’ll have a tough time this week, not only gaining American’s support for their bailout, but convincing lawmakers, who will clearly see their hybrid-driving as a redemption-seeking gesture and little more, that they can right the ship.

Listening to NPR today while working at the office, I heard, perhaps, the most interesting quote coming out of the automaker bailout hearing, which took place Wednesday on Capitol Hill. I didn’t have time to make a note of it or search for it at the moment, but after work, after searching the Internet for a good 30 minutes, I finally had the bright idea that, “Hey, I work for a newspaper, I can check the AP wire.” So, here it is with comments following:

During the House hearing Wednesday, Rep. Brad Sherman, D-Calif., asked the three auto chiefs seated at the witness table before him to raise their hands if they had come to Washington on commercial airliners. No hands went up. Then he asked if any planned to sell their corporate jets. Again, no hands went up.

Sherman and Rep. Gary Ackerman, D-N.Y., told the auto executives they were having a hard time justifying to their constituents bailing out companies whose chiefs fly around in expensive private jets.

Ackerman said there was “a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off them with tin cups in their hands. … It’s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo.”

A Senate vote on an automotive bailout plan, which would also extend jobless benefits, could come as early as Thursday, but it clearly lacks the necessary support to advance. — The Associated Press (Link to full article)

Thus, Sherman was essentially making the point that it was sort of hard to convince his constituents (and I would argue, the general American public) that bailing out companies whose owners say they want to save their companies (probably for their own vested interests and their expensive cars and jets), but don’t seem to care enough to make personal sacrifices to save money (Flying commercial: Oh, the tragedy!). Ackerman’s observation, “It’s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo,” was spot on. And I add this: Is Toyota, Nissan, Honda or BMW in dire straits? No.

Let’s compare American automakers with European ones, noting first, that most auto companies have taken a downward spiral during the last year because of the shakiness in the global economy. But American automakers are in far worse shape.

Closing shares for Wednesday, Nov. 19:

Toyota, 59.76; Honda, 19.89; Nissan, 6.78 vs. …

Ford, 1.26; GM, 2.79.

Why is this the case now? It’s probably multi-fold, with part of the reason consisting of the general economic climate right now and the other being that American automakers for years have made inferior products. There’s no bones about it, and perhaps now, it’s coming to a head. That’s not a knock on Ford and the like — I certainly want to see American products flourish — but it’s just the truth, and it’s no secret.

Consider this from former presidential nominee Republican Mitt Romney in a guest column to The New York Times:

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Add to that economic mismanagement and the poor leadership and you have what we saw today. You have automaker execs flying in on private jets asking for donations from the feds, which, in itself, is ironic and a prime example of why they should be allowed to suffer their own fate. It’s really unfortunate for the thousands in the Detroit area dependant on this bunch for their livelihood. My suggestion: go South: apparently it’s set to become the new Detroit. Many have already.