CAP’s Dan Weiss argues that bankruptcy for the auto companies would have too devastating an impact on employment to contemplate so we need a conditional bridge loan:
To avoid the deadly consequences of bankruptcy, Congress should create a federal bridge loan program that would provide up to $38 billion in loans if the companies agree to avoid excessive executive compensation, fulfill their recently renegotiated health and pension obligations to their hourly workers and retirees, continue to implement plans to build super-efficient cars, and cease efforts to block or weaken fuel economy and greenhouse gas standards. This would stabilize the Big Three, reduce oil use, and prevent an economic catastrophe that could last for years.
Reading GM’s plan yesterday and following the public conversation on this, I think there’s been way too little attention given to the policy angles — the “cease efforts to block or weaken fuel economy and greenhouse gas standards” element of Weiss’ conditions — which are really important. The auto industry has provided a decent living to a large number of Americans for many decades. But it’s also been a very pernicious force on our public policy. If car companies expect progressives to deliver them a financial rescue, then it only seems fair to me that progressives will want the companies to stop blocking key elements of the progressive political agenda. That means dropping lawsuits like the one aimed at forcing California to lower its fuel efficiency standards, it means stopping involvement in whatever anti-green climate change front groups these firms are involved with, it means seeing members of congress from Michigan and other rust belt areas offering assurances to colleagues that they won’t stand in the way of serious climate legislation, etc.
All the evidence I’ve seen suggests that carbon pricing will actually have only a modest impact on driving habits. The big changes will be in the cost of coal-fired electricity and certain aspects of agriculture. But driving has managed to become the public face of the climate issue in no small part because the auto industry has played a leading political role in blocking action. But people will still want cars in the low-carbon economy. These firms will be okay. Giving federal subsidies that are then used to lobby for pro-pollution public policy is not okay.