Looks like there will be no auto bail out with this Congress and this president. The NYT reports today:
The prospects of a government rescue for the foundering American automakers dwindled Thursday as Democratic Congressional leaders conceded that they would face potentially insurmountable Republican opposition during a lame-duck session next week.
Nor does it appear that Bush supports any action. What does this mean? “Some industry experts fear that one of the Big Three automakers will collapse before then.” This is GOP tough love.
Again, I don’t know that anybody should shed too many tears for the Big Three/Medium Two, but I would at the very least accelerate the $25 billion retooling loan to them — only with major strings attached (see “Why bail out the car companies when they bailed out on us?”). It looks like Obama agrees, according to today’s Washington Post piece, “Obama Ties Automaker Rescue to Regulation”:
Top advisers to President-elect Barack Obama are helping to draft an auto industry rescue plan that would bring new government oversight, including the possibility of an auto czar who could ensure the money was being used wisely.
Aides said Obama is also open to an oversight board that would perform the same function as one individual. The proposals come as the estimates of the cost to fix Detroit’s three largest automakers continue to mount.
“Certainly he wouldn’t believe in it being a blank check,” said an Obama adviser, who spoke on condition of anonymity due to not being authorized to speak publicly on the topic. “He wants oversight to be making sure the auto companies have figured out how to become viable, ongoing concerns.”
But, again, none of this is going to happen until Obama is president:
“Right now, I don’t think there are the votes. I don’t know of a single Republican who’s willing to support” the auto bailout, Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, said yesterday. While Dodd said he supports a bailout, he cautioned against “bringing up a proposition that might fail” and suggested that Congress wait until Obama takes office.
Not clear Detroit will survive that long, but as the NYT says, that’s no big deal to the GOP:
Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, said he would not support legislation to aid the auto companies and seemed prepared to let one or all of them collapse.
“The financial straits that the Big Three find themselves in is not the product of our current economic downturn, but instead is the legacy of the uncompetitive structure of its manufacturing and labor force,” Mr. Shelby said in a statement. “The financial situation facing the Big Three is not a national problem but their problem.”
On Thursday, Representative John A. Boehner of Ohio, the Republican leader, also came out strongly against the idea.
“Spending billions of additional federal tax dollars with no promises to reform the root causes crippling automakers’ competitiveness around the world is neither fair to taxpayers nor sound fiscal policy,” Mr. Boehner said in a statement.
Representative Jeb Hensarling of Texas, chairman of the conservative Republican Study Committee, in an appearance on Fox News, said: “You wonder where bailout-mania will end.”
Mr. Hensarling said American automakers should bear responsibility for their failed operations. “They are producing high-cost products that consumers don’t want to buy. And so now we have Washington on the verge of giving them a bailout simply because we have all heard of them and they have high-priced lobbyists.”
Again, bankruptcy is probably a better near-term option than simply handing the car companies a blank check (see Pearlstein: “A Detroit Bankruptcy Beats a Bailout”). But helping Detroit make a rapid transition to high fuel efficiency cars and advanced hybrids would be the best option of all.