Congress 'bails' on helping the auto industry. Now what?

McClatchy NewspapersNovember 20, 2008 

WASHINGTON — If there's a single moment that explains why Congress refused Thursday to give the ailing American auto industry immediate help, it came when Rep. Brad Sherman asked company executives to raise their hands if they'd flown to the nation's capital on commercial airlines.

No hands went up.

Then the California Democrat asked the heads of General Motors, Ford Motor Co. and Chrysler LLC, who were testifying before the House Financial Services Committee on Wednesday, whether they were planning to sell their corporate jets and fly home commercial.

Again, no hands went up.

Industry spokesmen explained later that they have travel policies to follow and safety considerations, but the public relations damage had been done.

"I know it wasn't planned, but these guys flying in their big corporate jets doesn't send a good message to people in Searchlight, Nevada, or Las Vegas or Reno or any place in this country," Senate Majority Leader Harry Reid, D-Nev., said Thursday.

He and House Speaker Nancy Pelosi, D-Calif., agreed to delay until next month consideration of aid to Detroit's automakers after finding that they lacked the votes for even a last-minute compromise on a $25 billion loan.

"Until we can see a plan where the auto industry is held accountable and a plan for viability on how they go into the future . . . until they show us the plan, we cannot show them the money," Pelosi said.

Their decision, reached at a hastily called private early afternoon meeting, came after nearly a week of tension among congressional lawmakers, the White House and the industry.

They all agreed that the carmakers need help, and the executives warned Congress that their industry could collapse within weeks without it. Economists disagree about whether that necessarily would devastate the Midwest and U.S. economies or whether conventional bankruptcy might be a better solution, but the chance of devastation is real.

However, several developments converged to make it impossible for lawmakers to cut a $25 billion check, factors that are still likely to be present next month.

Lawmakers found that their constituents are increasingly leery of October's $700 billion financial rescue passage. In the last few weeks, its uses have been questioned, and last week, Treasury Secretary Henry Paulson changed the plan's direction, saying that he wouldn't use the money to buy troubled mortgages and bad assets, but instead would try to help unregulated financial institutions that aren't banks but are important to consumer lending.

"There's a lot of skepticism in Pennsylvania and across the nation about the $700 billion, because of the lack of results," said Sen. Arlen Specter, R-Pa. Constituents were saying that carving out $25 billion to help automakers, as many Democrats wanted to do, seemed to add another unfathomable layer to an already murky endeavor.

Also helping to derail momentum for the auto aid was President-elect Barack Obama's comment Sunday on CBS's "60 Minutes" that help for the auto industry "can't be a blank check." He urged the White House, Congress and the industry to develop a plan for the aid.

When lawmakers returned to Washington on Monday for their lame-duck session, some Democrats echoed that view.

"Unless there is a new business plan," said Sen. Dianne Feinstein, D-Calif., "we'll be right back where we are. What's happened in the industry hasn't been abrupt."

Supporters of aiding the carmakers thought that those questions would be answered Tuesday and Wednesday when the auto executives and United Auto Workers President Ronald Gettelfinger testified before congressional committees.

Instead, many lawmakers grew angrier.

"They just weren't saying anything," Senate Banking Committee Chairman Christopher Dodd, D-Conn., said after the hearings.

Adding to the drama was the White House, which insisted that any money for Detroit must come from a loan approved in September that's intended to help the carmakers improve fuel efficiency. A bipartisan group, including Senate Auto Caucus Co-Chairman Carl Levin, D-Mich., crafted a plan to use that money.

On Thursday, however, Reid and Pelosi found that even that approach lacked the votes to pass, and they put the blame on the auto executives.

"The main reason (for the collapse) is what we've all witnessed in the congressional hearings this week," Reid said. "The executives of the auto companies have not been able to convince the Congress or the American people that this government bailout will be its last."

Come back Dec. 2 with a specific blueprint for the money, Reid told the automakers. Dodd's committee and the House Financial Services Committee could hold hearings that week.

If, Reid said, "they present a viable plan that gives us, the Congress, the confidence that taxpayers and the autoworkers will be well served," Congress would return the week of Dec. 8 to deal with it.

House Financial Services Committee Chairman Barney Frank, D-Mass., said he wanted to see some assurances that money from the September loan would still be used to help improve fuel efficiency.

Dodd talked about executives making sacrifices and symbolic gestures, perhaps taking big pay cuts.

Most of all, the automakers need to help Congress' constituents understand that their plea isn't just the cry of a gang of fat cats looking for an expensive handout, lawmakers said.

"It all comes back to persuading the American people," Specter said, "and there's a lot of skepticism out there."

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