Despite Big 3 Pleas, Auto Bailout Stalling

CEOs Berated On Capitol Hill; Congressional Leaders Say Deal Is Unlikely Before Year End

(CBS/AP)  Top Senate Democrats suggested Wednesday that a bill to rescue the Detroit Three automakers was stalled and called on the Bush administration to take steps to help save the industry if congressional efforts falter.

Senate Majority Leader Harry Reid of Nevada sought to lower expectations of reaching a deal on the $25 billion proposal before Congress quits for the year.

While he told the Senate he still hoped lawmakers could agree to an auto deal in the "next day or two" of the current lame-duck session, he added: "If we can't do it here legislatively, I would hope that the secretary of Treasury would listen loud and clear because they could take this into their own hands and do what I think is appropriate from their perspective."

Banking Committee Chairman Chris Dodd, D-Conn., was even more downbeat, calling the possibility of reaching agreement "remote."

"I don't see how in the next few days this is going to move forward," Dodd said. Still, he added, "That does not mean that there are not opportunities." He suggested that the Federal Reserve could possibly step up to the job.

The difficulties of striking a deal on the package before a new president and a new Congress with expanded Democratic majorities take office appeared to be too great to overcome. The deadlock persisted even as the heads of General Motors, Ford and Chrysler returned to Capitol Hill Wednesday to ask skeptical lawmakers for a $25 billion lifeline to keep their crippled industry from collapsing.

General Motors Corp. CEO Rick Wagoner told the House Financial Services Committee that collapse of the U.S. auto industry could lead to a loss of 3 million jobs within the first year and ripple throughout communities around the nation.

In sometimes contentious testimony, Wagoner was pressed on when GM would run out of money if the loans weren't extended.

He said he couldn't say precisely, but estimated that the company now was burning through "$5 billion each month."

But, as CBS Evening News correspondent Bob Orr reports, the auto executives seemed to undercut their own "desperate times" pitch when lawmakers learned they flew separately to Washington on three expensive corporate jets.

"It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo," Rep. Gary Ackerman, D-N.Y., said.

The Big Three executives were ridiculed for asking taxpayers to pay for years of production and management mistakes. As Rep. Jeb Hensarling, R-Tx, put it, "How do I know that you will not become the next AIG: $25 billion next month, $25 billion the month after that?"

CBS News asked the same question in an interview with GM CEO Rick Wagoner late Wednesday.

"We've really substantively restructured the cost side of the business and fed out a bunch of new models that are being well received," Wagoner said. But asked if he could promise taxpayers that he wouldn't be back for more money, he said, "I can't promise anybody because I don't know what's going to happen to the economy."

For General Motors, the goal is to limp to 2010, Orr reports. That's when new lower-cost labor contracts take effect, and when a revolutionary new electric car capable of going 40 miles with no gas will hit the market.

With the $25 billion emergency package, "We think we have a good shot to make it through this," Wagoner said. He said he anticipated that, if the package is approved, GM would qualify for about $10 billion to $12 billion of the money.

President George W. Bush and Republicans in Congress have been reluctant to use the Treasury Department's $700 billion financial bailout program to finance the loans. And White House press secretary Dana Perino has said Congress should draw the funds from an Energy Department program established by law last year to encourage production of fuel-efficient cars.

Earlier Wednesday, Sen. Richard Shelby, the senior Republican on the Banking Committee, said Wednesday he doesn't believe there will be a turnaround in the troubled U.S. auto industry until its top management is ousted and the manufacturing model sacked.

At a House hearing Rep. Barney Frank, D-Mass., pointedly suggested that Congress is betraying a classist bias by intervening to help white-collar bankers but not blue-collar auto workers.

CEOs weren't the only ones pressing lawmakers to step in with a rescue package. Local dealers blanketed congressional offices this week to make the argument to legislators that an auto bailout is necessary to prevent pillars of thousands of local communities from crumbling.

A Senate vote on an automotive bailout plan, which would also extend jobless benefits, could come as early as Thursday, but it currently lacks the support to advance.

In an op-ed essay in Wednesday's editions of The New York Times, Mitt Romney, a candidate for this year's Republican presidential nomination, wrote: "If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won't go overnight, but its demise will be virtually guaranteed."

The financial situation for the automakers grows more precarious by the day. Cash-strapped GM said Tuesday it would delay reimbursing its dealers for rebates and other sales incentives and could run out of cash by year's end without government aid.

[jwisenbaugh]

I don''t beleave that we should bail out the big 3. they have made billions dollars every year scent the frist car was made.i have heard that one man makes 12 million dollars in one year and he is only a ceo of one of the big 3.their is no reason that one man makes that much money in one year.our army men and woman should be the ones that gets paid the most. they put their lives in danger every day for their country. what does the big 3 do besides make new cars?

[harbinger09]

Bailouts will not save the banks or the auto makers--just stall tactics. Never forget recovery depends on lenders lending again and consumers buying these cars.

Most people are buying used cars or repairing their old cars. Think about it:

1. What person outlays a lot of money on a brand new car in an economy that is about to implode?

2. What bank lends out money in an economy about to implode?

3. With more and more jobs being outsourced, who is left to buy these new cars?

4. When is a car market saturated (when does the majority have a car and not need or want a new one)

5. Never forget, that a large % of yearly new car buyers were actually affiliated with the auto industry.

This means the idea of a car people will want to buy is also moot--because in the middle of an national economic collapse, who is dumb enough to go into debt on a car whim?

Self fulfilling prophecy/catch-22

[noloyalisti]

Trillions to murder women and children in Iraq but nothing to save jobs. Typical American fascist government at work.

[prounion]

I hope the big 3 "take a break" all 3 of them just need to shut down for 2 months and you fools saying let them die will be crying for them to start back up. the trucking companies will start folding the supply companies that supply all the automakers foriegn and domestic will fold. and guess what toyota honda all of the automakers use the same parts for their cars. there is no differnce between the toyota and gm cars hell they use the same parts. If the big 3 go down so will america. P.S. LIVE IN AMERICA BUY AMERICAN PRODUCTS

[jsutaguy]

Posted by craigh9 at 10:14 AM : Nov 20, 2008

Ford has already announced they will make 6 high mpg models that they currently build for Europe, available here. GM has already announced that BESIDES the massive plant closings and layoffs they''ve done over the last 3 years, they will cut ADDITIONAL models from their fleets to help insure profitability.

The problem with your "make them show a gameplan" argument is that they don''t control the biggest problem with their car sales: THEIR CUSTOMERS CANNOT GET CREDIT BECAUSE NONE OF THE BANKS ARE LENDING ANYTHING TO ANYONE.

We (The USA) cannot afford to convert 7 million taxpayers with mortgages into 7 million unemployment collectors with unpaid mortgages.

It is simply idiotic to give 1.3 Trillion to Wall Street (which employs about 600,000 people, and then to DENY 1.5% of that amount to 7 MILLION EMPLOYEES of PROFITABLE US MANUFACTURING FIRMS.

[craigh9]

Posted by justaguy11 at 09:53 AM : Nov 20, 2008

That is an issue that would need to be handled. We don''t manufacture a cannon in this country any longer so the military argument is a concern in many directions.

Again, if they come to the table with a PLAN that is viable I''m sure the money would flow - but to say it''s business as usual - just give us money to get to 2010 is extremely myopic and not worthy of a huge governmental loan because we are not solving anything - just prolonging the inevitable if the big three can''t adapt

[nomorekidds]

I am having so much fun watching these 3 boys get slapped around. None of them are accustomed to being told NO. They believe they should be able to do whatever they want whenever they want. And now their little kingdoms are crumbling. GM will file Chapter 11. The union and the egomaniacs at the top will be gone. The neanderthal workers will be given the choice of staying for $15 an hour or leaving. Hopefully they will leave. Plenty of job seekers out there who will work at a restructured GM for $15/hour.

[jsutaguy]

Hey Craig, what''s the "gameplan" for rebuilding the 3 largest manufacturing companies in the USA if we need, oh, I don''t know, HUMVEES for our military, or TANK ENGINES, or MILITARY TRUCKS...all of which ARE BUILT BY THE BIG THREE??

What''s the "gameplan" for paying off the 500 Billion plus in Pensions that will be owned by the Federal Government if they go bankrupt?

What''s the "gameplan" for putting 7 million people back to work after their companies disappear?

How in your brain is it a good idea to deny 25 Billion IN LOANS (NOT A BAILOUT! LOANS!) to 3 large, profitable, US companies which employ 7 million Americans and produce the majority of our military vehicles and engines...all while GIVING (not a loan, GIVING!!!) WAll STreet ONE THOUSAND THREE HUNDRED BILLION DOLLARS???? Which they use TO PAY BONUSES??

[jsutaguy]

THE BIG THREE HAD RETURNED TO PROFITABILITY LAST YEAR! The *plan* would be TO CONTINUE TO BE PROFITABLE....in the last 3 years, the Big Three have closed hundreds of plants, laid off tens of thousands of workers, and reduced models in order to return to profitability ALL WITHOUT ASKING FOR ANY GOVERMENT HELP, genius.

Then, the Corrupt GOP and WAll STreet destroyed our economy (and you are only *beginning* to see how bad it will be) and, BECAUSE PEOPLE CAN''T GET CREDIT FROM BANKS, THEY"VE BEEN UNABLE TO SELL VEHICLES

Clearly, the Big Three *are* selling what the US public is demanding...and they *ARE* profitable...until the Wall Street/GOP created economic meltdown.

GM outsold Toyota by about a third this year. Ford outsold Honda by about a third.. The number one selling vehicle in the USA this year was the F150....for the 32nd year in a row... The number 2 selling vehicle was the Chevy Silverado...and this was DURING THE GAS CRISIS! http://online.wsj.com/mdc/public/page/2_3022-autosales.html

GM Profitable last year:
http://tinyurl.com/292pzx

[promaclaura]

Craig, I agree, a presentation of a "gameplan" would have had better impact.

[craigh9]

I have a friend that is HUGE in automotive sales. He has been extremely involved with the big 3 for many many years. He no longer seeks out big 3 dealerships to purchase because they are impossible to deal with - if he has a problem it takes forever to get a proper response due to the overwhelming layers of management within the companies. When he deals with the foreign manufacturers he can deal directly with the actual decision makers - that''s why they make money and the big 3 are dying.

[craigh9]

Posted by justaguy11 at 09:13 AM : Nov 20, 2008

If the IDIOTS running the big three came forward with a real plan that showed they are addressing the problem maybe someone would loan them money. Let them be specific - cut management positions by 25%, cut upper management salaries by 33%, come to the table with concessions from the labor unions, etc. All they come out with now is poor poor pitiful us - we need money to get us to 2010 so we can continue to do business as we always have.

If you always do what you always did, then you''ll always get what you always got. They need a REAL plan for change that can be appropriately sold in order for someone to lend.

[jsutaguy]

Clearly, the Big Three *are* selling what the US public is demanding...and they *ARE* profitable...until the Wall Street/GOP created economic meltdown.

GM outsold Toyota by about a third this year. Ford outsold Honda by about a third.. The number one selling vehicle in the USA this year was the F150....for the 32nd year in a row... The number 2 selling vehicle was the Chevy Silverado...and this was DURING THE GAS CRISIS! http://online.wsj.com/mdc/public/page/2_
3022-autosales.html

2. The questions to ask are,
"Why are Bush and Paulsen not making the banks lend the 50 Billion to the Big Three?". This is less than 3% of the money WE''''''''VE ALREADY GIVEN TO WALL STREET!!!
"Why are Bush and Paulsen not making the banks lend AT ALL?". (As England did) http://tinyurl.com/5gzzlt
"Why are Bush and Paulsen, supposedly security conservatives, not concerned about the permanent failure of the 3 largest manufacturing firms in the USA? Are we supposed to buy our military vehicles from JAPAN???
"Why is Richard Shelby saying that the failure of the big three is inevitable when GM had returned to profitability last year BEFORE the Wall Street corruption debacle?" http://tinyurl.com/292pzx

Richard Shelby,supported by Wall Street, the designated GOP spokeman for the "let the Big Three Fail" talking points, helped give over half a BILLION in taxpayer money to build Mercedes, Honda, Hyundai plants here in Alabama. http://tinyurl.com/5pmfbt http://tinyurl.com/5jykp5

[jsutaguy]

"Profitable last year - on the cusp of closing this year - and that''''s your reason for bailing them out - when they can''''t bridge themselves from one year to the next. Out selling competitors by numbers of vehicles DOES NOT translate to PROFITABILITY. They are dying because they have been poorly run. If they can''''t come back through prudent management then they will die and something else will emerge to take their place"

Hey, idiot, their sales are off 45% in October ALONE, and they WOULD get their own Bridge Loan IF THE BANKS WERE LENDING!!! That''s what the big corporations DO to span the tough periods...

Guess what? Even though we''ve already given the banks over 1.3 TRILLION DOLLARS, they are NOT LENDING!!!!!!!!!!!!!!!

Ask yourself, why aren''t Bush and Paulson making them lends? This will save 7 Million jobs and the larges manufacturing operations in the USA..it would move the heat back to the banks that caused this problem. Answer: Cuz WALL STREET OWNS THE GOP!!!

[jsutaguy]

Hey idiots!!!!!!!!

You *do* realize that if the 25 BILLION is not loaned (not a "bailout", a LOAN) to the big 3, they *WILL* go bankrupt, along with all the parts suppliers for them. Guess what happens next?

THE FEDERAL GOVERNMENT BECOMES RESPONSIBLE FOR OVER 500 BILLION DOLLARS IN PENSIONS!!!!!!

That''s right, you sheep who simply suck up the big GOP/Wall Street lies, the PBGC, which is the Federal Agency responsible for insuring US Pension funds, will be on the hook for OVER FIVE HUNDRED BILLION IN PENSIONS!!!

Don''t believe the GOP big lie, lend the big three the less than 3% of the money we''ve already GIVEN TO CORRUPT WALL STREET BANKS!

[craigh9]

GM had RETURNED TO PROFITABILITY LAST YEAR BEFORE THE GOP/WALL STREET ECONOMIC MELTDOWN!
Posted by justaguy11 at 09:05 AM : Nov 20, 2008

Profitable last year - on the cusp of closing this year - and that''s your reason for bailing them out - when they can''t bridge themselves from one year to the next. Out selling competitors by numbers of vehicles DOES NOT translate to PROFITABILITY. They are dying because they have been poorly run. If they can''t come back through prudent management then they will die and something else will emerge to take their place.

[jsutaguy]

I repeat:

GM OUTSOLD TOYOTA BY A THIRD THIS YEAR!!

FORD OUTSOLD HONDA BY A THIRD THIS YEAR!

GM had RETURNED TO PROFITABILITY LAST YEAR BEFORE THE GOP/WALL STREET ECONOMIC MELTDOWN!

Get a clue, people...the Big 3 are asking for A LOAN! NOT A BAILOUT! and they are asking for less than 3% of the amount WE''VE ALREADY GIVEN TO THE CORRUPT WALL STREEET BANKS THAT CREATED THIS ECONOMIC MELTDOWN!

WAKE UP! This is a GOP Big Lie to inflict 7 million job losses on primarily Blue States in punishment for voting against them.

If you *really* cared about your country and its security, you wouldn''t want to see the last 3 major manufacturing firms, which HAD BECOME PROFITABLE AGAIN LAST YEAR, disappear!!

You people are idiots!!!!!!!!!

[craigh9]

Let them go into bankruptcy. If they can''''t sustain themselves through that them let them fail. This is America and if the automotive industry is a vialble option for smart business men then new companies will spring forth. Will there be pain, YES - but no where near the gloom and doom extolled on these posts. Someone with real business accumen will undoubtably buy pieces of these companies, hire skilled workers at REASONABLE wages and benefits, and will pick up shortly after the big 3 are out of the way.
It has happened time and again in America - let''''s allow capitalism to rise to the occassion as it always had.

[craigh9]

AMERICA''''S CEOS ARE TOO STUPID AND TOO ARROGANT TO DESERVE OUR HELP!!! If it weren''''t for the fact that so many workers would be adversely impacted, I''''d say let them all go bust.

Posted by rjstolba at 08:58 AM : Nov 20, 2008

I agree, but don''t let the workers off the hook too easily. They, through their union, have created a HUGE portion of this situation.

[jsutaguy]

Clearly, the Big Three *are* selling what the US public is demanding...and they *ARE* profitable...until the Wall Street/GOP created economic meltdown.

GM outsold Toyota by about a third this year. Ford outsold Honda by about a third.. The number one selling vehicle in the USA this year was the F150....for the 32nd year in a row... The number 2 selling vehicle was the Chevy Silverado...and this was DURING THE GAS CRISIS! http://online.wsj.com/mdc/public/page/2_3022-autosales.html

2. The questions to ask are,
"Why are Bush and Paulsen not making the banks lend the 50 Billion to the Big Three?". This is less than 3% of the money WE''''VE ALREADY GIVEN TO WALL STREET!!!
"Why are Bush and Paulsen not making the banks lend AT ALL?". (As England did) http://tinyurl.com/5gzzlt
"Why are Bush and Paulsen, supposedly security conservatives, not concerned about the permanent failure of the 3 largest manufacturing firms in the USA? Are we supposed to buy our military vehicles from JAPAN???
"Why is Richard Shelby saying that the failure of the big three is inevitable when GM had returned to profitability last year BEFORE the Wall Street corruption debacle?" http://tinyurl.com/292pzx

Richard Shelby,supported by Wall Street, the designated GOP spokeman for the "let the Big Three Fail" talking points, helped give many hundreds of millions of dollars in taxpayer money to build Mercedes, Honda, Hyundai plants here in Alabama. http://tinyurl.com/5pmfbt http://tinyurl.com/5jykp5