by Candyce Torres, University of New Mexico-Talk Radio News Service. Senator Debbie Stabenow (D-Mich.) and Representative Sam Brownback (R-KS) talk about the Cash for Clunkers legislation which will help the auto industry get more cars sold and off the lot.
By Michael Ruhl, University of New Mexico – Talk Radio News Service
Paul Ingrassia, former Detroit Bureau Chief of the Wall Street Journal and Pulitzer Prize winner, said that Chapter 11 Bankruptcy may be of long term benefit to companies like GM and Chrysler. According to Ingrassia, bankruptcy could free the companies from contractual obligations which are otherwise overly burdensome to their operations. It would allow these companies to reduce the number of brands and dealers they have without lengthy legal gridlock, which in turn could provide the ability for the auto companies getting back on their feet through a very thoughtful reorganization. (00:48)
President Bush said that he has not yet decided whether he will use TARP funds to bail out the auto industry (0:26).
Sen. George Voinovich (R-Ohio) expresses disappointment that the Senate did not pass the bailout bill but also said that the Bush administation may have the correct answer. (1:43)
Brett Littlefield, Director of Communications at the American Conservative Union, believes the Senate made the right decision in not passing the automobile bailout package. (0:22)
Kevin Hassett, Director of Economic Policy Studies and a Senior Fellow at the American Enterprise Institute for Public Policy Research, says that labor costs must be reduced for automobile companies to survive. (0:34)
Chairman of the House Select Energy and Global Warming Committee Edward Markey (D-Mass.) said that U.S. automobile companies are in trouble because of “their inability to move from Car 1.0 to Car 2.0 over the past half century. A business model premised on bigger cars, wider highways, and more oil is a failed equation.”
At a hearing to discuss the potential automobile bailout’s effect on energy independence, Markey said that these car companies should “use this moment as an opportunity to transform.” He felt that “innovation and technological change over the long term” must be made a priority in the future for these companies.
The automobile industry is a “very cornerstone industry” in the U.S. said Rep. Candace Miller (R-Mich.). If they went bankrupt, Miller said it would have “a catastrophic effect on our economy.” Miller praised the automobile industry as a lynchpin for creating the U.S. middle class.
Joan Claybrook, President of Public Citizen, felt that laws must be put in place to demand technological and energy-efficient improvements to ensure that auto industries sufficiently attempt these initiatives. She stated that the fuel efficiency required of 35 mpg by 2020 is a “meager provision.”
“We’re going to have these vehicles one way or the other,” said Peter Morici, Professor of International Business at the Robert H. Smith School of Business at the University of Maryland, referring to more energy-efficient and higher gas mileage automobiles. He felt that the only question is whether these improved vehicles are going to be made in the U.S. or not. Morici thinks that these companies should be bailed out only if they agree to share their patents with their competitors for a small price.
Pentagon Correspondent S. Dawn Casey will be attending a live briefing from Iraq with Army Maj. Gen. Mark P. Hertling, commander of Multinational Division-North and the 1st Armored Division, to provide an update on ongoing security operations.
The Washington bureau will be covering a discussion on “Oil Drilling and U.S. Energy Policy at the American Enterprise Institute for Public Policy Research (AEI) with Former House Speaker Newt Gingrich (R-Ga.).
At a hearing today with executives from Ford, Chrysler, and General Motors, Chairman Frank lamented that the U.S. is in its worst economic situation since the Great Depression including 533,000 lost jobs in November. He called the current lack of jobs in the U.S. “an unmitigated disaster.” Rep. Al Green (D-Texas) said that allowing the car companies to fail would put “2 million people out of work.”
Rep. Spencer Bachus (R-Ala.) said the reality is that “Detroit is making good cars.” He called a potential $34 billion loan to the major U.S. automobile companies “limited transitional assistance” and said he would only support giving the car companies the loan they requested if there is an “expectation of success.” Rep. Judy Biggert (R-Ill.) claimed these companies must find a way to be “self sustaining.”
Rep. Donald Manzullo (R-Ill.) said that the U.S. needs to “increase the demand for these vehicles.” He felt that either the government or the car companies need to find a way to encourage Americans “to start buying cars again.”
Ron Gettelfinger, President United Auto Workers (UAW), said workers in the automobile industry are “prepared to do our part.” He did caution against making auto workers and retirees the “scapegoat” since they only make 10 percent of the total cost of the businesses. He also said that allowing the car companies to declare Chapter 11 bankruptcy is not an option because people will not buy vehicles from a bankrupt company.
President and CEO of the Ford Motor Company Alan Mulally said that Ford had “too many brands” of vehicle, but they are now “matching production” with “customer demand.” He claimed Ford needs to become more balanced and efficient. He also stated that he has worked with the UAW to “reduce labor costs.” On behalf of Ford, Mulally asked Congress for a $9 billion bridge financing loan.
Robert Nardelli, CEO of Chrysler, asked Congress for $7 billion in bridge financing. He blamed his company’s lack of success on current U.S. auto sales, which he said were the worst in 20 years. Nardelli was excited about current improvements in his company’s vehicles though, saying that 73 percent of them would have improved fuel economy in 2009.
Chairman and CEO of the General Motors Corporation (GM) Richard Wagoner, who asked Congress for $12 billion in short term loans, said that GM is dedicated to conserving energy volumes and finding new “green jobs” in the future. He also said that his company will change the way they give executive compensation after his company’s economic fallout.
Ron Gettelfinger, the President of the United Auto Workers (UAW), says that auto workers are doing what they can to fix the inherent problems in the auto industries. He did caution against blaming workers for all the problems associated with these companies. (1:29)
