How Big Three Automakers Can Win Over Congress

The CEOs of the Big Three automakers are headed back to Washington to renew their calls for a bailout. Ohio Sen. Sherrod Brown, a Democrat, offers his insight into what Detroit needs to do to get in the good graces of Congress and stay out of bankruptcy.

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MICHELE NORRIS, Host:

From NPR News, this is All Things Considered. I'm Michele Norris.

MELISSA BLOCK, Host:

And I'm Melissa Block. The CEOs of the Big Three automakers are making a return trip to Washington. This time, they're traveling in hybrid cars, not corporate jets. That mode of travel didn't go over too well when they appeared before Congress two weeks ago. The auto execs will be asking Congress once again for emergency aid, this time as much as $34 billion. And they've come armed with new plans for how they'll try to nurse their companies back to financial health.

Ohio Democrat Sherrod Brown sits on the Senate Banking Committee, which will be hearing from the CEOs tomorrow. And Senator Brown joins us from Cleveland. Thanks for being with us.

SHERROD BROWN: Glad to be with you, Melissa. Thank you.

BLOCK: There are a lot of jobs in your state that depend on the auto industry. Do you support this bailout that's coming before you?

BROWN: Yeah. Of course I do. The auto industry is, for all its faults, and its management is not always been the best over the last two or three decades, but the auto industry is so important, not just for Ohio. But the number of jobs in this industry, and not just in auto states, but all over this country, is - the number of jobs is so significant that we need a strong, viable, prosperous domestic auto industry.

BLOCK: OK. When the executives came before your committee last month, they got a very chilly reception. What do you think they need to tell lawmakers in these hearings this week to make their case?

BROWN: I think they start with a bit of contrition, which I think that they will do. I think they learned a lesson that they should have known before when they flew in their corporate jets and would not even discuss a potential pay reduction from their multi-million dollar salaries, but they understand that.

And I think that companies, they're really proposing what the financial companies should be abiding by in terms of cuts in their salaries, in terms of executive compensation limits for other major executives, in terms of dividends, all of that. But they've also gone a good bit further in understanding that they need to cut costs in their companies.

They need a very different business plan. They need to be much more serious about building hybrids and electric vehicles and all of that. And I think they're going to accelerate their production of those vehicles and share that with us in the Banking Committee and with the Congress and with the American people.

BLOCK: How would you make the case, maybe to people outside of Ohio or maybe to Republicans on the committee who might not be convinced that this money, this $34 billion that they're requesting, is a solid investment, a good thing to do?

BROWN: First, there are no alternatives. This recession we're in would get much, much worse if we stand aside and do nothing. And I would also say that in every other country in the world, the government helps its auto industry when there are problems because they know how important it is to the nation as a whole.

We bailed out - as steelworker president Leo Gerard said, we bailed out people who take showers before work, but we refused to bail out people who take showers after work. It really is a case of - and we're requiring things of the auto industry that we didn't require of the banking and the financial services industry which we should have required. But we're going to do it right this time, and taxpayers' investments are going to be protected.

BLOCK: You think there's a double standard?

BROWN: I think there's been a double standard. I think that Secretary Paulson and the Bush administration has a - of course, have a bias towards Wall Street. That's why the secretary has refused to do this himself to help the auto industry, as he's refused to help people in their homes that are about to be foreclosed on to modify their mortgages, and we would like to see Treasury step up in both. But the focus of Treasury, the Department of Treasury, seems to be all about helping financial industries, helping Wall Street, not so much with Main Street.

BLOCK: One thing that was required, at least with the bailout of Fannie Mae and Freddie Mac, was that the chiefs of those institutions had to leave as a condition of their bailout. Do you think that the executives of the car companies should keep their jobs if they get government money?

BROWN: It remains to be seen what should happen with the executives. I think their performance tomorrow in the banking hearing will give us more indication of whether or not they, in fact, these three CEOs and their management teams are, in fact, able and ready to do what they are going to propose doing. I'm not convinced either way that the executives should stay, but I think it absolutely should be part of the discussions.

BLOCK: OK. Senator Brown, thanks very much.

BROWN: Melissa, thank you very much.

BLOCK: That's Democratic Senator Sherrod Brown of Ohio. He sits on the Senate Banking Committee that'll be hearing from chief executives of the Big Three Detroit automakers tomorrow.

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Congress Eyes Big Three Automakers' Plans

Detroit's Big Three auto executives have ditched their corporate jets for hybrid cars and replaced vague pleas for federal help with detailed requests for as much as $34 billion in their second crack at persuading Congress to throw their struggling companies a lifeline. Meanwhile, the United Auto Workers union offered several concessions in a bid to help the automakers.

Congressional leaders are reviewing three separate survival plans from Chrysler LLC, General Motors Corp. and Ford Motor Co. as they weigh whether to call lawmakers back to Washington for a special session next week to vote on an auto bailout.

In blueprints delivered to Capitol Hill on Tuesday, GM and Chrysler said they needed an immediate infusion of government cash to last until New Year's, and both said they could drag the entire industry down if they fail. Ford is requesting a $9 billion "standby line of credit" that it says it doesn't expect to use unless one of the other Big Three goes belly up.

But Chrysler said it needed $7 billion by year's end just to keep running. And GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit it might need if economic conditions worsen. The two painted the direst portraits to date — including the prospects of shuttered factories and massive job losses — of what could happen if Congress doesn't quickly step in.

Democratic leaders voiced concern and a desire to do something to avert an automaker collapse, but they made no commitments about helping an industry that's made few friends lately on Capitol Hill.

"It is my hope that we would" pass legislation to help the automakers, House Speaker Nancy Pelosi, D-Calif., said. Senate Majority Leader Harry Reid, D-Nev., said he would lay the groundwork Monday for a possible vote on an auto bailout measure.

In their first round of pleas for a government rescue last month, the Big Three executives arrived in Washington on separate private jets and enraged lawmakers who said they failed to take responsibility for their companies' troubles or justify a federal bailout.

"I think we learned a lot from that experience," Ford CEO Alan Mulally said.

He, as well as GM CEO Rick Wagoner and Chrysler chief Bob Nardelli, are all road-tripping the 520 miles from Detroit to Washington in fuel-efficient hybrid cars for hearings on Thursday and Friday.

Mulally and Wagoner both said they'd work for $1 a year — something Chrysler's plan said Nardelli already does — if their firms took any government loan money. Ford offered to cancel management bonuses and salaried employees' merit raises next year, and GM said it would slash top executives' pay. Ford and GM both said they would sell their corporate aircraft.

All three plans envision the government getting a stake in the auto companies that would allow taxpayers to share in future gains if they recover.

United Auto Workers President Ron Gettelfinger said Wednesday the union will give up job protections and rework a retiree health-care trust in concessions aimed at helping automakers clinch billions in government loans to weather a severe downturn.

Gettelfinger also said the UAW would consider other changes to contracts reached in 2007 with the Big Three.

All three automakers said Tuesday that they needed new concessions from the union in restructuring plans submitted to Congress.

Gettelfinger told reporters in a news conference that the steps were the "responsible thing to do" and the union was currently engaged in discussions with the automakers to revise the contracts.

Still, an auto bailout remains a tough sell on Capitol Hill.

Sen. Arlen Specter, R-Pa., said the mood in Congress "candidly is not supportive" of the automakers, although he called the consequences of just one of them failing "cataclysmic."

"Two of the Big Three say they cannot survive until the end of the year and if one or more goes down, all three go down," Specter said at a round-table discussion in Philadelphia.

Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said the automakers still need to prove they can survive and be profitable. "If these companies are asking for taxpayer dollars, they must convince Congress that they are going to shape up and change their ways," Dodd said in a statement.

His panel is to hear testimony Thursday from the auto executives, UAW chief Ron Gettelfinger, and the head of the Government Accountability Office on the companies' plans.

The House Financial Services Committee is to hold a similar session on Friday.

From the Associated Press

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