Nader statement on automaker bailout

The following is a media release from the Nader presidential campaign:

September 29, 2008
www.votenader.org
FOR IMMEDIATE RELEASE
Contact: Marc Abizeid, 202-360-3273, marcabizeid@votenader.org

NADER CAUTIONS UNSAFE AT ANY SPEED CONGRESS TO PUT BREAKS ON STEALTH BAILOUTS

This weekend, drowned out by the $700 billion Wall Street bailout negotiations, the Senate approved a bloated loan package that released $25 billion in below-market rate loans to the auto industry. The Congressional Budget Office estimates that it will cost taxpayers roughly $7 billion to finance the loans to bailout failing companies with no demands for oversight and accountability. Below is a statement by Ralph Nader, originally published September 17, 2008 on his blog, recounting the tale of Chrysler’s 1979 $1.5 billion loan guarantee when the government took steps to ensure it would benefit from the agreement, prior to the transformation of our Congressional leaders into Congressional corporate servants.

Wednesday, September 17, 2008

Statement on Auto Industry Bailouts
by Ralph Nader

The Big Three are in big trouble, and they have themselves to thank for it.

Ford and General Motors have reported substantial losses in the second quarter amounting to $15.5 billion, and $8.7 billion, respectively, while Chrysler, which was bought off last year by a private equity firm, Cerberus, refuses to reveal its financial standing.

It is no wonder why their lobbyists were spotted schmoozing with members of Congress at the Democratic and Republican National Conventions, liquoring up in their plush suites and private parties while they made their case for direct government loans which, if approved, would likely add to our federal deficit.

Last December, Congress approved a $25 billion loan to automakers and their suppliers under the Energy Independence and Security Act, though it has yet to be funded. That bill includes a modest requirement for automakers to increase their average vehicle fuel efficiency to 35 mpg—a benchmark we should have set decades ago, and would allow the companies to have their way with virtually no oversight or accountability.

This corporate Congress cannot be expected to issue serious demands, set tough conditions, or impose strict rules on the auto companies to ensure their workers receive fair pay and benefits, and prevent their fat-cat executives from making off big while leaving their companies in shambles.

Such blatant giveaways have become the norm in Washington since the corporate stranglehold of Congress and the White House have smothered the forces seeking worker, consumer and environmental justice.

But this recent example should not discount our long history of dealing with corporate failures in more public and effective ways than just ponying up billions on demand at any big corporation’s whim.

In 1979 when Chrysler was on the verge of bankruptcy, the automaker came crying to Congress for a bailout, which they eventually got, but Congress wasn’t as much of a pushover.

Back then, at least the corporate chieftains were grilled by Congress and had to agree to give something back for Uncle Sam bailing them out—good jobs and pensions for their workers, and more efficient cars to reduce reliance on foreign oil and reduce prices at the pump.

Now the CEOs don’t even have to leave Detroit and they get much more money for almost no return commitment to America, while they outsource jobs and pollute our environment.

During discussion on a proposed loan bill to bailout Chrysler in October 1979, Senator William Proxmire (D-WI) who chaired the Senate Banking Committee issued his opposition to Chrysler’s request and noted: “We let 7,000 companies fail last year—we didn’t bail them out. Now we are being told that if a company is big enough… we can’t let it go under.” He went on to call the proposed deal “a terrible precedent.”

Raising the government’s demand for performance standards, President Carter’s Treasury Secretary William Miller told Chrysler officials, “it’s going to be so awful, you’ll wish you never brought the whole thing up.”

Today, we rarely hear such candid opposition to corporate orders shouted at their congressional servants who lack the fortitude to put serious restraints and conditions on mismanaged, reckless big business and their overpaid CEOs seeking tax-payer salvation.

As a part of the Chrysler deal in the late Seventies, the government took out preferred stock warrants and after the company turned itself around and repaid its loan seven years early, the government ended up cashing out, receiving $400 million in the appreciated stock.

And Congress made clear to Chrysler that it had specific conditions the company had to meet before receiving the loan guarantee. It forced the company to contribute $162,500,000 into an employee stock ownership trust fund geared to benefit at least 90 percent of its employees, design more fuel efficient autos to help reduce consumption of foreign oil, and prohibit wages and benefits from falling below a level set three months before the legislation was passed.

Today, congressional actions to grant multi-billion dollar loans to the corporations lack the reciprocity some in Congress demanded 30 years ago. Before Congress irresponsibly dips into the public piggy bank, this time it would be wise to look back at how the government once dealt with Chrysler’s dilemma, require clear benchmarks to deliver on the next generation of green collar jobs, improved fuel efficiency and gain a substantial return on its investment, not just in monetary value, but in the longterm viability of the domestic motor vehicle fleet.

Congress needs to call on the auto industry to innovate their way out of this morass into which they’ve engineered themselves into. A sensible strategy would be to issue stock warrants to the government, like in the 70s, which would create an incentive for Congress to keep pressure on the auto industry to improve. Public Congressional hearings are a must.

Will Congress echo its actions of 30 years ago when it scrutinized corporate demands, grilled company executives, and imposed conditions to ensure fair compensation and safety for workers? Or will Congress continue down the road of corporate servitude, refusing to stand up for workers, consumers, taxpayers and the environment in its session-ending stampede and flight away from auto industry accountabilities?

3 Responses to “Nader statement on automaker bailout”

  1. Richgriffin Says:

    Bravo Ralph Nader!! There has been much dreadful legislation this past week, including a 6% INCREASE in the military budget, that hasn’t been fully discussed in the corporate media as they obsess over the “bailout” manufactured crisis. I have decided to vote for Ralph Nader once again.

  2. ~enemyartistkristofeR! Says:

    Ralph Nader has been doing this for a LONG time and He has a PROVEN track record, the Guy KNOWS what he is talking about. Its a Real Sham that Obama has all this wool pulled over the eyes of all those Sheep out there. They will see, they will see in the coming four years (if Nader isnt elected) when this $835 Billion Dollar Rich Mans Bailout hurts us more than it helps. They will see when we are STILL at War with Iraq, Afghanistan, Pakistan Iran and Russia! They will see when the already over inflated Military Budget gets even bigger! They will see when the Patriot Act is still a Law and The FISA Bill is still a Law. They will see when all this Talk of CHANGE and HOPE and BELIEVE is proven to be nothing more the political rhetoric. They will see how both McCain or Obama will be not that far off from a Bush Presidency! They Will See After its Too Late!

  3. ChikenShet Says:

    This auto loan crap makes me not want to vote. The big thre auto mfrs should be allowed to fold. I highly believe the UNION is the main cause of their failure. Think about it. Why should a person with no college education, some don’t even have High Scool ed, make $29/hr for mounting hardware on hardware? Tires, seats etc… I have seen people “Stage” parts like screws and washers and gaskets and push buttons that get paid over $24/hr. Give me a break. No wonder they are losing money. They have to support the morons in their work force. A high scool student can do this for federal min wage!
    Most everything is automated and the unhealthy stuff is done by robots. That’s ridiculous. If one were to vistt one of their plants and audit this you will see it’s true. I have been in manufacturing for 10 years. Positions get a pay increas because of tenure? WTF is that. After 5 years your still an idiot manual robot doing the same thing you got paid for when it was minimum wage! The big three should fold and the American people should not have to suffer through their reign of OPEC Support terror.
    DROP THE UNION!
    Let’s take a look at this PHEV incentive that was passed also. To take advantage of this incentive, the vehicle you purchase must have soo much battery in it, can’t remember the specs but it was 3x more than any current foreign hybrid uses. Ironically if you look at any vehicles that can qualify, only the Chevy Volt and other US hybrid wannabe vehicles can qualify. Why? Because they are soo inefficient they require that much battery to run. So basically these US autos can not sell themselves and the big 3 need the govt to try and make the deal sweeter. For this reason I will never purchase a US big 3 vehicle again. The American people CAN survive even if the big 3 auto are gone. Need a car? There’s others to choose from? Lose your job because the plant failed to foresee the coming inevitable world change and they blindly charged on building Bradley Tank SUV’s? No problem, other auto manufacturers exist here in the US and when competition is gone from the big 3, guess what, manufacturing increases elsewhere in the US. Incentives for this PHEV bill should go to the vehicles that ARE PHEV. That should be the criterea. Then the consumers can decide WHAT PHEV they want to buy. So, guess what, they will most likely not buy a Chevy Volt and I highly recommend against the volt. This vehicle as well as any other attempts for the big 3 to sell as a hybrid / PHEV is just like their predecessors. They were hogs on gas back then, and in this generation they are hogs on batteries! Nothing has changed and they learned nothing. Tell me again why we are giving these huge loans to the same people that enticed people and sold Americans these poor excuses for a vehicle? I hope they all go under. This will open the doors to the small entrepreneurs like the “AC Propulsion”, “Phoenix Motors and “Hybrid Technologies” or “Black Bay Tecnologies”.
    Basically IF the big 3 took what “Hybrid Technologies” is doing and refined the process, expand their facility, buy them out and ensure product reliability to “Their” standard the I believe the big 3 can make a come back. Think about it. This little comapny, Hybrid Technologies, takes already built ICE vehicles and convert them to 100% Electric in about 4 days. You get a range of 100+ miles. Good for commute and for soccer practices and runs to the grocery store, run to fast food for the 3 kids and get a beer. That is a perfect idea. So there, I just retooled the big three in less than an hour, my bill is $50Billion please.
    Of course this will not happen because Detroit has this “It wasn’t my idea so I wont bother with it” persona. Sure they’ll probably get the loan. How’s it feel to be left out in the cold for those Americans who lost their homes to bad loans? Govt will bail big auto but leave Americans to fend for themselves and at the same time pay for this friggin mess. Yes, it is true that “We weren’t pushing these larger vehicles, we were just building what our customers wanted,” Mulally said….” (Quote from: http://afp.google.com/article/ALeqM5h4EahO3VBl2HqNDP58DrifgZ_RlQ) but you continued and did nothing to “Adapt” to the market, Just like the dinosaurs, and guess what, the Asteroid of OPEC hit and you cant “Adapt”! Hey Detroit, “Retool THIS!”, bastards.

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