Hours after it appeared a bailout plan for General Motors Corp. and other domestic automakers was nearing completion, Democratic leaders in Congress on Thursday put the brakes on the plan by postponing a vote on the measure. House Speaker Nancy Pelosi,D-Calif., and Senate Majority Leader Harry Reid, D-Nev., said that the car companies would have to prove to Washington that the bailout would not be throwing good money after bad, and promised to revive the debate in December after the companies provided "an acceptable plan" that shows that Detroit's Big Three at long last are serious about restructuring and getting healthy.
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It is hard to say for now what exactly lawmakers will want from the automakers (though a cynic might, after watching two days of long-winded hearings on the subject, suspect that Congress might prefer platitudes and empty promises to raw data). The auto companies could probably go a long way toward winning Congress' heart (and providing them with political cover) by pledging to develop new fuel-efficient technologies, cut expenses (without dramatically slashing their UAW work forces) and to produce innovative new cars.
Ironically, much of what GM is likely to say in making its case will echo what CEO Rick Wagoner already told Congress during hearings this week (and are echoed on the company's public relations Web site gmfactsandfiction.com). GM since 2005 has reduced annual structured costs by $9 billion, with an additional $3 billion or $4 billion to come as the effects of 2007 UAW concessions come on line. Once those concessions are in place, GM says it will match foreign rivals when it comes to labor costs.
Meanwhile the company can boast Motor Trend's 2008 car of the year, the Cadillac CTS, and note that it will offer 20 models in the U.S. next year that get at least 30 miles per gallon. And that doesn't even begin to address the Chevy Volt, GM's pioneering extended range electric vehicle due to hit showrooms in the next 18 months.
But the automakers' message never resonated with pundits or American taxpayers, who are understandably growing weary of bailouts and have grown accustomed to picturing Detroit as a bloated dinosaur undeserving of either pity or assistance.
And so it is back to the drawing board for the automakers. Smart (though not safe) money is still on GM getting its bailout and avoiding bankruptcy for now: It seems unfathomable that leadership would go home for the holidays if the UAW's biggest employer was really only days away from a meltdown. But if this week's hearings proved nothing else, it is that the burden of proof for aid for GM and its peers is much higher than it was for American International Group Inc. and some of the financial services firms. And for that, GM only has its own sorry recent history to blame. - Lou Whiteman
