On Thursday the top GM, Ford and Chrysler executives made their case to the U.S. Senate Banking Committee, and on Friday they face the House of Representatives Financial Services Committee.
Earlier in the week the auto companies sent in their loan paperwork, outlining the changes they would make if they got the $34 billion. They also warned of dire consequences if they didn't, such as the loss of millions of U.S. jobs in the industry and its support businesses. To show they were serious, all the top executives from all three companies in the delegation cut their multimillion-dollar salaries to $1 a year and promised to dispose of those corporate jets that got them in hot water the last time they came to Washington. The United Auto Workers union also offered help in modifying its contract.
The plans for restructuring came as U.S. auto sales hit a 25-year low. GM has warned that "there is no Plan B" if it doesn't receive $4 billion in loans this month and about $18 billion in 2009. Ford asked for $9 billion and Chrysler $7 billion. A couple of weeks ago they said they needed about $25 billion -- apparently "about" is $13 billion, which is the new loan request total. Some of the plans are superficial -- executives cutting their pay to $1 a year; some were in the works anyway. Others are game-changing, such as the move to more efficient vehicles and GM's suggestion it may dump Hummer and Saab.
Working against the automakers are polls -- if the lame-duck session of the 110th Congress pays attention to polls right after elections have just been held. A CNN/Opinion Research poll released Wednesday indicates 61 percent of U.S. residents asked said they don't want to buy out the car companies, especially as foreign-owned companies with plants in the United States aren't having the same depth of problems.
On the other hand, working for the automakers is the Democratic congressional leadership. Democrats traditionally support the auto and shipbuilding industries, just as Republicans favor aerospace and high tech.
The Republican case against the bailout is an exceptionally weak one, because the Democratic 110th Congress was stampeded just a couple of months ago into authorizing a $700 billion bailout of the Wall Street financial sector and then bungled its implementation. Also, President-elect Barack Obama has made clear he wants the Big Three to finally move toward hybrids, alternative energy, electric power and more efficiency.
House Speaker Nancy Pelosi, D-Calif., feels the same way. Pelosi, a San Francisco environmentalist, won a crucial political victory when she finally forced venerable Rep. John Dingell, D-Mich., the longest-serving member of the House, out of his chairmanship of the powerful House Energy and Commerce Committee and replaced him with Rep. Henry Waxman, D-Calif. When that happened, the Big Three and the UAW lost their most powerful patron and protector of the old ways of producing gas-guzzling SUVs and business as usual.
GM Chief Executive Officer Rick Wagoner and his Big Three colleagues have rejected the bankruptcy option with horror. But some economists disagree. Economist Martin Feldstein told CNBC Nov. 19, "There's this myth out there that if they go into bankruptcy, millions of people will lose jobs. That's not what happens when you have Chapter 11 bankruptcy. The business continues, and the government could provide lending to get them over the hump while they are reorganizing. But the key thing is to become more competitive by getting wages in the current unionized auto companies in line with other automakers in the United States."
Feldstein, it must be said, was an adviser to defeated Republican presidential nominee Sen. John McCain of Arizona, and the Wall Street tsunami has also swept away the credibility of traditional Republican free-market arguments in Washington.
The triumphant Democrats have no intention of starting their new era by allowing the most venerable and revered of great American industries to collapse. But the new generation of Dems isn't going to let Detroit thumb its nose at the world anymore, either.
Obama and Pelosi are not trying to end an era of triumphant success by the executives of America's great automakers. They are insisting on an end to generations of failure, short-sighted greed and catastrophic decision-making. Change -- big, lasting, sweeping and irreversible change -- finally has come to America's auto industry. Count on it.