General Motors (GM), it appears, has mobilized half the country in its effort to secure a taxpayer bailout. It has made clear that the bailout is its ONLY plan, thus reducing Congress’s decision to a simple “bailout or bust.” It has threatened that “bust” will take down not only GM and its tens of thousands of workers, but the millions of workers who power its global supply chain. It has launched a massive letter-writing and lobbying campaign to make it appear that the only folks who are against the bailout are in Republican offices on Capitol Hill.
If only General Motors displayed this much passion in making cars. If only taxpayers could be assured that, if they bailed the company out, it would get religion about the need to compete on quality, price, and efficiency–like the many other international companies that make cars in this country–instead of on national guilt (“buy American.”) If only the taxpayers could be confident that they wouldn’t just be throwing more money down a rat hole.
For a few minutes there, it looked as though Congress might actually let General Motors go bust–a decision that would almost certainly not lead to the Armageddon that the company describes. (We may be headed there, but it won’t be because of this decision). Now, however, GM has dug deep and rallied the troops to a heroic level of effort, and we may get a bailout after all.
WSJ: General Motors, hoping to sway the battle in Washington over an auto-industry bailout, has begun telling federal officials that a bankruptcy filing by the car maker would set off a chain reaction hammering hundreds of suppliers and dealers — and in turn the company’s Detroit rivals.
GM is attempting to set the terms for what looks to be a showdown among the lame-duck U.S. Congress, President Bush and the incoming Obama administration. On Friday, Senate Majority Leader Harry Reid signaled he will move forward on Monday with a bill giving the industry access to the $700 billion Troubled Asset Relief Program. That entity, known as TARP, was set up by the government in October to help ailing banks and other financial firms…
Amid the political horse trading, GM is holding meetings this weekend with U.S. Congressional leaders, the Bush White House and members of the Obama transition team, according to people familiar with the situation. The efforts are an attempt to show policy makers how a GM bankruptcy filing would unleash unintended consequences that could cripple the country’s industrial base.
GM’s board is composed of several people considered influential in Washington circles, and some of them are pitching in on the lobbying effort, say people familiar with the process. Among these directors are Erskine Bowles, Bill Clinton’s former chief of staff; Phil Laskawy, recently named as the non-executive chairman of Fannie May; John Bryant, a key Obama fundraiser; and Armando Codina, who is a close personal friend of President Bush. Through a spokesman, Mr. Codina declined comment. The other directors could not be reached.
Warning of systemic risk may seem like a self-serving step for a company seeking a government bailout. But GM’s new lobbying nonetheless raises the political stakes for Congress and president-elect Barack Obama.
A bailout would be a boon both to the companies and, by saving jobs, to organised labour, a major supporter of Mr. Obama in the election. Auto-related industries employ 3.1 million people around the country, encompassing everything from car-seat makers to auto dealers to auto-parts stores. GM itself employs 123,000 in North America and does business with thousands of North America suppliers.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.