A billion here, a billion there and pretty soon you’re talking real money.
It’s unclear who opined those words (though it was attributed to Sen. Everett Dirksen, the longtime Illinois Republican who served from the 1950s through the end of the’60s, who was rumored to have been misquoted but thought the phrase was so good he let it ride on his coattails), but they have an especial meaning nowadays.
If you’re a big guy – big, in the sense of Ford, GM and Chrysler- you’re getting big help from Uncle Sam, that is, from us taxpayers, to the sum of $25 billion. That approval came much quicker and with far less rancor than the $700 billion package that Congress fought over till it finally said yes.
On the last Saturday of September, just a few days after the U.S. House OK’d the 5%-interest loan to the Big Three, the Senate overwhelmingly voted aye, as in an aye for an aye, for the loan, too. On Oct. 1, President Bush put his John Hancock on what now is a familiar term: bailout (OK, the new term the D.C. pols are spinning is “buy-in,” which sounds so much more like a can’t-lose, ground-floor opportunity deal we’re all to be part of -¦or, maybe like we’re getting in on a poker game).
The $25 billion is supposed to help the Big Three in their quest to turn the corner away from the brick wall where they all were headed because of their heavy emphasis on big, high-pollutin’ gas guzzlers, instead of taking the route that, especially, Toyota and Honda have been taking with hybrid and electric car development. Detroit is expected to invest this loan to retool its aging auto plants and produce fuel-efficient, low-to-zero-emission vehicles. Sounds a bit like the tune played back in the ’70s when rising gas prices put Detroit on a small-car diet -¦ for a while.
Did we need today to “reward’ Detroit for so many years of ignoring the changes that have been visibly percolating as oil prices continued to rise? How come the Japanese carmakers predicted this and got it right? Maybe we should have bought Toyota instead, made it a wholly-owned American company and forced the Big Three to really compete.
Well, the die is cast.
But it’s been cast before.
Nearly 30 years ago we bailed out Chrysler for a mere $1.2 billion in taxpayer-subsidized loans (that’d be about $4 billion today). Its chairman, Lee Iacocca, became the turnaround king, with a lot of savvy and moxie, and helped a bit by President Carter’s bailout and, two years later, President Reagan’s import restraints on Japanese vehicles. Chrysler did make significant changes and it did repay the loan.
But here we are again. And with more players. Interestingly, German automaker Daimler, which last year sold 80% of the privately owned Chrysler to Cerberus Capital Management LP, a New York City-based investment firm, might have sold off the remaining 20% to Cerberus by the time you read this. Cerberus invests in a wide-ranging host of business operations, including its controlling interest in GMAC Financial Services. Looks like Cerberus will be a beneficiary of some of our loan largesse.
Detroit is happy- its execs, its labor force, its suppliers. Are you happy?
The aftermarket auto accessory market moves a lot of money around, too. Not the trillions that automakers do, but our industry gives consumers what the carmakers don’t: customized, personalized vehicles. With 235 million cars, trucks, SUVs and CUVs on America’s roads, the aftermarket industry takes care of a lot of people. And if we’re affected by Detroit’s neglect, shouldn’t we get some “love” from Uncle Sam? Won’t our suppliers have to retool?
Hey, I’m not asking for a bailout. But, maybe just a little buy in?