Auto Bailout: Seeking Signs of Sacrifice

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And starting in 2010, the UAW will be in charge of handling its own health-care fund, albeit after billions of dollars in contributions from the automakers.

Members of Congress were clearly looking for sacrifice from the union's older workforce and retiree pensioners. "The average family of four in my district makes $36,000 a year, and I find it difficult to ask them to fund much richer salaries and health care of workers in other states," said Walter Jones, Republican Representative from North Carolina.

UAW President Ron Gettelfinger shot back with the concessions the union has made in the past two years. "The UAW is not the low-hanging fruit here," said the union chief.

For the second straight day, members of Congress asked the CEOs if they would limit their own salaries. The suggestions ranged from $1 million a year as suggested by one congressman to $1 a year for the next year or two as suggested by another. Only Chrysler CEO Robert Nardelli agreed, while GM's Wagoner and Ford's Mulally sidestepped the question.

Senator Carl Levin (D-Mich.), who testified in the House after missing the Senate hearing (BusinessWeek.com, 11/19/08) on Nov. 18, made an impassioned plea to House members who oppose the bailout. He cited the fact that President George W. Bush, Treasury Secretary Henry Paulson, President-elect Barack Obama, and Senate Minority Leader Mitch McConnell all agree the auto industry should be helped. "The argument is only what source of money it is," said Levin.

Levin has been careful to acknowledge, and even substantiate, the heavy criticism against the auto industry by members who oppose the auto loan program, even while arguing for protection of jobs.

"Blame them…for the quality problems of the 1970s, or for paying their executives and their workers too much…but don't throw out millions of jobs, a vital segment of our industrial base, and our economy…in your frustration," Levin said.

GM's Advertising Push

GM has been running an ad campaign this week aimed at updating lawmakers and staffers about the quality improvements and fuel-efficient vehicles the company has been making. It launched a Web site, gmfactsandfiction.com, and has taken out ads in newspapers directing the public to the site.

The automakers have enlisted their dealers to pepper lawmakers with support for government auto loans, and GM has even asked its customers to contact lawmakers.

"I don't blame them…every lawmaker is hearing about this issue and the more they hear from people supporting it, the better it may turn out," said Senator Chris Dodd (D-Conn.), chairman of the Senate Banking Committee.

Officials at GM privately say they are "war-gaming" options to maintain a minimum amount of cash liquidity (BusinessWeek.com, 11/7/08) to sustain operations for the next three months.

The expectation is that the Obama Administration will be more willing than the Bush White House to tap into the Treasury's $700 billion financial bailout fund to help the auto industry. There will be around $400 billion of that money left when Obama takes office. But the new President will still have to go to Congress to get it released.

Kiley is a senior correspondent in BusinessWeek's Detroit bureau.