Thursday, February 09, 2006

Detroit: Bail Us Out But Please Don't Call it a "Bailout"

That's the clear message being heard in Washington, D.C. from General Motors and Ford, judging by a front-page news story in today's issue of The Wall Street Journal. That article is only available online to subscribers.

The Journal story confirms what I predicted here last Dec. 6 in a post inspired by an op-ed in The Washington Post by James Womack, author of the classic "The Machine that Changed the World." Womack argued that Japan Inc. is not the Big Two's problem but better products from Toyota, Honda and Nissan are.

In that post, I noted that: "Womack's op-ed is especially important in view of the coming demands from politicians and domestic auto executives for measures such as government subsidies for sales of hybrid vehicles, trade restrictions on imports and federal tax credts and support for research and development of new technologies."

The latest Journal story confirms that laundry list and adds the important tactical decision by GM and Ford officials to never, ever refer to the assistance they are seeking in the nation's capitol as a "bail-out."

Note the first two graphs of the Journal story:

"As their woes mount, America's two big auto makers are making it clear they don't want or expect a bailout from Washington and instead have crafted a call for help that focuses on measures that could provide more limited assistance.

"Among specific areas where Detroit is seeking federal support: Restraining health care costs, promoting new fuel technologies and keeping exchange rates in line. To strengthen their case, General Motors Corp. Ford Motor Co. and the United Auto Workers are couching their appeals as measures that would benefit all American manufacturers at a time when U.S. industry is coming under increasing pressure from globalization."

But like Shakespeare's rose, a bailout by any other name is still a bailout. And what GM, Ford and the UAW are seeking is anything but a cheapo version of the $1.5 billion in loan guanantees Chrysler received in a much-debated 1979 bailout.

The table has already been set by the Medicare Presciption Drug program for taxpayers to assume a big portion of healthcare costs currently borne by GM and Ford. Tax credits for alternative energy use and development will cost tax dollars. And so and so on.

There is the additional consideration that the UAW and its allies on the Democratic side of the aisle in Congress - led by Michigan senators Stabenow and Levin - will push for every possible form of federal assistance, direct and indirect. When serious negotiations begin, the Bush vow to oppose a bailout is likely to prove to be little more than words.

In other words, expect whatever legislation ultimately passes Congress and lands on Bush's desk to include a host of provisions, all of which will cost all taxpayers in one way or another. In the final analysis, it might even contain measures that everybody can agree are good and proper.

But a bailout of Detroit it will still be.