The Wall Street Journal editors are none too pleased with the car companies last round of pleading. In exchange for going onto the public payroll, the Big Three have come up with politically-pleasing plans for green cars, but little to resemble a realistic plan for recovery. The editors write:
The car makers’ request for a bridge loan, by contrast, looks like a $34 billion bridge to nowhere. It has already morphed into an opportunity for political extortion — and we don’t even have a bill yet. When, in a couple years, costs have not come down as expected because of political pressure to keep the unions happy and the green cars aren’t selling — because they were designed in Washington, not for consumers — the companies will be back for more money.
The bailout commitment, in other words, is effectively open-ended, no matter what anyone says. And with the feds so invested in the companies, it will only be a short step for Congress to begin to coerce consumers to buy the cars that Washington prefers. Mr. [David] Friedman, the concerned scientist, is already planning for that day. He said Friday that we’ll eventually have to impose a “fee” (read: tax) on cars that “pollute too much” or use “too much gas.”
This fairy tale, in other words, does not end happily ever after. A bankruptcy, prepackaged or otherwise, keeps looking better.
Standing in the way of this economic and political disaster has been a strange and intriguing combination of political bedfellows. Conservatives have shown no inclination to go along — unless Congress wants to undo the restrictions on already appropriated funds and allow the car companies to use the green technology conversion fund to keep themselves afloat. But environmental-friendly Democrats including Speaker of the House Nancy Pelosi had strenuously resisted the idea of letting the car companies wriggle out of their green mandates. (Sen. Diane Feinstein has the quote of the month: “I do not support disadvantaging the next generation of American automobile companies in an effort to save the first generation.”)
Now it looks like some muddled compromise (some money, some oversight) will emerge, as Pelosi has weakened in her opposition to tapping the funds previously allocated for green conversion. ( Just in case, Chrysler hired bankruptcy counsel, a rare sign of foreward-looking thinking from car company management.) One thing we know for sure: if they don’t go under before next year the Big Three will be back. Then President Obama won’t be able to duck. If he still beleives the Big Three are worth saving at taxpayers expense, he’ll have to referee the food fight in Congress and explain to taxpayers why these companies should be hopping on to the permanent government dole. That will be fun to watch.