Auto Companies, Democrats And Tangled Webs

I’m on a Wall Street Journal kick today. Another good article on Friday by Kimberley Strassel dissecting the political game going on with the bailout provisions for the Big Three automakers. It’s a wonderful example of how quickly campaign donations and promises can tie a party in knots.

Here are the players and the dilemma:

What do bleeding Detroit auto makers, Colombia and green groups have in common? Not a lot, unless you are Nancy Pelosi.

If there was a moment that highlights to what extent the Democratic Party has become captive to its special interests, this might be it. Mrs. Pelosi and Harry Reid have spent this week demanding that Washington stave off a car-maker collapse. What makes this a little weird is that Mrs. Pelosi and Mr. Reid are Washington. If they so desperately want a Detroit bailout they could always, you know, pass one.

Strassel is being a bit disingenuous as the Democrats still would potentially have to contend with either a Bush veto or a filibuster in the Senate. Both would be unlikely given political stakes, though. She goes on to recount how the Democrat’s got cold feet as the financial crisis deepened and the car companies started looking shaky. Not wanting to get blamed for advancing money that might later get tied up in say a GM bankruptcy they hatched their plan.

The plan? Make it the Bush administration’s responsibility to give Detroit cash — namely by claiming after the event that the $700 billion rescue package for financial institutions was in fact a rescue package for auto makers. This was attempted with several hilarious “colloquys” — pre-scripted dialogues between members that were quietly inserted into the Congressional Record after the vote, all aimed at rewriting the “intent” of the law. Say, this one, from Oct. 1:

Michigan Sen. Carl Levin: “As Treasury implements this new program, it is clear to me from reading the definition of financial institution that auto financing companies would be among the many financial institutions that would be eligible sellers to the government. Do you agree?”

Connecticut Sen. Chris Dodd: “Yes, for purposes of this act, I agree that financial institution may encompass auto financing companies.”

Fun. Meanwhile, Democrats passed $25 billion in aid for Detroit, though under the careful guise of “green” funds to help it meet new fuel-efficiency standards.

It’s not pleasant to see how these guys bobb and weave to get things done, is it? The article then notes that the whole apple cart was upset when Treasury Secretary Paulson dug in his heels and insisted that TARP was for financial institutions thus placing the party in what is beginning to look like a no win situation.

If that weren’t enough, the administration has had the temerity to take Democrats at their legislative word, and demand the auto makers actually use that $25 billion in green funds for . . . green retooling. Which, needless to say, isn’t going to help the Big Three CEOs pay their upcoming health-care bills.

And so Mrs. Pelosi has been landed with Detroit, again. The auto makers have staged a brilliant PR campaign, tying their misfortunes to today’s financial mess — never mind those decades of mismanagement. They’ve warned that the ripple effect of a crash could cost three million to four million jobs. Democrats have also undoubtedly been reminded by UAW President Ron Gettelfinger that those come from his union, which recently helped Mrs. Pelosi win an election.

The problem is how not to offend the other groups that just helped her win an election. The White House has intimated that its price for Democratic legislation in a lame-duck session would be the passage of the Colombia trade agreement. Yet Mrs. Pelosi has successfully sat on that deal for months at the demand of the broader union movement, which just spent hundreds of millions to increase Democratic majority.

Meanwhile, another trial balloon — a proposal to loosen the rules governing the $25 billion in green money — sent Mrs. Pelosi’s environmental friends bonkers. They also just spent big helping Democrats, and insist the money go to building clean cars, not digging out Detroit.

The financial crisis might have well have tipped the scales in favor of the Democrats this election cycle. At the same time, the immediacy of the problems force decisions that in normal times would be worked out over months. The payback for Democrats is that their hand is getting forced while promises and money spent are very much on the minds of their supporters.

Tom Lindmark

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