Bailing Out The Big Three

Just a quick thought on hypocrisy and perception. Last month, CEOs of the Big Three automakers came to Washington in private jets to explain why they should be able to gobble up a big share of taxpayer largesse. All had received multi-million dollar bonuses for losing billions (I’m sure their bonuses were minor in comparison to the cost of the mistakes they all made) and each came with what seemed like a chip on their shoulders as they appeared to be demanding money.

They offered Members of Congress little more than threats of the imminent demise of the domestic auto industry and the loss of potentially millions of jobs (and, by implication, millions of votes). At no time did they offer a concrete plan on how they would rebuild their companies to turn or profit or even produce a product Americans want.

Since they were asking the taxpayer to take a stake in their company – and I’m still a taxpayer (for the moment) – it would have been nice for them to be a bit better prepared and give us more of a plan and fewer overt threats. I certainly couldn’t go to a bank and ask for a bailout on the basis that I would go out of business without their help. In fact, because of the actions of companies like the automakers, I can’t consider asking the bank for even a free toaster anymore.

Predictably our representatives in Congress used the Capitol pulpit to preach austerity to the CEOs, chiding them on wasteful spending, lack of leadership and poor planning. Just to be clear, weren’t these lectures coming from the same people who tacked on $160 billion in pork to the “bailout” bill and who seemingly have a blank check to spend our money buying up every industry that hasn’t moved to China? Isn’t this the same group that built the Capitol Visitor Center because Senator Reid had difficulty with “smelly” tourists visiting his office with an original price estimate of $71 million and a final cost of $650 million? Who are they to lecture, and who do we complain to when they blow our money like an alcoholic on pay day?

Eventually the automakers were shamed enough that they regrouped, huddled with their lobbyists, and went through a crash course on how to grovel with panache to elected officials who think they own the country. Two of three CEOs promised they would take only $1 in salary next year, which would leave them to have to live on the $30 million in bonuses they received the previous year (memo to self, let three of the maids and two butlers go to make it through the pay cut). On the second visit to beg for money, the CEOs chose not to fly their private jets – even went so far as to say they would sell them – and instead drove to Washington from Detroit (no details yet on whether or not they were chauffeured and if they ate breakfast at Perkins along the highway heading south).

Despite their new etiquette, it looks like it won’t be enough. Predictions by Senator Reid and Speaker Pelosi indicate they don’t have the votes for a bailout of the domestic auto industry. It should be noted that Speaker Pelosi, who spared little sarcasm in her attack on the wealthy CEOs, doesn’t drive to out-of-town meetings or take the Metro to work. She flies on a taxpayer-funded Gulfstream G3, the same make and model flown by the automaker CEOs. Her reasoning is that the president and the vice president get their own planes to shuttle them around and, since she’s third in line to the presidency, she can’t be bothered going through security and sitting on JetBlue to fly between San Francisco and Washington. I’ve seen plenty of Congressional Members sipping wine with me in first class to Washington and even saw Janet Reno stuck in economy. I think Pelosi will be fine flying like the rest of us, and even picking up some frequent flyer miles for a really cool vacation!

In some way, I am interested to see what happens if they don’t get the money. It may tell us a lot about the use of taxpayer money to bail out any industry, including the banking industry. There are no visible signs that the financial services bailout has done anything for the average person and it would likely be a safe bet that the world will continue to spin on its access if the Big Three were forced to shut down or reassemble in a leaner, meaner fashion. It may tell us that the financial services sector should have been forced to do the same thing. I say, Let ‘em squirm.