Monday, November 17, 2008

The Meaning of Change Will Be Tested With the Auto Industry Bailout

[This article also appears on You can access it from my author page here.]

On Meet the Press yesterday, Tom Brokaw presented the two sides of the proposed $25 billion auto bailout debate. Sen. Carl Levin, Democrat of Michigan, argued that it was essential to help the car manufacturers survive, since not to do so would mean the loss of millions of jobs. Sen. Richard Shelby, a Republican of Alabama, responded that the government should not be in the business of propping up failing companies, and that a Chapter 11 filing might be the best thing for an organization like General Motors that has been so poorly run. (You can read the transcript here.)

Both of them made solid points, even as they were both coming from exceptionally tainted places. (Shelby was espousing a right-wing, markets-cure-all philosophy that has been discredited by the current economic crisis, while Levin has been a central player in the group of Michigan members of Congress who have protected the auto industry from any environmental or other federal regulations, helping to cause the current state of failure for the three companies.) Levin is correct that in the current economic climate, the loss of millions of jobs would be catastrophic. And Shelby, too, is right that the bailout would be throwing money at an industry that has been exceptionally poorly run.

But, to me, the Levin-Shelby argument is like two passengers fighting for a deckchair on the Titanic. No matter who wins, the ship is still going down.

Both of the senators on Meet the Press missed the larger point, viewing the issue in a short-sighted manner. They failed to address the 35-year history of this country not adopting a sound energy policy to combat the dangers of relying on foreign oil imports. The Levin-Shelby smackdown on Meet the Press (which correctly portrays how the battle seems to be shaping up on Capitol Hill now) demonstrates a "same old" approach to this enormous problem, with one side fighting for its special interest and the other side mindlessly clinging to an outdated ideology, all while the larger, politically thornier challenge goes ignored.

Didn't we just have a presidential election that was built on the idea of change?

This country faces an energy crisis that will have a profound effect on our future fortunes in myriad ways. Economically, the swings in the oil market can wreak havoc on the day-to-day fiances of average Americans, as we saw when gas prices soared to more than $4 a gallon. From a foreign policy standpoint, our dependence on oil from the Middle East has forced us to engage in the region in ways that have not served our national interests. And from the point of view of global warming, if we don't do something to lower the level of carbon that we release into the atmosphere, all of the other problems we're facing could become moot if the very habitability of the planet is called into question.

Simply put, after 35 years of sticking our heads in the sand, it's time to address the overall energy situation, rather than running to address crisis after crisis resulting from a lack of a sound energy policy. Or, as Barack Obama put it on 60 Minutes last night, "We go from shock to trance" when gas prices go up and down, and that kind of approach has to stop. (You can read the transcript of the interview, or watch it, by clicking here.)

Since Obama campaigned on a message of change, I was hopeful that his take on the auto industry financial woes would reject the Levin-Shelby view of the issue and adopt a broader point of view. And on 60 Minutes last night, Obama delivered. He said:

"For the auto industry to completely collapse would be a disaster in this kind of environment, not just for individual families but the repercussions across the economy would be dire. So it's my belief that we need to provide assistance to the auto industry. But I think that it can't be a blank check. So my hope is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance but making sure that that assistance is conditioned on labor, management, suppliers, lenders, all the stakeholders coming together with a plan what does a sustainable U.S. auto industry look like? So that we are creating a bridge loan to somewhere as opposed to a bridge loan to nowhere. And that's, I think, what you haven't yet seen. That's something that I think we're gonna have to come up with."

I liked that Obama wants any solution to take into account what "a sustainable U.S. auto industry" will look like, because the big three U.S. car manufacturers have not demonstrated that they have a plan to survive in a 21st century energy environment. I took his statement to mean that for these companies to be sustainable, they have to be part of a national energy policy that looks to wean the country off of its addiction to oil.

Obama and the increased Democratic majorities in Congress do not come into power until January, and it is, apparently, not certain that General Motors can last that long without aid from the government. But if George W. Bush and the current Congress decide not to act, and the company survives to next year, the fate of the U.S. auto industry could provide the new president and Congress with their first test of what change really looks like.

I do have confidence that President Obama will propose that any assistance to the car manufacturers be part of a larger plan that changes the way the United States approaches its energy use. I have less confidence that such a plan will find enough support in Congress to pass, especially in the Senate, where it would take only 41 Republican votes to keep any legislation from moving forward.

If, come January, the debate over aid to Detroit is framed strictly as a Levin-Shelby showdown, we have all lost, no matter which side prevails. Such an outcome would demonstrate that despite the best intentions of a President Obama, the power structure in Washington is not really open to fundamentally changing the way business is done, and, more importantly, is unable to tackle the real problems facing this country.

The question shouldn't be whether or not to bail out the U.S. auto industry. Rather, the debate should be how assistance to the car manufacturers fits within the larger national energy plan that is greener, self-sustaining and economically positive.

Sure, David Brooks is correct that the U.S. auto industry has no right, based on its track record, to be propped up by the government. And Paul Krugman was correct (as he discussed on This Week yesterday) that the effect of the U.S. automakers going out of business in the current economic climate could be devastating to the economy. But, in the long run, what really matters is that the U.S. develop an energy policy that not only ends our dependence on foreign oil and combats global warming, but also provides an engine for 21st century economic growth. And in doing so, that plan would provide aid to the U.S. auto industry that is consistent with this policy, addressing the concerns of both Brooks and Krugman.

Obama was elected because Americans wanted change. I take that to mean that the American people are ready for big solutions to big problems. I hope that the crisis in the U.S. auto industry provides the first chance to address a big challenge, rather than ignore it and battle over an issue that is merely a consequence of a much larger problem. I believe Obama is up to the task. The question is, will Congress let it happen?