Detroit, Mich. – A Democratic Green Industrial Policy was already gaining speed Thursday as American automakers groveled for money before the most openly hostile-to-auto Congress in U.S. history. How hostile? At the same moment the Big Three was meeting with House Speaker Nancy Pelosi, her henchman — ultra-green Rep. Henry Waxman (D., Calif.) — was announcing his intention to oust industry ally Rep. John Dingell (D., Mich.) from his chairmanship of the Energy Committee.
Imagine Pelosi’s surprise, wrote Detroit News columnist Daniel Howes, “that she and her like-minded colleagues are in a position to dictate the future of an industry they’ve shown repeatedly to dislike.”
It is, of course, no coincidence that the Big Three arrived at Washington’s doorstep together. All three have labored under “pattern bargaining” union contracts — Democrat-supported unions — that made their wage and pension costs unsustainable against non-union foreign automakers.
And all three paid discriminatory costs on federal fuel-mileage rules — Democrat-drafted fuel-mileage rules — that put them at a compliance disadvantage relative to foreign competitors’ smaller lineups.
A Democratic bailout of Detroit’s auto industry is a Faustian bargain if there ever was one. And the price will be steep.
“Pelosi & Co. are likely to emerge with more influence over the future of Detroit than most in flyover country would care to admit,” continues Howes. “Limits on executive comp and bonuses in exchange for public money? You can bet on it. Meddling in product decisions? Likely. Dictates on where new products would be built, a sop to the Democrats’ allies in the United Auto Workers? Possible, if the UAW has anything to say about it.”
Indeed, the Wall Street Journal reports that a Pelosi spokesman said after the meeting “that she wants some form of ‘recoupment’ for taxpayers in return for more subsidies, possibly faster rollout by the car makers of more fuel-efficient vehicles.” But such a mandate would work at cross purposes with a bailout designed to save the companies.
Only consumer markets will determine whether small cars will be in demand. If the companies are required by politicians to make cars inconsistent with market preferences, they will lose even more money and the taxpayer will be on the hook again in an endless downward cycle toward the nationalization of the auto industry.
When’s the last time a Faustian bargain had a happy ending?
– Henry Payne is a writer and editorial cartoonist for The Detroit News.