The chief executives of Detroit’s Big Three automakers returned to Capitol Hill yesterday to plead for $34 billion in federal aid to bail out the industry. The company CEOs all drove to Washington in hybrid vehicles after being criticized for flying in for hearings last month in separate private jets. Lawmakers said they were not convinced that the automakers could return to profitability even with a massive infusion of government cash. We speak with longtime consumer advocate Ralph Nader and Wendy Thompson, a retired worker at American Axle in Detroit and the former president of UAW Local 235. [includes rush transcript]
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JUAN GONZALEZ: The chief executives of Detroit’s Big Three automakers returned to Capitol Hill yesterday to plead for $34 billion in federal aid to bail out their industry.
The company CEOs all drove to Washington in hybrid vehicles after being criticized for flying in for hearings last month in separate private jets. That time around, they were sent home empty-handed with congressional Democratic leaders demanding detailed business and spending plans from GM, Ford and Chrysler.
The companies submitted those turnaround plans before the Senate Banking Committee on Tuesday, promising major changes, such as producing smaller, more fuel-efficient cars, reducing vehicle models, and slashing executive pay and bonuses.
This is Richard Wagoner, CEO of General Motors, speaking to reporters after the hearing.
RICHARD WAGONER: The auto industry is an important one for the economy, and obviously it’s under tremendous pressure in part because of the global financial crisis. So we put forth a plan which we think adjusts our business to a smaller market.
JUAN GONZALEZ: Financially, GM is the most desperate of the Big Three. The company said it faced bankruptcy without $4 billion in federal loans by the end of the month, with billions more needed in 2009.
But lawmakers said they were not convinced that the automakers could return to profitability even with a massive infusion of government cash. After a six-hour hearing, Senator Chris Dodd, the chair of the Senate Banking Committee, said he would try to assemble a plan to revive the automakers, asserting that "inaction is not an option."
SEN. CHRIS DODD: A partial or complete failure of the domestic automobile industry would have ramifications far beyond the manufacturing — far beyond manufacturing and pensions. It would affect virtually every sector of our economy. That includes the financial sector, which is a particular focus of this committee. A collapse within the auto sector would unquestionably worsen the credit crisis.
JUAN GONZALEZ: Dodd supports a taxpayer rescue but called on the Bush administration or the Federal Reserve to save the automakers because Congress might not do so. Dodd said Treasury Secretary Henry Paulson must explain why the car companies, which support one in ten US jobs, are less deserving of assistance than Wall Street banks and insurance companies, which received a $700 billion financial rescue program in September.
AMY GOODMAN: The chief executives of the Big Three [are] scheduled to appear again today before the House Financial Services Committee. With opposition to an auto industry bailout strong among Republicans and even among many Democrats, congressional leaders have given themselves one week to make something happen.
Wendy Thompson is a retired worker at American Axle in Detroit and the former president of UAW Local 235. She joins us from Detroit, where she is helping organize a caravan of auto workers to Washington, D.C., scheduled to arrive Monday morning.
Ralph Nader, longtime consumer advocate, former presidential candidate, he catapulted to fame decades ago with his book Unsafe at Any Speed
, which took on the auto industry. He joins us on the telephone from Washington, D.C.
Let’s start with Wendy Thompson. What do you think needs to happen right now?
WENDY THOMPSON: Well, we’re going to Washington in a caravan, because we think it’s very important that a rank-and-file worker point of view come into this debate. We don’t think it’s a question of saving corporations. It’s a question of saving an industry, a question of saving working-class communities and the heartland of America.
And we think a comprehensive reformed industry has to happen. Our suggestion is to expand the industry to become transportation-based and alternative energy-based. We say that there’s — instead of closing these factories, why don’t we start to build products like light rail for mass transit or wind turbines for alternative energy? There is work that needs to be done to create a new society here in America. And a lot is at stake.
JUAN GONZALEZ: Wendy Thompson, your union has been basically backing the company CEOs in this effort to get a bailout, but at the same time there are many Republicans, especially in the Congress, who see the contracts that the unions have had over the years as part of the problem that the automakers have. They claim that the labor costs of the auto companies are out of whack with other automobile companies, especially the Japanese companies. Your response to those criticisms?
WENDY THOMPSON: The solution to the problem is not to take away more from workers that have already had so much taken from them. And it’s a downward spiral: if they attack the decent-paying jobs, then no one is going to have a decent-paying job in the end. And this is not going to help us certainly get out of the economic crisis we’re in.
We are going to Washington not just for ourselves as autoworkers, but for all American working people, because we think that unions and union wages is what’s going to bring this country forward, not set it back. But we do feel that you do need government intervention here, that the corporations have not been pursuing the right path. And after all, the government is supposed to represent the people, and they should have oversight. And, in fact, like they say, taxation without representation — well, if the American working people are investing in these corporations, they should have representation, too.
AMY GOODMAN: Compare, Wendy Thompson, the $700 billion bailout for the financial industry to what the automakers are asking for, and lay out the message you’re taking to Washington. I mean, you’re going big with these demands if you’re saying, if they should get the bailout, what they should have to do, from saving autoworkers’ jobs to single-payer healthcare.
WENDY THOMPSON: That’s right. We are asking for big changes, because that’s what’s necessary. We think that as autoworkers, that we have to stand firmly with saving the environment and saving the planet and that if the auto corporations aren’t doing it, the people have to take control here and say this is what has to happen. And that’s the point of view we want to get across. We represent all working people.
JUAN GONZALEZ: Ralph Nader, you have been a longtime critic in the past of the auto industry. Your perspective now on them coming to Congress and asking for this bailout?
RALPH NADER: Well, Juan, first of all, it needs to be made clear that the workers and the UAW have given up far more than what the government subsidy will come down to in dollars, if what the auto companies are asking for is accepted by Congress. They gave up huge — billions of dollars in 2007, and they’re giving up more in 2008.
And what this whole debate is lacking is any concept of numbers. For example, if this is a $34 billion so-called bailout, what is it really? Well, it’s subsidized loans, or maybe they’ll turn it into loan guarantees. And depending on what the government gets in return, that is a fraction of what — as Amy said, of what Citibank and the financial industries have gotten in New York.
The reason why there’s so much focus on the auto companies is not just its role in the American economy, but it’s public, and there are congressional hearings, where the wave of the gigantic bailout after bailout of Wall Street occurred largely on weekends in secret meetings between the Federal Reserve, the Treasury Department, and the goliaths on Wall Street. And these were sweetheart deals. Citibank got a huge sweetheart deal with very, very little reciprocity.
Now, if the Congress is going to move to save the domestic auto industry, they’re going to do it as taxpayers, as shareholders, as creditors, and they will drive a hard bargain. And as a result, the taxpayer can get preferred shares, they can get warrants, so that if the companies recover, the taxpayer gets not just the money back, but a huge surplus. I mean, Ford Motor Company stock now is around $2.60. If Ford modestly recovers, it could go to $20. And, of course, those Treasury warrants and preferred shares would come out very, very handsomely, as they did in the Chrysler bailout when Iacocca turned it around in 1980 and ’81.
So, what I think should be done is for the government to say, “OK, you want our help. We are going to own a part of you. We are going to be creditors and restructure you; remove the board of directors and the executives that are deemed not to be performing over the years; put people who know how to produce fuel-efficient, emission-controlled safe motor vehicles in place; and reform the whole area of shareholder rights,” because the government will be a shareholder. And since the government is effectively an insurer, they can move to apply the principle of insurance and loss prevention and produce motor vehicles and alternative transit, mass transit, that will damage less people on the highway and the environment. So, I call it government capitalism, where the government plays the role of a shareholder, the role of a creditor, the role of an insurer, and restructures the entire industry.
I must say, on the UAW, though, the biggest mistake the UAW ever made in this area was to support for thirty years, against consumer and environmental groups on Capitol Hill, a freeze on fuel efficiency. And because the government could not upgrade its fuel efficiency for over thirty years, from the 1975 standards, the Japanese and other foreign competitors were able to eat a larger — eat into the market share of the domestic industry. And I’m glad to hear Wendy say that it seems like some workers, at least, understand that that’s got to change.
AMY GOODMAN: Wendy Thompson?
WENDY THOMPSON: Yes, I do feel that a union is the people and that we, as rank-and-file people, must get more involved in saying what we feel needs to happen. The corporations have not listened to our point of view, but also we have not been as active as we need to be on these issues. And we mean to change that now, and that’s why we’re asking to people to join us in Washington on Monday. We’re spending one day there. You can go to autoworkercaravan.org and see what the plans are. Join with us, because unions are democratic organizations — at least they can be if the memberships participate. And if we did have it, it would be easier for people to get in unions, and hopefully there will be a law change that will allow what’s called card check, where you have a union when the majority of the people sign cards. I think if American people were in unions, it would raise wages, and it would help us develop industry and get out of the crisis we’re in now. But also, working people have to have say in the government, absolutely.
AMY GOODMAN: We’re going to come back to this conversation in a minute. Wendy Thompson is a retired worker at American Axle in Detroit, former president of UAW Local 235. She’s speaking to us from Detroit, helping to organize a caravan of autoworkers who will be in Washington, D.C. on Monday to have their voices heard. Also, Ralph Nader is with us, catapulted to fame decades ago with his book Unsafe at Any Speed that took on the auto industry.
This is Democracy Now! Medea Benjamin will be joining us, and then we’ll be talking about The Blogging Revolution. Greatest number of journalists jailed today are online journalists. Stay with us.
AMY GOODMAN: We’re talking about the taxpayer bailout of the auto industry. Our guests, Wendy Thompson, retired worker at American Axle, former head of UAW Local 235, speaking to us from Detroit, and Ralph Nader.
Ralph, before we go on with the conversation, I just wanted to remind people of your background. I don’t think a lot of people know about how you catapulted to fame with Unsafe at Any Speed that took on the Corvair, but more than that, it took on the entire auto industry. GM, ultimately, you sued for spying on you. Can you tell the story?
RALPH NADER: Well, I was a young lawyer, and I went to Washington to federally regulate the auto companies for safety standards, fuel efficiency, emission control in the mid-1960s, and we had good chair people of House and Senate committees, and Lyndon Johnson was willing to sign these bills, and the press was willing to cover the story as an ongoing story instead of a sporadic feature. And it was really the American dream of justice. And the result was the saving of millions of lives and injuries, and it led to the fuel efficiency laws and reduction in emissions from motor vehicles.
And then we hit a stone wall the moment that United Auto Workers allied itself with the auto companies and stopped any increase in fuel efficiency standards. That opened the door for the SUV gas-guzzlers, etc., and that differential that consumers saw between what foreign car companies were selling and what Detroit was selling.
I view this proposed bailout as a mechanism to further those statutory regulatory goals of fuel efficiency, pollution control and safety. What couldn’t be obtained by regulation, because of the opposition of the auto company lobbyists and their allies, now can be obtained, because Washington holds all the cards. The moment Washington signals that they’re going to save the domestic auto industry, the auto industry has no cards. Washington has all the cards. And if they represent the motorists and the environment and the workers, they can turn this crisis into a great opportunity.
On the other hand, the right-wing forces in Congress and elsewhere want to use this crisis to break the union, to destroy the higher standard of living that autoworkers have been receiving compared to other workers. So there’s a real struggle going on. And the problem, Amy, is it’s being done in a frantically rushed manner, and that’s bad, because this is a very complex package they have to work out if they’re going to further the regulatory goals and if they’re going to restructure the industry.
JUAN GONZALEZ: And, Ralph, isn’t one of the key issues, in terms of the huge losses of the auto companies, is the health payments, the health insurance payments that they have to make, which in essence are a reflection of the country’s continuing inability to have a universal health insurance? Wouldn’t that, to some degree, be a great assist to the auto companies if we could fashion some kind of a healthcare plan?
RALPH NADER: Exactly. The foreign auto companies operate out of countries that have universal healthcare, like in Europe and in Japan. Out of the rubble of the World War II, they gave their people universal healthcare. Out of the victory of World War II in the United States, we still don’t have it. And that would relieve hundreds of dollars per car, in effect, the expense of producing a car, if we had universal healthcare, and the domestic industry could be more competitive.
But somebody’s going to have to pay for the mismanagement. And that means the board of directors and the executives, maybe with one or two exceptions, have got to be removed, and a sort of trusteeship has to be established over these companies.
AMY GOODMAN: Some people call GM a healthcare company that makes cars. They spend more for healthcare than they do for steel. Talking about going to Ontario because they have single-payer healthcare in Canada, unless Harper succeeds in dismantling it if he remains the prime minister.
RALPH NADER: That’s correct.
JUAN GONZALEZ: Well, Wendy Thompson, I’d like to ask you, you’re — the international leaders of the UAW, you’re raising these issues in this grassroots effort, but are your union leaders at this point willing to break with the past policies of continuing to support the policies of the CEOs of these companies?
WENDY THOMPSON: Well, again, we feel it’s very important that a rank-and-file point of view be presented here. And that’s why — that is why we’re going to Washington, to present the point of view that we, as workers, are coming down firmly on the side of fuel-efficient cars, saving the planet. We don’t think it’s right to take healthcare away from those who have it. Let’s expand it to everyone. And that is a part of our proposal: single-payer healthcare for everyone. You don’t take away a decent livelihood from one group, and then it exists for no one. If you’ve got it for one group, you keep it, and you expand it to everyone. I agree that the role of a government is key here and that the people have to have a say in the government and, therefore, a say in what happens in the industry. And that is why we’re going to Washington.
AMY GOODMAN: I wanted to turn for a minute to this film called Who Killed the Electric Car? In 1996, General Motors introduced the EV-1 electric car in California and Arizona. Hundreds of the electric cars were soon on the road. Then they all disappeared. The mystery behind their disappearance is a subject of this documentary, Who Killed the Electric Car?, which we featured on Democracy Now! last year. This is an excerpt.
PETER HORTON: There’s nothing like driving a car, where you realize, as you’re sitting in traffic, there’s no pollution coming out of your tailpipe. There’s — it’s just, you know, battery [inaudible].
DAVID LETTERMAN: By driving an electric car, what are you sparing us from?
TOM HANKS: I’m saving America, Dave. That’s what I’m doing. I am saving America by driving electric cars.
AMY GOODMAN: That was Tom Hanks, speaking on the David Letterman show. Despite the praise from drivers, General Motors stopped manufacturing the cars and forced all drivers to return their EV-1s. GM was able to do this, because none of the cars had actually been sold, only leased. After the electric cars were removed from the road, they were sent to Arizona, where they were crushed.
CHRIS PAINE: We flew over General Motors, and looking down, we could see right next to the racetrack where the EV-1 was first tested, we saw, I don’t know, maybe fifty EV-1s, crushed and put on top of semi flatbeds right next to the yellow crusher. General Motors is almost finished off, I think. I don’t imagine there’s very many EV-1s left that haven’t been crushed out. It’s pretty sad.
DAVE BARTHMUSS: There’s one of four things that will happen with the EV-1s. They will go to colleges and universities, engineering schools. They’ll go to museums and other displays across the country. Other EV-1 vehicles are being driven by our engineers. And the other option for the EV-1s at the end of their life is recycling. But know that every one — every part of the EV-1 is going to be recycled, dismantled through a third party and then reused. Everything is going to be recycled. We’re not just going to crush it and send it off to a landfill.
JIM BOYD: When I saw the picture of the pile of crushed cars, it hurt. And I — you know, I thought it was pretty spiteful.
IRIS OVSHINSKY: To see on the computer, on the internet, the crushed EV-1s that GM did, that was tragic.
STANFORD OVSHINSKY: It was wrong. It was wrong.
AMY GOODMAN: That, an excerpt of Who Killed the Electric Car?
by Chris Paine. Ralph Nader, now, after the first debacle of the auto makers coming to Washington in their corporate jets, they drove up in fuel-efficient vehicles. Final comment on this?
RALPH NADER: It’s the same kind of window dressing they’ve been engaged in, especially GM, since the 1939 New York World’s Fair. They dangle the electric car, they dangle new kinds of propulsion systems, but it never happens. We’re still saddled with the infernal, eternal, internal combustion engine. And GM came yesterday with the Volt. The Volt is going to cost at least $40,000 to $50,000 to anybody who wants to buy it. That’s just more window dressing by GM. That’s why the management and the board of directors have to be removed completely, and put in people who really know how to produce cars that are in consonant with consumer needs and the environment.
And we should know that the auto suppliers are really the source of innovation here. There are a lot of brilliant engineers and scientists and management types that are available that have circled around this forlorn, mismanaged industry for years but have never been given the responsibility for it.
And people have just got to get Congress to put numbers on this. You know, the bailout of Citibank, $300 billion on-the-backs-of-the-taxpayer risk and another $45 billion in preferred shares for one bank, this so-called bailout could only cost $10 billion, if it works, for example, of the taxpayer, and the taxpayer could get $20, $30, $40 billion back in appreciated stock value. So we need to be much more demanding of Congress, and we need to learn more about corporations. And I can give you the website for the Multinational magazine, which is multinationalmonitor.org, because without an informed public, we won’t realize what the full parameters of this is.
Autoworkers have shrunken in number by two-thirds in the last fifteen, twenty years. The UAW has lost two-thirds. They have given up tens and tens of billions of dollars, the workers, and that’s not coming to the forefront, compared to what the government is offering.
AMY GOODMAN: I want to thank Wendy Thompson for being with us. We’ll follow that trip you take to Washington, D.C., UAW Local 235, former president, helping to organize this auto caravan. Again, that website, Wendy?
WENDY THOMPSON: www.autoworkercaravan.org.
AMY GOODMAN: Thanks for joining us. She’s joining us from Detroit today.
WENDY THOMPSON: Thank you.
AMY GOODMAN: She’ll be in Washington on Monday.