Imagine Rick Wagoner, Alan Mulally and Bob Nardelli’s displeasure when they open this morning’s Detroit News and read the “Government May Delay Auto Money.” While you’d hope The Big 2.8’s CEOs knew this before now, it’s still pretty sobering stuff. “We have significant doubts about whether distribution of [$25b worth of federal low-interest] loans by January 2009 is realistic,” Department of Energy (DOE) spokesman Healy Baumgardner warned. “There are a number of legal and administrative requirements with which the Department must comply, such as the National Environmental Policy Act, we anticipate it could take at least 6 to 18 months or more, after necessary funds are appropriated.” Beaumgardener’s remarks unleashed John Dingell’s ire. “It appears that DOE is making excuses for its own anticipated failures,” pronounced the chairman of the House Energy and Commerce Committee. “This is unacceptable; this investment is too important to Michigan for the Department of Energy to drag their feet,” U.S. Rep. Mike Rogers, R-Brighton pronounced. Instead of asking for a federal bailout, Detroit calculated they could alter the DOE “retooling” loans to suit their needs AND get the cash pronto. In this, as in so many other things, they may be entirely, disastrously wrong.

Automotive News [AN, sub] reports that the U.S. House of Representatives have passed a bill which includes authorization for $25b in federal low-interest loans for Detroit. The legislation, originally designed to help Detroit automakers retool 20-year-old-plus factories to build automobiles that are 25 percent more fuel efficient than similar models, cleared the Reps by a margin of 370 to 58. The Senate will rubber stamp the bill– whose main purpose is to keep government running in the new fiscal year that begins Octover first– by the weekend. President Bush is expected to sign it next week. And before that’s done, Detroit’s minions will do everything in their power to get their hands on the cash and subvert Congress’ original intent for the bailout billions.  As AN puts it, “The final version of the bill is expected to include language that would speed the issuance of the loans and the adoption of rules by the Department of Energy that would govern their use, said John Bozzella, Chrysler LLC’s vice president of global external affairs and public policy.” Meanwhile Rep. John Dingell, chairman of the House Energy and Commerce Committee, was over the friggin’ moon. “Some critics will call this loan package a bailout,” the Michigan democrats statement admitted. “It is not. These loans amount to a little more than 1 percent of the real bailout — the one that the Bush administration wants for Wall Street at a cost of $700 billion to taxpayers.” So it’s not a bailout that’s less than the other bailout. Makes sense to me.

Stop selling. To be fair, it’s no surprise GM NA Prez Troy Clarke Troy felt obliged to respond to The Christian Science Monitor‘s anti-bailout ed. “Years of mismanagement, high executive salaries, and overly generous worker benefits have indeed hurt the Big Three… Detroit is no more deserving than many other US industries – textiles, furniture, toys – that have failed to compete well against foreign companies.” In response, Clarke quickly trots out the usual arguments: GM provides American jobs, GM’s [drug on the market] alt power cars help U.S. energy independence, climate change is a bitch, Mars is in retrograde, etc. And then we’re off in uncharted territory. For one thing, Clarke confirms the memo on the Volt’s non-ICE rechargable batteries. “The Chevy Volt, an electric vehicle that will go on sale in late 2010, will deliver 40 miles of gasoline- and emission-free driving on a single charge and hundreds more miles by using a small gas engine to generate additional electricity.” For another, he’s already talking about widening the federal loans’ retooling remit. “The capital raised through these loans can be spent on such efforts as increasing our nation’s R&D in advanced batteries and alternative fuels, and retooling our factories to build new vehicles that use these advanced technologies.” As for proof that GM has the brains for the job… “Nearly a century ago, GM introduced the automobile self-starter, a technological breakthrough that banished the hand-crank forever. As the Volt demonstrates, GM is still at the forefront of advancing automotive technology.”

Congress will approve $25b worth of federal low-cost loans under the 2007 Energy and Security Act. The funding will be included in a general bill that keeps the lights on down in DC. In other words, it’s a sure thing. And, let’s face it, a sweetheart deal. As The Detroit News reports, “The Big Three automakers, which have poor credit ratings [!!!], could save more than $100 million per $1 billion borrowed and will get as much as 25 years to repay the loans. They could also ask the Energy Department to defer repayment for up to five years.” And now, the bad news: the program won’t be expanded into a slush fush for the struggling Detroit automakers. The language continues to mandate that the money be used for retooling old factories to build fuel efficient vehicles. The good news: “…the U.S. Department of Energy will have broad latitude to determine how and which projects will qualify for loans under the program.” Let the lobbying begin! The bad news: “This is a $25 billion loan program (and) we’re going to carry out our due diligence in implementing a program this large,” Energy Department spokesman Healy Baumgardner promised. Translation: automakers aren’t likely to see any loans until spring of next year at the earliest. The consolation prize: the Volt will qualify for a $7500 federal tax credit. You know; after Uncle Sam gives GM billions to build it. Sweet!

“We want auto finance companies to be able to raise the money they need to finance more auto purchases.” Well I bet you do, Ms. American Financial Services Association spokeswoman Lynne Strang. But c’mon, are we really talking about Uncle Sam taking over bad car loans? Yes, we are. “The American Financial Services Association is asking Congress to allow auto finance companies and other institutions to tap the $700 billion bailout fund designed for the troubled mortgage industry,” Automotive News [sub] reports. “The trade association, based here [Washington], also is proposing that automobile loans be classified as ‘troubled assets’ along with home mortgages.” Just another lobby group wanting a suck on the federal teat? Well, yes. But this hungry mouth could well get fed. “U.S. purchases of distressed assets would help people, Mr. [Secretary] Paulson told The Wall Street Journal, by enabling lenders to resume making loans for homes, cars and small businesses, and by keeping the economy from sliding into a deep decline that would cost jobs.” When private enterprise depends on government largesse to survive, when an economy depends on bad debt rather than good productivity to thrive… where’s John Galt when you need him?

We recently reported that the National Automobile Dealers Association (NADA) was sitting-out the bailout begathon in our nation’s capital. Their decision seemed sensible enough; NADA members include all American brands, even those who are doing just fine without a federal loan, thankyouverymuch. Well, we spoke too soon. Automotive News [sub] reports that NADA is back on board for the Potomac shuffle after “automakers had encouraged NADA to support the loans because they would provide broad economic benefits.” The news comes as industry lobbyists make the final push to appropriate funds for the $25b loan program by the end of the month. Meawhile, House Democratic leaders drafted a continuing resolution which commits Dems (in writing) to appropriate the cash by the October 1 deadline. In that missive, we also learn that the total cost of the bailout will be $7.51b, with $10m of that going towards the inevitable “administrative costs.” With NADA now on board, and the Dems making all the right noises, Detroit can nearly be assured of the bailout’s passage. Up next, surviving until the checks arrive, and gearing up for round two.

Much of our ire at the proposed auto-industry bailout has been reserved for the OEMs, but their supplier co-dependents are pushing just as hard for the pork picnic. Automotive News (sub) reports that Lear and Visteon were among a dozen suppliers who joined the D3 lobbying efforts in DC last week. Bosch spokeswoman Cheryl Kilborn tells AN that some suppliers were lobbying on behalf of their own projects, while others were present to support the efforts of their OEM partners. The main message of supplier lobbyists was, according to Motor and Equipment Manufacturers Association VP Ann Wilson, “we are everywhere.” And since suppliers are responsible for nearly 70 percent of the value of the typical vehicle and more than 40 percent of automotive R&D spending, it only makes sense that they be eligible for bailout money if Congress puts out. And like the manufacturers, suppliers want fewer strings attached to the government loans, arguing that asking for 25 percent increases in efficiency for bailout-funded projects is too burdensome. Having brought that message to some 40 congressional representatives last week, industry lobbyists are hoping that a united front among OEMs and suppliers helps the federal teat pop out with Janet Jackson-like alacrity. Then they can get back to gouging each other as usual.

The Detroit Free Press finally offers us a timeline on when GM, Ford and Chrysler might get their share of $25b worth of federal low-interest loans. While congressional funding will most probably slip through this week, cash-in-hand is a whole ‘nother matter. “The Bush administration must still write the rules that will govern how the loans will be handed out, and the U.S. Department of Energy has said the process may not be done by the end of the year. After Congress set up a loan guarantee program to develop clean energy sources in August 2005, the DOE took more than two years to write the rules for it, and no money has been lent yet. With a new administration taking a couple of months to fill key jobs and restart the work, auto executives worry that without quick action on the rules, they would not see any money from the loans until mid-2009 at the earliest.” To his credit, The Freep’s Justin Hyde spells it out. “Given the estimates of slow auto sales through 2010, that kind of delay could make Detroit’s troubles look more like Wall Street’s.”

God forbid The Detroit Free Press should question the intellectual basis upon which bailout proponents stake their claim to $25b worth of taxpayer funded low-interest loans. (Or more.) No, the hometown paper feels obliged– obliged I tell you– to offer its own summary of how The Big 2.8 should argue their case for bailout bucks during this “challenging” time. Justin Hyde of their Washington staff reckons Wall Street’s financial meltdown helps Motown by blessing them with three talking points: “automakers and parts suppliers are pledging to pay back the money they receive;” the loans are “small change” and “helping blue-collar factory workers carries more political cachet than riding to the rescue of bankers.” And now the really good news! “Democratic leaders have said they likely will put the auto industry’s request into the budget resolution that keeps the government open through the elections — the only veto-proof bill that Congress must pass before it adjourns. That bill is expected to come to the floor sometime later this week, depending on how far lawmakers get on other matters.” Bad news to follow…

Well he would, wouldn’t he? As usual, George F. Will takes his sweet time getting to the meat of the matter: his final position on Uncle Sam’s $25b low-interest loans for The Big 2.8. And when he does, Will’s irony meter pegs out at 10. “Lemon socialism — the subsidization of the weak — is supposedly needed lest a U.S. automaker file for bankruptcy, causing the sort of civil disorder and social chaos that accompanied the disappearance of Studebaker, Packard, American Motors and others.” Will’s summation hedges his rhetorical bets, but the message couldn’t be any different from Washington Post stablemate and nominal car critic Warren Brown. “Detroit says, correctly, that some of its problems stem from fuel economy and other mandates imposed by the 535 automotive engineers on Capitol Hill. But that is beside the point, which is: No one thinks that the failure of an auto manufacturer would pose systemic risk to the economy. Americans would just buy a different mix of cars.” In fact, day after day, month after month, year after year, they already are. [thanks to loads o’ folks for the link]

Students of this series will know that justification for the proposed $25b in low-interest federal loans for Detroit automakers is a moving target. First, legislatively, it was all about retooling old mid-western factories to build fuel-efficient cars (i.e. energy independence via United Auto Workers jobs). The media immediately saw the loans for what they are: bailout bucks. And while Detroit hewed to the “retooling for our future” meme, their politicians (savvy bastards that they are) chanted “jobs, jobs, jobs.” On Fox news yesterday, reporter Jeff Flock unveiled the latest party line: “Hey, if Wall Street’s money men are getting all this money, why not help the people who actually build stuff?” (Fair and balance that.) The Washington Post‘s nominal car critic is down with that. “At least with the car companies, we have the promise of something tangible — more fuel-efficient, environmentally friendly vehicles such as the plug-in electric Chevrolet Volt car that GM displayed last week at its 100th corporate birthday celebration… That’s worth $25 billion, I think. It’s a better risk than betting that the investors and speculators who got us into our current financial trouble by buying and selling poorly vetted loans have our best economic interests at heart.” Moral relativism sucks. [thanks to inept123 for the link]

When the [not always] Right Reverend Jesse Jackson weighed-in in favor of $25b worth of low-interest federal loans for Detroit’s automakers, I couldn’t quite peg JJ”s angle. Jackson blathered-on about economic catastrophe and kids not being able to go to school. Well, now we have an indication of the real reason that JJ voted aye for the bailout. Automotive News reports “Desmond Roberts, chairman of the National Association of Minority Automobile Dealers, says his group has been urging members of Congress for most of the summer to provide $500 million in direct loans and loan guarantees to help minority dealers.” Yes, you heard right: NAMAD was into bailouts before bailouts were cool. “We were asking before the manufacturers went with their request,” says Roberts, owner of Advantage Chevrolet, of Hodgkins, Ill. “What we’re asking now is if they are going to appropriate $25 billion, can’t they carve out $500 million for the dealers who are in dire straits, whose absolute existence is threatened today? We’re the forgotten component.” AN says GM has about 340 minority-owned dealerships out of 6,550, while 271 of Ford’s 4,056 dealerships are owned by minority dealers. No flames now, but can someone please explain to me why minority-owned car dealers should get federal assistance when non-minority-owned dealers don’t?

Once upon a time, Barack Obama and John McCain actually disagreed about the proposed automaker bailout. Obama took his cues from the UAW and backed the proposal. McCain remained principled– until he realized he had to win Michigan. Now, not only is McCain camping-out in Obama’s rhetorical territory, promising that “change is coming,” he’s also pushing to be seen as Detroit booster-ier than thou. His new ad literally opens on the corporate logos of the Detroit three, while a honey-voiced narrator coos that “Michigan families depend on the auto industry.” But can McCain really win by following his opponent into populist positions? A post over at Wired indicates that not only is he pandering after already-committed voters, but he’s also helping to fuel protectionism, corporate welfare, and jingoistic anti-innovation. Because there is less daylight between the McCain and Obama positions, McCain is coming under increasingly narrow and divisive attacks, the latest based on his opposition to “buy American” stipulations for (get this) secret service motorcycle purchasing. McCain’s opinion that mandating the purchase of Harley-Davidsons is “unnecessary and counter-productive” has caused the Obama campaign to start a “hybrids and Harleys” initiative. At a recent rally in Grand Rapids MI, Hybrids and Harleys for Obama banned all foreign-built hybrids from the parade of vehicles. Er, all non-D3 hybrids, anyway. Canadian Silverado hybrids were welcome, as were Mexican-made hybrid Vues. Holding Americans and their presidential candidates to an impossible standard of driving American-made, eco-friendly hybrids is the result of a lack of substantive debate. When neither side refuses to take a principled stand on an issue, contrast is derived only through pandering and empty symbolism. For two candidates who claim to be agents of change, this is a lot of the same-old tired politics as usual.

Non-industry bailout supporters almost always qualify their backing with a number of conditions to be placed on automakers who receive government assistance. As Automotive News [sub] reports “The problem with the plan included in the energy bill: the string attached. Actually, it’s more of a rope. A cable even.” One such rope or cable is the requirement that retooled factories produce vehicles which are 25 percent more efficient than their competitors. Though that may be theoretically possible, AN worries that regulating the loan program could be a nightmare. Unsurprisingly, the Project For A New Generation Of Vehicles (PNGV) is brought up as an example of what happens (or not) when the government gives Detroit money without attaching firm enough conditions. And just like that, there’s another article in Automotive News which reports that automakers are calling on Washington to “change restrictions attached to the money that may impede its benefit for the struggling companies.” An industry lobbyist confides that preliminary conditions were written-up when the energy bill passed last December, but they “were not given much thought at the time.” The big problem? The requirement of 25 percent efficiency improvements, of course. GM CEO Rick Wagoner says that efficiency gains are “typically made in smaller increments.” No kidding, Rick. Detroit got over a billion to develop a new generation of fuel-efficient vehicles starting in 1993 and we still haven’t seen any tangible results, thankyouverymuch. Meanwhile, Nancy Pelosi has not made clear if she is willing to change restrictions on the use of the money or how that would be accomplished. Furthmore, she says that “full funding” of the loan proposal is still up in the air since their are many other programs fighting for access to the federal teat. Stay tuned for future Wagoner press conferences calling on the government to distribute the $25b “in unmarked bills, stuffed in a suitcase and hand delivered to the RenCen.” After all, if Detroit were into the whole “accountability thing” it wouldn’t be asking for a bailout in the first place, would it?

TTAC commentator, Buick dealer and GM stockholder activist Jim Dollinger (a.k.a. Buickman) has long argued that Wall Street’s money men have been running GM into the ground accidentally on purpose. While we understand his POV– who could possibly be this stupid?– The Detroit News reveals that Goldman Sachs and JPMorgan Chase are working “back channel negotiations” to protect their asses from a Motown C11 (i.e. get your elected representatives to give American automakers $25b+ in low-interest federal loans that the banks can’t or won’t give). That’s because both of these “august” financial institutions own big chunks of Ford and GM {the exact “vig” in the comment below). Only time is running out, as bailout fatigue grows. Oops, sorry, this isn’t a bailout. Not that you’d know it from JP Morgan’s pleas. “Beyond the need to provide a safety net for workers, we believe the automotive industry is critical to national security. Not only does the automotive sector support the steel infrastructure that is critical to manufacturing defense weaponry, but the automotive sector also provides about 1 out of every 12 jobs in the U.S., is a key factor in getting the U.S. independent from foreign oil and is essential toward cleaning up the environment,” wrote JP credit analyst Eric Selle. All done? No, I didn’t think so.