Auto Industry’s Arrogance Led to Its Predicament;Congress Should Attach Strings to Any Bailout

Sept. 11, 2008 

Auto Industry’s Arrogance Led to Its Predicament; Congress Should Attach Strings to Any Bailout

Statement of Joan Claybrook, President of Public Citizen*

The auto industry’s financial predicament reminds us of the old fable of the grasshopper who spent his days living high and carefree, too arrogant and foolish to worry about the impending winter. Like the grasshopper, auto manufacturers got fat and comfortable marketing gas-guzzling, unsafe sport utility vehicles to consumers, while ignoring inevitable rising oil prices and the onset of global warming. They paid no heed to events of the 1970s, when oil embargoes and shortages shook their companies to the core.

For years, Detroit automakers fought tooth and nail against federal measures to improve the fuel economy of their fleets and against state efforts to lower vehicle emissions. General Motors went so far as to destroy its own zero-emissions electric cars after California eased its rules. All the while, Detroit’s foreign competitors embraced new technology, outclassing the U.S. in the marketplace.

Now, the industry has come to Congress hat in hand, begging for a bailout that could cost American taxpayers as much as $50 billion. We’re not sure how Detroit’s CEOs, whose annual pay ranges from $2 million to $12 million (even as share prices fall and losses reach the billions) can ask for this bailout with a straight face. They should be embarrassed.

Yet these CEOs know that the politicians view their companies as too big to fail. Faced with the workers’ union and entrenched lobbyists representing the many companies dependent on Detroit’s survival, members of Congress are feeling tremendous pressure to give them what they want.

It’s time for the government to show some tough love to the auto industry and not enable it to continue its resistance to 21st century public priorities. In a letter to all U.S. senators and representatives, Public Citizen and others will urge lawmakers to tie any bailout to assurances that manufacturers will increase the fuel economy of their fleets beyond the standards set last year by Congress and comply with all safety standards.

Last year’s Energy Independence and Security Act authorized loans to help the industry revamp selected manufacturing plants to build more fuel-efficient vehicles and required the companies to achieve a 125 percent increase in the fuel economy of vehicles made in those plants. Today, the consumer groups are asking that an increase in the overall fleet fuel economy be tied to any bailout dollars appropriated.

The industry created the mess it’s in now, and did it while laughing all the way to the bank. It’s time for these companies to give back to the American people.

*Note: Joan Claybrook was administrator of the National Highway Traffic Safety Administration from 1977-1981.

###

READ the coalition letter to the House.

READ the coalition letter to the Senate.