- The Washington Times - Wednesday, November 26, 2008

A list of job cuts, shuttered factories, canceled bonuses and commitments to fuel-efficient cars won’t be enough next week when U.S. automakers get another shot to persuade Congress to give them $25 billion in loans.

Through the Thanksgiving weekend, teams will be tagging more meat to throw at skeptical lawmakers who vilified the automakers’ top executives the last time they went to Washington. That means executive pay cuts, union concessions, and perhaps even higher fuel-economy requirements and a glimpse at top-secret product plans.

At General Motors Corp., the largest of the Detroit Three and probably the most needy, teams are preparing a detailed plan, first for GM’s board on Monday, then for delivery to Congress by its Tuesday deadline.

The House Financial Services Committee plans to hear testimony on the loan requests Dec. 5, two days after the Senate banking committee hears the plan.

Steve Adamske, a spokesman for House Financial Services Committee chairman Rep. Barney Frank, Massachusetts Democrat, said Tuesday that each company is expected to submit a report that will be made public to “give confidence to the people that we’re not giving good money after bad.”

People with knowledge of the plans being formulated by GM and Chrysler say they will contain more than just details of past restructuring.

The person familiar with the GM plan said it likely will include new, visible sacrifices from top executives, even working for $1 per year. Also on the table are concessions from the United Auto Workers, including elimination of the much-criticized “jobs bank” in which laid-off workers keep getting most of their pay.

Executive pay cuts are almost a certainty, given the language in a letter House Speaker Nancy Pelosi, California Democrat, and Senate Majority Leader Harry Reid, Nevada Democrat, sent to the automakers last week demanding detailed plans.

President-elect Barack Obama also signaled that the heads of the three auto companies who came to Washington asking for a bailout were “a little tone-deaf” to what’s going on in the country, the second time this week he has had harsh words for Ford, Chrysler and GM.

In an interview with ABC’s Barbara Walters released Tuesday in which he also said bank executives should forgo their annual bonuses, Mr. Obama said excessive compensation “has been a chronic problem, not just for the auto industry … I think it’s been a problem for the captains of industry generally.”

“One of the things I hope my presidency helps to usher in is a return to an ethic of responsibility. That if you’re placed in a position of power, then you’ve got responsibilities to your workers. You’ve got a responsibility to your community,” he said.

During last week’s congressional hearings, only Chrysler Chief Executive Officer Robert Nardelli committed to working for $1 per year, while GM CEO Rick Wagoner and Ford’s Alan Mulally didn’t directly answer the question.

Besides getting called out for flying to Washington on separate corporate jets, a lack of answers from the CEOs was a big part of the problem last week and a big reason why the CEOs were chastised by hostile lawmakers, said Aaron Bragman, an auto analyst with the consulting company IHS Global Insight.

The Bush administration, meanwhile, told Congress that the Detroit companies must show how they can cover their sizable labor costs and huge employee-retirement obligations before they get a federal lifeline.

In a letter Tuesday to senior congressional Democrats, Commerce Secretary Carlos Gutierrez and Energy Secretary Samuel W. Bodman said the carmakers have to show they “have a product mix and cost structure that is competitive in the U.S. marketplace.”

Sen. Debbie Stabenow, Michigan Democrat, said the companies need to talk about advanced vehicles under development and give a specific accounting of how much in loans they need and why.

“The image that they project is very important. It’s important that they show at every level they understand how serious this is and that they’re willing to make sacrifices as well,” she said.

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