Carmakers deserve respect — and a loan

By Warren Brown

CORNWALL, N.Y. — It’s too bad that General Motors is little more than an American manufacturing company providing American jobs. It gets no respect from the U.S. government.

The same can be said of Ford and Chrysler, beggars all — and all of whom are being treated as such by the U.S. political and financial establishments.

The domestic car companies should turn themselves into a foreign government. Iraq is an example. Then, they should declare themselves open for democracy and economic development, whether their native constituents want it or not. That should get the U.S. Treasury dollars flowing.

Better still, maybe the domestic car companies should just get out of making cars and trucks altogether. They could use whatever money they have left after liquidation to set up a business making risky mortgage loans. That should win federal favor.

I mean, it’s downright embarrassing, watching Detroit automobile executives running around Washington and the Democratic and Republican national conventions, as they were in Denver and in St. Paul, Minn., over the past two weeks, begging for loans and mostly getting the bum’s rush.

It’s demeaning.

Horsepower crazy

I know. Detroit screwed up, went truck and horsepower crazy, and fought federal attempts to mandate tougher fuel-efficiency standards. And let us not forget how Detroit misjudged the competition. So now, it’s getting the fiscal beating it deserves, pummeled by crashing sales of all of those big trucks that suck too much fuel in an era of high gasoline prices.

Go away, Detroit.

It’s so easy to be virtuous when one’s only sin is patronizing the house of ill repute. Here’s what I mean: American politicians and regulators enabled Detroit’s profligacy. The same politicians who made a big show of demanding that Detroit produce more fuel-efficient cars and trucks did next to nothing to create a market for their sale. In fact, federal economic policy, deeply soaked in cheap gasoline, did just the opposite.

By mandating more technical fuel economy without adjusting the price of the fuel consumed, federal policy lowered the cost of driving in the United States and, in turn, helped increase consumer demand for bigger vehicles and more horsepower. It was all good ... until a meteoric rise in gasoline prices ended all of that.

Now, the U.S. car companies find themselves in the lurch. They are asking the government for what amounts to a $25 billion loan at a very favorable interest rate — about 4.5 percent per annum — to help pull themselves up. They are being told to get lost.

It is a hypocritical response.

What gets me is that there is not one foreign car company manufacturing in the United States that has not received millions of dollars in government aid — usually via local and state tax incentives and abatements that ultimately have a federal tax impact.

But here are GM, Ford and Chrysler asking for a loan, which they are vowing to repay. Beggars! Profligates! Go away!

“They make stuff. Companies that actually make stuff — manufacture things — don’t get any respect in America,” said Lou Ann Hammond, an automotive and energy writer living in California.

I asked her what the car companies had to do to get a federal loan.

“They could stop being car companies and become a Bear Stearns,” she said.

It’s crazy.

Risky loans

We bail out financial companies that knowingly made risky loans. We bail out oil-rich dictatorships that promise to embrace democracy. We eagerly give foreign manufacturers every conceivable tax break to set up a new plant here, put up a new facility there. But we punish American car manufacturers who are trying to turn themselves around and reduce our national demand for oil in the process.

Those companies and their suppliers provide nearly 25 million American jobs. They spend $12 billion annually in research and development in the United States. That amount is likely to increase, thanks to the need to develop new automotive materials, fuels and propulsion systems as we shift to a less-oil-dependent future. In that regard, domestic car companies largely constitute America’s future — American-owned — industrial base.