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Would The 'Car Czar' Be Too Political?

POSTED: 03:16 PM ET, 12/11/2008 by Derek Kravitz

As Senate Republicans threaten to derail plans for a $15 billion bailout of the country's automobile industry, some are wondering aloud if a proposed "car czar" for the ailing companies would be less of a regulator and more of a political lackey.

This morning, Senate Minority Leader Mitch McConnell (R-Ky.) bluntly said the plan wasn't "tough enough" and said "a lot of struggling Americans are wondering where their bailout is," signaling his dislike for some of the watchdog provisions in the legislation.

One of the major sticking points in the bill is the amount of influence, or lack thereof, of the proposed car czar, the industry regulator who would essentially control the purse strings of the government bailout and who could force Detroit's Big Three automakers into bankruptcy.

The critics suggest that the czar would have little real authority over the companies and would be susceptible to influence by lawmakers.

"A bailout would invite all sorts of meddling by lawmakers to have the companies carry out their own sort of pet policies," said Sen. John Ensign (R-Nev.), according to the Wall Street Journal.

Some Republicans, namely Sen. Judd Gregg (R-N.H.) and Sen. Norm Coleman (R-Minn.), spoke of bolstering the duties of the new "auto czar." But in the House debate, Minority Whip Eric Cantor (R-Va.) derided the czar as an unneeded "bureaucratic" imposition on private business, according to Politico.

Meanwhile, Democrats have been lining up behind former Federal Reserve chairman Paul Volcker as the nominee for car czar job, but the 81-year-old economic adviser to President-elect Barack Obama doesn't meet some of the Republicans' ideal qualifications for the role (namely that he isn't a bankruptcy judge).

But Volcker does have experience; As Fed chairman, Volcker was the lead principal government regulator in the Chrysler Corp. bailout of the late 1970s.

By Derek Kravitz |  December 11, 2008; 3:16 PM ET
Previous: 'Lady Macbeth' of the Blago Scandal | Next: Senate Kills Auto Bailout, Jackson Supporters Sought Cash for Blago, Senators Blame Rumsfeld for Detainee Abuse

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Watching the Republicans try to blame the auto maker's problems on the Unions instead of Management would be a joke, if wasn't so serious. Management decides what kind of cars to build and the unions build them GM and Chrysler management had the Unions build stupid gas guzzlers that no one wanted to buy. Why is Ford in better shape? It built more cars for the world market and was better managed. Same Union deals. Ford would like a line of credit, in case ... no bail-out.

Give a short term loan and throw the bad management out of there!

Posted by: thebobbob | December 11, 2008 4:33 PM

Let them go bankruptcy where a judge can call the shots.

Posted by: theodosia1 | December 11, 2008 4:39 PM

The UAW contract is blackmail of the auto industry. Retiree medical benefits are the principal culprit. The UAW must get realistic and give it up already. Even the Fed employees no longer get retiree medical benefits, depending on hire date.

The market determines the products and people wanted big SUV's. With gas prices at a 5 year low many people still want them.

I say let the auto industry reorganize without taxpayer money.

Posted by: AbolhassanBaniSadr | December 11, 2008 4:43 PM

The Car Czar is yet another public relations gimmick used by Congress to make it look like they are exercising due-diligence as they take care of one of their preferred constituencies. Given a choice between bankruptcy (which the Big-3 and the UAW have fraudulently attempted to characterize as a disaster scenario), one would think that they would take whatever Congress chooses to give them. However, since that's really not what's happening at all, they (like the banks) are negotiating the terms under which they will accept a bailout.

Translation, they are threatening Congress with near term public consequences, as well as longer term private consequences which they know would come out in the event of a bankruptcy. That's exactly why it's in the best interests of the public to let them go bankrupt, just as it would benefit us to see several more major financial institutions go belly-up as well. That's the only way we're going to clean out the perpetrators of the malfeasance which has created this problem in the first place, and it's the only way to force into the public eye the behind the scenes conspiracy between private financial interests and members of Congress.

Considering what is being done to our economy by Wall Street, the UAW, Big-3, and Congress: If it looks like a Duck, and it quacks like a Duck, it probably rhymes with a Duck.

Posted by: thomas777 | December 11, 2008 5:12 PM

Even if a bail out does occur it will not save these companies. People are losing there job's, not buying cars. What's the point in loaning a company money that can't sell there products. Perhaps it is better to let them reorganize under Chapter 11. At the same time the government can use this money to replace it's own fleet of car's. This way it will keep people working untill this crisis runs it's course and the tax payers are not just throwing money away.

Posted by: ashmike13 | December 12, 2008 12:31 AM

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