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Automakers Are Lining Up Aid, But Just Don't Call It a Bailout

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By Jeffrey H. Birnbaum and Sholnn Freeman
Washington Post Staff Writers
Sunday, December 4, 2005

Troubled U.S. automakers and their allies on Capitol Hill are seeking billions of dollars in aid from the federal government ranging from health coverage for their workers to extra tax write-offs for themselves.

They're also asking for one rhetorical favor: Please don't call the requests a bailout.

"I don't view it as a bailout," Sen. Carl M. Levin (D-Mich.) said.

"We're not looking for a bailout," agreed William C. Ford Jr., chairman of Ford Motor Co.

The "B" word has been taboo ever since Chrysler Corp., faced with impending insolvency, sought and narrowly won $1.5 billion in loan guarantees from Washington in 1979 and 1980. The company eventually borrowed $1.2 billion and repaid the loans in 1983, seven years earlier than was required.

Nonetheless, the notion of the American taxpayer saving a company with a large and quick fix has pretty much gone out of style and has not been repeated since, with the exception of loan guarantees to airlines after 9/11. Even though General Motors Corp. and its rival Ford Motor now face serious financial straits, both are studiously avoiding public condemnation by spreading their aid requests widely among many types of government policies.

Taken together, however, the components of their wish list would cost tens of billions -- far more than Chrysler ever dared to seek.

With pleadings that large, breaking the requests into smaller pieces makes a great deal of legislative sense, and industry and labor leaders hope that several relief packages could begin to move in Congress next year. The outlook is uncertain, especially given the size of the federal budget deficit, but auto industry representatives said they were optimistic that at least some of their proposals would succeed.

"The likelihood of some sort of grand solution probably isn't there," said Dennis B. Fitzgibbons, director of public policy in Washington for DaimlerChrysler AG, the firm that was formed when Germany's Daimler-Benz merged with Chrysler in 1998. "But," he added, "there are pieces that people could agree on."

Many, many pieces. In a speech in Washington last month, William Ford urged the government to help domestic automakers by expanding subsidies for companies that make components for gasoline-fuel-cell hybrids and other fuel-efficient vehicles. He also asked for federal money to retrain workers and for tax breaks to help manufacturers outfit old plants with new equipment.

GM has its own elaborate list. It hopes that pension legislation that is wending its way through Congress will tread lightly on heavy manufacturers such as GM. The legislation would strengthen the federal backstop to private pension plans by raising corporate contributions to a fund. The company also seeks health legislation down the road that would unburden it of the huge cost of medical coverage that it now offers its 450,000 retirees and their spouses.

One proposal that's being floated is for the government to provide catastrophic health care coverage. GM has pointed out that the most severely ill patients, the top 1 percent of health care users, account for 30 percent of health care costs. The industry also is interested in revising tort law as a way to alleviate health care costs.


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