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GM and Chrysler, owned by the government, lobby the government

By Peter Whoriskey
Washington Post Staff Writer
Thursday, January 13, 2011; 9:06 PM

General Motors and Chrysler, the bailed-out automakers still partially owned by the government, have joined an industry coalition that this week lobbied against proposed federal rules on fuel efficiency.

The attempt to push back against regulations pursued by environmental groups follows the automakers' efforts last year in which they opposed measures in an auto safety bill, which had been supported by the Obama administration.

The notion of federally owned companies lobbying the government - at times on the opposite side of the architects of their bailout - has drawn repeated criticisms from environmental organizations, safety advocates and watchdog groups. They say the government should have used its influence to block the companies from interfering with legislation that could improve the public welfare, such as environmental controls and safety enhancements.

"Even when the government owned 61 percent of General Motors, the company was arguing against government proposals on auto safety and pollution controls," said consumer advocate Ralph Nader. "As the owner of the world's second largest auto company, the government could really have made the company a model."

They didn't, in Nader's view.

"It's hard to make something like this up," he said.

The U.S. government owned 61 percent of GM after the bailout, but a public offering of stock in November reduced that stake to 33 percent.

The government owns 9 percent of Chrysler, a far lower stake. As a result, critics have focused on GM's lobbying efforts.

All along, Treasury officials have said they would try to let GM operate as if it were a normal commercial enterprise, owned by private parties. Otherwise, political meddling, among other things, could hamper the company in its recovery.

A Treasury spokesman said yesterday that the department's position hasn't changed.

"The administration has been true to their word from the start and has allowed us to make the business and commercial decisions," GM spokesman Greg Martin said.

Even though the government has a stake in the company, Martin said, "GM still retains the same First Amendment rights its competitors do. When you consider we are a global company that sells a machine that weighs several thousand pounds with an equal number of parts, there are very few policy issues that don't affect us."

GM spent $6.6 million on its lobbying efforts in 2010, according to public records - a considerable sum, but far less than the $14.3 million it spent in 2007, before the economic crisis.

Perhaps the company's most notable efforts came as Congress debated an auto safety bill drafted in the wake of the massive Toyota recalls.

Among other things, the measure called for mandating "black boxes" on all cars, bulking up the budget for regulators and jacking up the fines faced by automakers who flout the rules.

The Obama administration supported higher fines, but GM and most other major automakers argued that the increases would be too punitive. The bill eventually stalled in the Senate in December.

"I think it was totally unethical that GM was lobbying against the government's position," said Joan Claybrook, a consumer advocate and former chief of the National Highway Transportation Safety Administration.

More recently, GM, like the other automakers, has raised concerns about efforts to raise fuel efficiency standards to as high as 60 miles per gallon.

The government is in the process of setting fuel efficiency standards for the years 2017 to 2025.

In a move approved by GM, the Alliance of Automobile Manufacturers sent a letter on Monday to Rep. Darrell Issa (R-Calif.), chairman of the House Committee on Oversight and Government Reform. The letter cautioned that some of the proposed fuel economy measures could raise costs as much as $6,435 per vehicle. Moreover, it noted that the industry is facing new federal regulation on fuel economy labeling and rear visibility.

"These rules have the potential to impose significant addition costs on the car buying public, and therefore also bear careful scrutiny," the letter said.

The two companies also sought to influence a proposed free trade agreement with South Korea. Automakers initially perceived that to be a threat because they said it would allow Seoul to maintain barriers keeping U.S. cars out, while rules in this country would allow hundreds of thousands of South Korean-made vehicles in.

While GM has continued to make active use of lobbyists, the company did suspend political contributions in 2009, the year it went into bankruptcy and was rescued with a government package of $50 billion in aid.

It restarted its political donations the next year, however. In August 2010, GM reported that it gave $41,000 to groups associated with lawmakers. The vast majority of it, $36,000, went to the Congressional Black Caucus Foundation, a charity that has 11 members of the Congressional Black Caucus on its board of directors.

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