CEOs for the Big Three auto makers -- General Motors, Ford and Chrysler -- came to Capitol Hill today with an urgent appeal.
Testifying before the Senate Banking Committee, the Big Three sent a clear message to lawmakers: Either pay now, or pay much more later if and when the industry collapses.
"The societal costs would be catastrophic," said General Motors Chairman Rick Wagoner. "Three million jobs lost within the first year, U.S. personal income reduced by $150 billion, and a government tax loss of more than $156 billion."
Chrysler chairman and CEO Robert Nardelli said that the ramifications of bankruptcy would be felt far and wide.
"This would put at risk health care coverage for retirees, which is part of Chrysler's nearly $20 billion total health care obligation, $2 billion in annual pension payments to our retirees and surviving spouses, approximately $7 billion in current payables, $35 billion in future annual supplier business and 56,600 direct Chrysler employees earning $6 billion in wages."
Automakers asked Congress for $25 billion in emergency loans to withstand an impending collapse, but many in Congress are skeptical.
"They are seeking treatment for wounds that I believe, to a large extent, were self-inflicted," Banking Committee Chairman Sen. Chris Dodd, D-Conn., said. "No one can say they couldn't see this coming.
"The boardrooms and executive suites have been famously devoid of vision. ... The automakers have failed to adapt to change, in my view," Dodd said.
But many among the Democratic leadership, worried that the failure of Detroit's Big Three could bring down the whole nation, have expressed support for federal aid. They have proposed diverting funds from the $700 billion federal rescue package for Wall Street to help automakers.
"It's very clear that the chairman of the Federal Reserve has the authority to help the automobile industry any time he chooses to do so," Senate Majority Leader Harry Reid, D-Nev., said in a press conference on the Hill today. "We've got legislation pending on the floor that mandates the money coming from the $700 billion that we've appropriated. We'll come to the floor tomorrow and find out where we are."
The Bush administration, which worked with Congress to allocate $25 billion for the auto industry to meet standards for fuel efficiency, suggested that additional funds for Detroit could come from an expansion of their package, instead of from the Troubled Assets Relief Program.
"We don't think that taxpayers should be asked to throw money at a company that can't prove that it has a long-term path for success," White House spokeswoman Dana Perino said in a briefing. "We don't think that these funds should be taken from the TARP. That was never the intent of Congress. That money is specifically for the financial industry to help prevent a collapse in our financial system."
CEOs weren't the only ones soliciting lawmakers. It was an industry-wide effort with union leaders and mayors of 16 cities pushing for a bailout. Car dealers also tried to drum up support, going door-to-door on the Hill.
Chuck Eddy, a Chrysler dealer from Youngstown, Ohio, went to Congress to convey a sense of urgency.