Public Citizen

Auto sales have plummeted. General Motors is on the verge of bankruptcy. The Detroit auto industry, which was once the symbol of American industrial success, is now depending on a Congressional bailout to save it from collapse.

And yet, Congress, which scrambled to pass a $700 billion Wall Street bailout, can not agree on legislation that would both save auto makers such as GM and provide guidelines to ensure the future success of the American automotive industry.

What happens if Congress can’t agree on an auto industry bailout? The Center for Automotive Research (CAR) estimates that a GM bankruptcy filing would result in the initial loss of approximately 2.5 million jobs, according to the Washington Post.

But it wouldn’t end there.

BusinessWeek, likewise, suggests that a GM bankruptcy would kill the company’s sales and have a domino effect on automotive supply companies, as well as spell disaster for GM’s investors.

The proposed $25 billion emergency aid to automakers promises to protect tax-payers by incorporating bans on employee bonuses for individuals who make more than $200,000 a year, while also preventing automakers from paying dividends to shareholders for as long as the firms owe the government money, according to the Washington Post.

Although a bailout would provide temporary relief to offset a prospective GM bankruptcy, the legislation must do more than simply delay GM”s demise.

Likewise, until companies such as GM can produce products that answer the current demands for environmentally-safe and fuel-efficient modes of transportation, a bailout would provide nothing but a false sense of short-term financial recovery until the same crisis emerges again at a later date.

But could there be (head)lights at the end of the proverbial tunnel?

In a letter to House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, Public Citizen outlined a means by which a financial bailout that would merely provide a temporary source of relief for GM and the automotive industry can be transformed into a sensible investment in the future of American transportation.

Public Citizen requested that consideration be given to environmental standards, fuel economy, safety and equity before Congress decides to pass legislation regarding additional public investment in financial relief for the automotive industry.

In the letter, Public Citizen states:

The domestic manufacturers have claimed that they are financially strained by fuel economy
regulations, but if they do not move quickly to catch up, they will not survive at all. Investing in the vehicles and technologies that will reduce oil consumption and reduce greenhouse gas emissions will help to sustain domestic auto industry jobs.

In order for the automotive industry to hope for any long-term form of financial recovery, government legislation must incorporate guidelines by which automotive companies such as GM would produce products that would follow up-to-date demands for fuel conservation and consumer safety.