Bikini Wax

After playing chicken with the Bush Administration over who should cough up money to help the U.S. automotive industry and how much, Congressional leaders blinked yesterday and offered Detroit a loophole through which wiggling is still possible for them.

There will be no bailout before the Thanksgiving break. Instead, the Big 3 automakers are to use this time to construct a business plan specifically detailing how they will reach economic viability. Congress convenes again on December 2 to evaluate the plan and any money is conditional on its approval.

Conventional wisdom suggests this is a fool’s errand. If auto executives had the imagination and self-discipline to craft such a strategy, the industry would not be facing bankruptcy in the first place.

However, lawmakers said it would be up to Senate Banking Committee Chairman Christopher Dodd of Connecticut and House Financial Services Committee Chairman Barney Frank of Massachusetts to judge what “viability” means and whether the automakers achieve it in their plan. The fix, so to speak, is in.

These developments will doubtless cause teeth gnashing among those who prefer to let the market oversee the survival of the economic fittest. Lawmakers universally agree the testimony of auto executives before Congress this week was a public relations disaster, with CEOs for the Big 3 flying private corporate jets into Washington to then beg for money.

Far worse, automakers staunchly refused to accept any culpability for the crisis, insisting their problems all stemmed from the current credit crunch rather than their inability to build cars that consumers actually wanted to drive. To be sure, U.S. manufacturers have taken baby steps to improve quality but Kelley Blue Book reported only yesterday that their products still lag far behind those of European and Asian carmakers in projected resale value.

UAW officials received similar jaundiced reactions for their staunch refusal to consider compromising on the better-than-average wages and health benefits of their members.

In spite of all this, the truly naïve viewpoint is to expect the federal government will do nothing to help Detroit. As Washington Post columnist Eugene Robinson points out today, “In the end, I don't think either George W. Bush or Barack Obama wants to be remembered as the President who lost the auto industry.” I suspect Senate Majority Leader Harry Reid and Speaker of the House Nancy Pelosi have similar feelings.

Teeth gnashing is occurring now for those Democrats who hoped Obama would bring fresh faces to Washington. Although he has not yet named his choices for Secretaries of Energy and Interior as well as the head of the EPA (or even leaked them!), former Clinton aides, allies, and advisors are conspicuous at the top of virtually every list.

Yet if the pending bailout is a mere placebo for the real ills of the auto industry, another decision by Congress yesterday may provide the strong medicine that comes wrapped within the sugar pill. The Democratic Caucus voted to strip the chairmanship of the Energy and Commerce Committee from Representative John Dingell of Michigan and bestow it upon Representative Henry Waxman of California in his stead.

For the House to bypass its usual seniority rules is a mini-revolution in itself. At age eighty-two, Dingell is the longest-serving Representative in Congress and the top-ranking Democrat on the committee for the past twenty-eight years. This is the first ouster of a committee chairman by Democrats since 1985.

Dingell supposedly pleaded to keep his chairmanship for one more term, at which point he planned to step down voluntarily. He pointed to recently passed legislation raising fuel economy standards for U.S. autos to thirty-five miles per gallon by 2020 as well as finally releasing global warming legislation for consideration.

His colleagues rejected this defense as too little, too late. Dingell is the archetypical defender of the status quo, long criticized by others within the Democratic Party for pandering to both big automakers and big utilities. Environmentalists accuse him of obstructing virtually any green legislation brought before him.

Dingell consistently opposed stricter air pollution standards and raised particular ire by blocking states from setting higher fuel efficiency standards than federal standards. He also supported legislation preempting state food safety and labeling laws that exceeded federal standards.

Waxman has been in Congress nearly as long as Dingell. He chaired the House Energy and Commerce Committee’s Health and Environment Subcommittee for sixteen years and been the senior Democrat on the Oversight and Government Reform Committee for twelve years.

In spite of this, new chairman’s reputation is very different from that of his predecessor. The consensus opinion finds Waxman to be liberal, blunt, critical of U.S. automakers, and extremely pro-environment.

His voting record shows a distinct fondness for increased auto efficiency and alternative fuels. He voted “yes” on tax incentives for energy production and conservation, “yes” on tax incentives for renewable energy, “yes” on investing in homegrown biofuel, “yes” on raising CAFE standards, and “yes” on increased AMTRAK funding for operations and improvements.

Conversely, he is no great friend of fossil fuels or other conventional forms of energy. He voted “yes” on removing oil and gas exploration subsidies, “yes” on maintaining an offshore oil drilling moratorium, “no” on authorizing construction of new oil refineries, “no” on oil drilling and development in Alaska’s ANWR, and “no” on a Yucca Mountain nuclear waste dump.

Reaction to Waxman’s appointment by different groups ran along expected lines.

Thomas Pyle, president of the Institute for Energy Research, a pro-business research group, gloomily said Waxman’s ascendancy “isn't good news if you're in the business of American energy or other kinds of free-market commerce.”

In contrast, David Algood of the California League of Conservation Voters jubilantly celebrated the news as “huge, just huge.” Dan Becker, director of the Safe Climate Campaign called it “a whole new day” and characterized Waxman as “a real champion” for the environment.

The scuttlebutt is that Waxman carried the day not by vilifying Dingell but simply presenting himself as a better agent to enact some of the sweeping changes President-elect Obama promised in the areas of energy and environment during the campaign.

Most interestingly, Waxman and his supporters pressed the idea that Congress did not have eight or even four years in which to pass such legislation but merely two. “The memory of 1993 and 1994 is seared in a lot of our minds,” explains Democratic Representative Howard Berman of California.

Traditionally, both energy and environmental bills are difficult to pass without broad bipartisan support. However, Waxman combines tenacity with high energy and earned a reputation as an effective and successful legislator.

Chrysler, Ford, and GM executives may be sighing with relief over the continued possibility of free money from Washington. But even if Dodd and Frank do little more than rubberstamp their business plan next month, automakers are likely to find strings – or should I say wax? – attached to that money. Moreover, they are likely to find the federal regulatory environment much less friendly than it has been over the past several decades, regardless of whom Obama places in his Cabinet.

“It may very well be that Waxman is the person to deliver the bad news to the auto industry that if they want federal help, they need to change the way they do business,” suggests Linda Fowler, a Professor of Government at Dartmouth College.

“Well, this was clearly a change year,” Dingell said with rueful graciousness after his defeat. Yes, yes it is. What is more, those who doubt Obama’s promise of change may find it fulfilled if in ways sometimes unexpected.

Waxman represents California’s Thirtieth Congressional District, an area that includes Hollywood, West Hollywood, Beverly Hills, Santa Monica and Malibu. Detroit is about to meet Southern California and receive a painful but much-needed bikini wax in the process.