A lifetime of preparation to save the auto industry: Sen. Chris Dodd for Car Czar

Sen. Chris Dodd. D-Conn., Sunday demanded the head of General Motors CEO Rick Waggoner as a condition for giving GM wagonloads of tax money. That Sen. Dodd felt free to make the demand, and that it failed to provoke outrage, is a sign of how badly the framework of our nation has been bent.

Sen. Dodd was elected to Congress in 1974, at the age of 30, and has been there ever since. Prior to his life in politics, Dodd served a term in the Peace Corps, served in the National Guard, and practiced law for two years. There seems to be no connection whatsoever between the auto industry and the three occupations of his youth.

It must be his lifetime in Congress that qualifies him to make firing decisions for a private sector corporation.

Except, of course, GM is no longer really a private sector corporation. It is about to be nationalized -- the taxpayers are being forced by law to purchase an “equity stake” in the Detroit Three that we declined to purchase freely in the stock market.

Sen. Dodd’s demand for Waggoner’s head is an inevitable consequence of the government invasion of the market. It is a short and slippery slope to the point that politicians demand patronage spots at GM, or require that a certain percentage of its fleet be made up of “affordable” vehicles for low-income people.

Won’t happen? Look at what happened on Fannie Mae and Freddie Mac.

Among the other ideas careening about Washington is the appointment of a “car czar” who will force the auto makers to restructure and cut costs. It is unclear where this wise, all-knowing bureaucrat will come from, or why he or she will know more than all the people who have spent their lives competing in the industry. Nor is it clear why the automakers will bow to this person’s authority when they have been unwilling to bow to the crush of the marketplace.

Here’s an idea: Chris Dodd for Car Czar. After 36 years in Congress, he’s eminently qualified – to know how to get more money out of Washington, which will become necessary by March or April of next year.

Sen. Dodd is chairman of the Senate Banking Committee. Surely he will do for the auto industry what his committee's oversight did for the banking industry,

America can do better. In the early 1980s, the U.S. steel industry was pronounced dead. It went through a very painful period of consolidation – but it survived, and regained profitability. Newsweek has an excellent short essay on allowing the market to work to produce a Big One automaker to compete against Toyota. Let’s shake out the excess production capacity, pare the dealer network and let the best workers in the world – the Americans – build the cars the world is waiting to buy.

Audaciously Hoping for the TInkerbell: Gov. Strickland's plan to balance Ohio's budget

Gov. Ted Strickland Monday unveiled his executive plan for Ohio’s yawning budget deficit: hope for a good Christmas shopping season or a federal bailout. The audacity of his hope is a poor substitute for coherence.

Mr. Strickland’s comments came during an emergency press conference Monday. He wants, among other things, a $100 billion package of federal “block grants” to the states. “Block grants” are what bureaucrats call great wads of cash given away with no strings attached.

Ohio is required to balance its budget by law, although Washington is famously free of such unfashionable fetters. So, Mr. Strickland wants the federal government to run his deficit for him. Or, failing that, if Santa will bring him a robust Christmas shopping season, there might be enough sales tax revenue to see us through.

The governor joined the lengthening line of failed executives demanding cash so they continue doing more of what they have been doing. It is interesting that Indiana Gov. Mitch Daniels is not among them – he’s insisting that his state government actually balance the budget by doing things like slowing the runaway monster of Medicare spending.

A true leader sees opportunity in trouble. In ordinary times, it’s impossible to create big change in government. In these unordinary times, the Governor has a chance to truly change state government from top to bottom.

More than two-thirds of the 50 states spend less in state and local money than we do. Ohio ranks 15th among the 50 states in state and local spending – more than $8,500 for every man, woman and child in Ohio, according to the Tax Foundation. More than $21,000 per household.

Like the domestic auto industry, Ohio needs to junk its 20th-century business model and re-egineer. It remains to be seen whether the aging men at the helms of any of these enterprises has the vision, courage and energy to do it.

Throwing in your lot with those who follow

Two CEOs of troubled major corporations were asked during the past week if they would work for $1 a year. Their different answers show very different views of the world, and their places in it.

Edward Liddy, who was tapped to run insurance giant AIG in September after the company had already been run into the ground, will receive a salary of $1 a year this year and next. More than 50 other top executives will have their pay limited as well.

GM chief Richard Wagoner, who has had eight years to finish running his company into the ground, was asked during Congressional hearings if he would work for a dollar a year. He indicated he was satisfied with his current compensation, which includes salary of $2.2 million, according to SEC filings.

Which man is showing leadership? Both of them are fabulously wealthy -- something all of us would like to be. Both have made mistakes in their careers. But the dollar-a-year man is leading in a way that tells those who follow that he's thrown in his lot with them

The term “dollar-a-year man” originated with executives who answered America’s call during World War Two. They left their private companies and went to work for the government, helping to run the war effort, for the token pay of a buck per year. It was revived famously by Lee Iacocca during Chrysler’s dance with bankruptcy in 1979-1982.

The world has changed again, like it did after 9-11. This catastrophe lacks the dramatic video of explosions, burning buildings and people falling from the sky. But it’s as dangerous, and as important, and as expensive.

Ohio Gov. Jim Rhodes famously and correctly said that profit is not a dirty word. Let’s add “selfless,” “noble” and “duty” to the list of acceptable words. At the end of the day, America is made up of people who are willing to answer the call – and that’s why we will survive these days, and one day again, thrive.

Better cars, lowers costs, and a dollar-a-year -- saving Detroit again

Economic drama is not new to Detroit. During the late 1970s, Chrysler Corp. was bleeding cash and dancing with bankruptcy. What happened then shows part of what’s wrong with Detroit now, and may point the way out of current swamp.

Lee Iacocca was a career car guy who spent 28 years with Ford. Far from a perfect man, he was fired by Ford.

Chrysler picked him up in late 1978 as president and chief operating officer. Iacocca agreed to work for $1 a year, and vowed to take no greater salary until Chrysler returned to profitability.

Iacocca managed to win $2 billion in concessions from dealers, creditors and labor. Those concessions, and the humility of that $1 a year salary, helped him win passage of the Chrysler Corp. Loan Guarantee Act of 1980 -- $1.5 billion in federal loan guarantees.

He also started producing cars that America actually wanted to buy – what an idea! He famously ordered engineers to lop off the top of a K-car and create a convertible – a market niche abandoned by American manufacturers nearly a decade earlier.

Iacocca was a shameless self-promoter, and his critics sniff that he was nothing but a salesman. But his work looks an awful lot like leadership, even with the warts.

Chrysler lost $1.7 billion in 1980, but by 1983 the company turned things around and posted a profit of $500 million – and, best of all, paid the loans back years ahead of schedule. His template -- sacrificing his own salary, revamping his product line, cutting his overhead -- is what the Detroit Three need today.

I’ve opposed the auto bailout because the markets, and bankruptcy restructuring will best help the D-3 make the rapid transitions that are necessary. The auto companies continue to carry huge legacy costs from oversized dealer networks, labor-related costs and excess production capacity. The necessary concessions from dealers, labor and retirees are all contractual, and won't happen without a judge.

And CEOs are still taking salaries that would make a drug lord blush, all the while posting huge losses. No plan for recovery is in place – the message seems to be, give us money, we’ll let you know if we need more.

But it seems that the new Congress, controlled by a heavy majority of Democrats, will pass some sort of auto bailout after it takes office in January. If the government just has to intervene, it would do well to remember history – and please, try to get a plan out of the D-3, and find us a dollar-a-year-man.

There's a reason I don't own GM stock. Why does Congress get to force me to buy it now?

You get more of what you subsidize, and less of what you tax. Congress’s urgent task in the current bailout mania is to avoid producing more of what it doesn’t want – such as short-sighted management and products no one wants to buy.

General Motors and its ailing cousins lumbered onto the floor of Congress last week, begging for $50 billion – money it could not convince us to willingly spend for its unlovely products, and money which it now proposes to take from us by the force of legislation.

We don’t even get a free SUV in the bargain.

When some lawmakers balked at the price tag – call it the beginnings of a return by Republicans to fiscal sanity – the auto industry dug its collective toe into the carpet yesterday and mumbled that maybe $25 billion would get the job done.

Here’s a question: Why should we bestow the public treasure on the same brain trust that failed to foresee that growing global demand for oil would drive up gasoline prices, and drive down demand for its SUV-heavy fleet? (According to Edmunds Auto Observer, SUVs make up about half of GM’s sales, versus about a third for Toyota.)

The automotive industry may be due for another round of consolidation. It’s true that our national security requires domestic manufacturing capacity – but that doesn’t translate into three automakers, in their current configuration.

And here’s another question: Why should we, the taxpayers, want to buy an equity stake in these poorly performing companies? Isn’t an equity stake what GM, Ford, & Chrysler LLC offer for sale every day on the New York Stock Exchange – a stake that fewer and fewer people want to buy? What do those people know that Sen. Henry Reid doesn’t know?

Sen. Reid and Rep. Nancy Pelosi seem to be making the argument that the auto bailout makes sense because of the jobs of those folks who work in the industry. But if relief for troubled workers in a recession is the goal, this bailout is an awfully inefficient way to get there.

According to the U.S. Bureau of Labor Statistics, 1,282,000 people are employed in the manufacture of “motor vehicles and motor vehicle equipment” – a.k.a. the automotive industry. That’s not just the Big Three, but all their suppliers as well.

The $50 billion bailout would give every one of those people $39,000 each. (You can do the math: $50,000,000 divided by 1,282,000.) If it’s half, the per-person cost is $18,500.

If the worry is the workers, just give them the money and bypass the CEOs. Better yet: let the consolidation begin. It's time, and America will ultimately be stronger.