For the southeast Michigan’s economic engine, Thursday looked like a dark day.
First, Rep. John Dingell, a Democrat from Dearborn whose district includes Ann Arbor, lost his seat as chair of the powerful House Energy and Commerce Committee. Dingell has been a long-time advocate for the auto industry in Congress.
A few hours later, House and Senate Democratic leaders announced that Congress wouldn’t vote on a bailout for domestic automakers until after Thanksgiving. This came just after reports circulated that a deal had been reached to provide the Detroit Three with a cash infusion that would allow them to avoid bankruptcy.
General Motors and Chrysler are both close to running out of cash and could be forced to file for bankruptcy protection if they don’t get government help. While it’s not at all clear what form such a bankruptcy process would take, any disruption of the domestic automakers’ ability to meet payroll and pay suppliers could be devastating to the region.
On Wednesday, University President Mary Sue Coleman and the presidents of the states other two research universities issued a statement calling on federal lawmakers to prop up the American auto industry. The three presidents said a halt in the operations of General Motors, Ford and Chrysler would be a “crisis of cataclysmic proportions.”
The Detroit automakers provide millions of dollars every year in donations and research funding to the University of Michigan.
But the state’s three research universities are hardly the auto industry advocates with the most sway in Washington. That title would likely belong to Dingell.
Dingell has served in Congress for 54 years. He’s on track to become the body’s longest-serving member in history in February. But he lost his seat atop the Energy and Commerce Committee to Rep. Henry Waxman (D-Calif.), a strong environmentalist from a wing of the Democratic Party that has been frustrated by Dingell’s reluctance to support curbs on carbon emissions. That opposition to restrictions on emissions has been largely attributed to his steadfast support for General Motors, Ford and Chrysler.
Dingell supporters were displeased with the vote. Committee chairs are rarely booted out and usually go to the most senior candidate.
“I think it was highly inappropriate,” Rep. Rich Boucher (D-Va.) told The Associated Press. “There was no obvious reason for it, other than the desire for another person to chair the committee.”
Michigan House Speaker Andy Dillon (D-Redford Township) said he was “extremely disappointed” with Dingell’s loss of the committee chairmanship.
“The congressman has been an unwavering advocate for not only the auto industry but also the state of Michigan,” Dillon said in an interview.
Waxman released a statement on Thursday saying he was “honored by the vote.”
“We are at a unique moment and have an opportunity that comes only once in a generation,” he said. “I will work with all parts of our caucus and across the aisle to deliver the change that the American public expects us to deliver.”
Waxman called Dingell a “legislative giant” and said he respects Dingell and his many legislative accomplishments.
On Thursday afternoon, Democratic congressional leaders held a press conference to discuss plans for a possible bailout for the automotive industry. Congress has asked automakers for a detailed plan by Dec. 2 that will show how federal money will be used to make the companies profitable. Lawmakers are expected to meet in a special session to consider the plans the following week.
House Speaker Nancy Pelosi said Congress would not release any funds until plans from the automakers were submitted and reviewed.
“Until they show us the plan, we cannot show them the money,” Pelosi said at a press conference Thursday.
The White House offered little reassurance to questions about what would be done if Congress is unable to reach an agreement soon.
“If the Congress doesn’t act this week and one of the companies is in imminent danger of insolvency, we would suspect that they would want to come back and finish the work that they didn’t get done this week,” White House spokeswoman Dana Perino said. “I can’t imagine a scenario where they wouldn’t come back, unless the answer is that they just don’t care.”
In an interview with the Detroit Free Press, General Motors CEO Rick Wagoner expressed his frustration with the Congressional delay.
“We had said we felt that given all the uncertainties in the financial market, and weakness of sales in the auto market, we felt that urgent action was appropriate and needed,” Wagoner said.
Michael Flynn, research scientist emeritus at the University’s Transportation Research Institution, said he thought a bailout plan would have passed had auto executives not made a public relations mistake.
“I expect this would have passed if they didn’t fly to Washington in their corporate jets,” Flynn said. “That’s what torpedoed it.”
The CEOs of GM, Ford and Chrysler were criticized Wednesday for flying in separate private jets to Washington for testimony before congressional committees.
Flynn said Big Three executives now need to present a persuasive business plan to convince lawmakers to shell out money.
“We’ll be like the venture capitalists,” he said.
Flynn said Dingell’s loss would also affect the auto industry’s future.
“In a sense, they’ve now lost a friend,” he said. “Waxman is much more likely to hold their toes to the fire.”
Waxman, known for his focus on environmental issues, waged a silent campaign for the chairmanship. Many considered Pelosi, also of California, a Waxman supporter because of her decision not to back Dingell. Pelosi and Dingell have often clashed, while Pelosi and Waxman more aggressive moves on environmental protection.