Administration wants plan from automakers

November 23, 2008 6:57:41 PM PST
The new administration has already weighed in on what they think the auto industry should do if they want any taxpayer money.

President-Elect Obama's Senior Advisor David Axelrod warned the companies that they must retool and restructure if they want help.

The ailing auto industry has until December 2nd to present Congress with a plan that lawmakers say would make them worthy of at least $25 billion in loans in order to stay in business.

Obama's advisor David Axelrod drew a very clear line in the sand Sunday as to what the new administration wants to see.

"So my hope is that the big three auto executives come back to Congress in early December, hopefully on commercial flights, come back with a plan and not just an extension of need," said Axelrod.

Executives were sent home last week after congressional hearings to return with a definitive plan. Axelrod says then Congress would likely have a positive response.

House Speaker Nancy Pelosi says bankruptcy is a bad idea, but she says the industry should be blamed for its own troubles.

"That's no reason not to have innovated. And that's why they're in the situation they're in now is because they didn't innovate," she said on CBS.

Economists warn that not helping the auto industry could lead to greater financial turmoil, including as many as 3 million lost jobs.

Terry Connley, the Dean at Golden Gates University's School of Business, says any kind of bankruptcy would have to be very well structured.

Connely says that "Anybody talking about a bankruptcy responsibly is talking about a prearranged event, so that you don't have a circumstance where all the related industries roll over at the same time."

What lawmakers say they want is a business plan from the automakers, one that assures that the money will be used to retool factories to produce safe, fuel-efficient cars that will compete with foreign automakers like Toyota.

Taxpayers who visited the auto show at San Francisco's Moscone Center Sunday agreed.

David Zbrudzewsk told ABC7, "I don't know. I'd hate to see a lot of people out of work. But I don't know. Maybe you need to change your business practices before you start asking for my money."

Victims of the auto industry's problems are still piling up.

The Peninsula Dodge dealership in Redwood City is one of nine dealerships that has been closed because of what the owner calls an "ongoing perfect economic storm."


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