Groups activate grassroots to counter bailout fatigue

Even though the last auto plant in Anderson, Ind., closed in 2007, town leaders are hoping Congress will agree on an auto bailout next week.

Hundreds of residents there receive pensions earned from their years spent making parts for General Motors, a legacy from the industry’s heyday, when the car company operated 30 plants and employed as many as 30,000 workers in the city.

{mosads}“Our population is still dependent, in a lot of ways, on those benefits,” said Tammy Bowman, a spokeswoman for the city.

The fact that GM is facing bankruptcy is “not a pleasant situation,” Bowman said.

Anderson is one of several towns and small cities that are part of the Mayors Automotive Coalition. Created by the Ferguson Group from its existing base of clients, the coalition of local officials from cities and towns in 10 states is one of several groups lobbying to put Main Street’s imprimatur on the auto rescue package to counterbalance a case of bailout fatigue on Capitol Hill.

The coalition is sponsoring a fly-in day starting Monday to lobby in support of the $34 billion bailout package. Mayors and local officials from 25 cities in six states are scheduled to participate.

The message is twofold: Approve the bailout, and help communities, like Anderson, that have already been hurt by the constriction of the domestic auto industry with new economic development money.

“Local governments bear the worst brunt of the closed plants, idled brownfields, unemployed citizens, lost tax revenue, increasing foreclosures, and other terrible impacts of the decline of this industry,” a paper distributed on Capitol Hill states.

Lawmakers expressed reluctance — or, in the case of a few, outright opposition — to appropriating billions of dollars to automakers, skeptical that it would do any good despite pleas from auto executives last week.

The situation is particularly dire for the company that was once the backbone of Anderson’s economy.

General Motors has asked for $12 billion in loans and a $6 billion line of credit. It has said it needs $4 billion by the end of the year, or else risks failing.

Bailout supporters argue that the economy, already staggering, can’t handle such a loss. At a hearing on Friday, House Financial Services Committee Chairman Barney Frank (D-Mass.) warned of an “unmitigated disaster” if the automakers were allowed to go under. One point the coalition is making is that several towns and cities have already suffered from the constriction of the domestic auto industry and need federal help to get out of their decline.

“Dozens of communities are already there,” said Matt Ward, a lobbyist at the Ferguson Group. “These communities are desperate for help.”

The mayors’ group wants Congress to appropriate $1 billion in money through the Emergency Economic Adjustment Assistance Program, administered by the Commerce Department, in a stimulus bill.

Typically, the program gets around $40 million a year. “Nice, but not enough,” Ward said.

The mayors won’t be the only ones lobbying for the bailout next week, likely the final week of the 110th Congress. Auto dealers and suppliers are also mounting their own grassroots effort to build support for the bailout. Dealers are feeling the impacts of the dramatic decline in the domestic car industry. Bailey Wood, a lobbyist for the National Automobile Dealers Association (NADA), said 20,000 workers at auto dealerships lost their jobs in October alone. This year, 700 dealerships have closed.

Dealerships are often key contributors to local economies, Wood said. “Even small dealers pay millions of dollars a year in taxes,” he said.

Critics say the car makers should be allowed to go bankrupt so that they can restructure to become more competitive with Japanese car companies. But the prospect of bankruptcy scares John McEleney, who owns two dealerships in the Iowa towns of Clinton and Iowa City.

“I’m afraid people will be reluctant to do business with a bankrupt company,” said McEleney, who is the incoming chairman of NADA.

NADA is sponsoring a fly-in of its members next week as well. One hundred and fifty dealers are expected to participate. Like the mayors, the dealers will be lobbying for both the bailout and something else: in their case, more direct inducement to consumers to buy new cars.

Low interest rates and low gas prices have not been enough to get people into the showroom. Auto sales have declined by 25 percent from the year before. “People are scared about their jobs and their 401(k)s,” McEleney said.

One bill introduced by Sens. Barbara Mikulski (D-Md.) and Kit Bond (R-Mo.) would provide tax breaks for new purchases. McEleney said the association supports that bill. It also wants Congress to appropriate money for so-called “cash for clunkers” programs that encourage drivers to trade older vehicles in for new ones.

He said the group was hopeful Congress would provide “something significant for auto sales” in an economic stimulus package next year.