‘Car Czar’ Could Dictate Models and Prices of U.S. Automakers

Original Post: cns news
By: Matt Cover

(CNSNews.com) - The House-passed $14-billion bailout bill for U.S. automakers would give a presidential "designee" the potential power to tell the automakers what cars they could make and the price at which they could sell them.

The bill--formally titled the Auto Industry Financing and Restructuring Act--passed the House Wednesday, but appeared stalled in the Senate yesterday. The act would grant sweeping powers to a federal "Car Czar" -- an individual the bill merely refers to as "the President’s Designee."

The designee would be solely responsible for carrying out the provisions of the auto bailout, including overseeing the negotiations for and approving the restructuring plans the automakers must produce under the proposal by a March 31 deadline.

The bill directs the automakers to negotiate restructuring plans and submit them to the designee by that date. If the automakers successfully negotiate a restructuring plan, the designee will evaluate whether the plans meet each of six conditions required by Congress.

Meeting the ‘requirements.’

Section 6 of the bill--titled “Submission of Plans”--states:

“The president’s designee shall approve the restructuring plan if the president’s designee determines that the plan will result in,” meeting a set of requirements.

Among those requirements: a provision that automakers have “a product mix and cost structure that is competitive in the United States market.”

This requirement would mean that the federal Car Czar could determine which cars and trucks the automaker could produce, according to a Senate Banking Committee staffer, because the “designee” would determine what would and what would not be competitive.

If the designee deemed that the company’s proposed product line and pricing structure would not be competitive, the company would have to change its plan--or have its federal financial assistance revoked.

“If an evaluation by the president’s designee demonstrates that . . . the eligible automobile manufacturer . . . fails to submit an acceptable restructuring plan,” the bill says, “[t]he repayment of any loan may be accelerated . . . and any other financial assistance may be cancelled by the president’s designee.”

If the Car Czar believes that the automakers are not making sufficient progress toward negotiating restructuring plans to his liking, he is specifically called upon to ask Congress for additional powers to give him the authority to make them do so.

“At any such time as the president’s designee determines that action is necessary to avoid disruption to the economy or to achieve a negotiated plan,” the bill says, “the president’s designee shall submit to Congress a report outlining any additional powers and authorities necessary to facilitate the completion of a negotiated plan.”

There is no definition in the bill outlining what these powers might be, but the bill further authorizes the Car Czar to substitute his own plan for restructuring the auto industry if he believes the automakers have failed to come up with an adequate plan of their own.

Under the bill, the Car Czar's plan could take the form of extended negotiations between the automakers and other interested parties, forcing the automakers into Chapter 11, or presenting his own plan to Congress in the form of new legislation that would--by federal law--tell the car companies what models they could make and what they could charge for them.

“The president’s designee shall provide to Congress a plan that represents the judgment of the president’s designee as to the steps necessary to achieve long-term viability…including through a negotiated plan, a plan to be implemented by legislation, or a (bankruptcy) reorganization,” the bill says.

Another condition the restructuring plans must meet is a mandate to produce “advanced technology vehicles”--including hybrids and other fuel efficient vehicles.