Dealing with Detroit

The White House, lawmakers and automakers appeared close to a long-awaited bailout deal last night, as Democrats offered up a draft of legislation intended to shore up the Big Three at least until the end of the first quarter of 2009. The proposals would see Washington hand Detroit a whopping $15 billion in loans, funded largely by dipping into federal money already set aside to help spur the development of fuel-efficient vehicles; a piffling $500 million would be kept back for improving fuel-efficiency.

That’s arguably short-sighted, since it’s only by developing next-generation autos that manufacturers will be able to compete in the long term. Still, allowing the automakers to implode isn’t an option - and the lawmakers did exact a number of environmental concessions before agreeing to hand over the cash.

Some were merely symbolic: automakers will be required to ditch their corporate jets and send their executives around the country on commercial flights; they’ll also have to conduct studies to examine whether excess capacity at SUV plants could be used to supply public transit agencies with new buses and trains. Others were more important: before raiding the federal piggybank, automakers would be required to abide by both state and federal fuel-economy standards, and to abandon any legal challenges to states’ efforts to regulate greenhouse gases.

Perhaps the most important part of the deal, though, is the creation of a “car czar” to oversee the administration of the funds. The czar - appointed by the President, and perhaps heading a board of Cabinet officials - would have access to all the automakers’ corporate records, and right of veto over any business deals worth more than $25 million; he would also be tasked with negotiating a long-term restructuring of the auto industry, with the power to cut off federal funds if Detroit doesn’t play ball.

That would give the czar unprecedented power to reshape the auto sector - power that, in the right hands, could be used to prod automakers into finally abandoning their love affair with SUVs and beginning to put resources into developing greener and more commercially competitive vehicles. Assuming the deal goes through, all eyes will be on President Bush and President-Elect Obama: together or separately, they need to find a bailout administrator with the vision and political muscle to bring real change to Detroit.