The MacNeil/Lehrer Report; Chrysler Compromise Legislation Decision

ROBERT MacNEIL: Good evening. After months of backroom politicking, public hearings and massive lobbying, the bill to bail out the ailing Chrysler Motor Company is approaching zero hour in Congress. Tomorrow the House Rules Committee will consider the bill, with floor action on Thursday and a vote in time for Senate action before the Congress goes home for Christmas on December 21st. Chrysler says that if the Congress does not act before Christmas the company will run out of money and will have to go into liquidation in January. Chrysler is the third largest auto maker. The potential economic and political fallout from a free enterprise disaster like that has galvanized the administration and the Congress. But it`s also produced deep philosophical and practical divisions about the proposed federal bailout and what price the company and its workers should have to pay. Those divisions have threatened to kill the save Chrysler effort or delay it until too late. Tonight, will the Congress save Chrysler, and if so, on what terms? Jim?

JIM LEHRER: Robin, the major bone in the throat is what sacrifice Chrysler`s 125,000 employees should make to save their own jobs. The original administration proposal left that vague. The $1.5 billion in federally guaranteed loans would have to be matched by a like amount from private sources, including the company`s bankers, suppliers, and employees through their unions. The House Banking Committee accepted this general approach; it`s the bill that goes to the House floor this week. But the Senate Banking Committee balked. It passed a version, due on its floor for debate next week, that would raise the amount of aid but also put a three- year freeze on wages. One of the key leaders in successfully getting it through was Senator Richard Lugar, Republican of Indiana. We`ll be hearing from him in a moment. The freeze idea was immediately and strongly rejected by the United Auto Workers and its president, Douglas Fraser, who we`ll also be talking to shortly. Because, according to Chrysler, time for salvation was running out, Congressional, administration, company and union people sat down over the weekend to see if compromise was possible, to see if a delaying and possibly killing difference between the House and Senate could be worked out in advance. What emerged is now being called the Blanchard compromise, named after Congressman James Blanchard, Democrat of Michigan.

But I understand, Congressman, you don`t want full credit for the compromise, is that right?

Rep. JAMES BLANCHARD: That`s correct. I`m willing to go along with it; it`s not mine, it`s really Congressman Moo:rhead of Pennsylvania. I`ve been trying to sell it to a number of people, including Senator Lugar, and hopefully tonight we can win him over so we can get this job done.

LEHRER: All right; make sure that technically we understand what the compromise involves. It`s amendments to this House bill that goes to the Rules Committee tomorrow and to the floor later on, is that right?

BLANCHARD: That`s correct, and it`s really a modification of the Lugar/Tsongas amendment that was offered to the Senate committee, and made what we feel is a more fair situation. We don`t have a wage freeze, we don`t have some other things.

LEHRER: You don`t have a wage freeze, but you do ask the employees and their unions to do more. What exactly do you want them to do?

BLANCHARD: Our compromise specifies that the workers, through their union, will have to come up with about $400 million worth of sacrifice, contribution to Chrysler. The House bill specified no amount. The Lugar bill, I guess, would call for about $1.1 billion. We`re saying about 400 million...

LEHRER: That would be the effect of the wage freeze for three years that`s in the Lugar bill.

BLANCHARD: That`s right, and what we`re saying is about $400 million, we think, is about as high as you can go and call it a fair compromise. $400 million, we estimate, is the equivalent of $4,000 per worker over a three- year period, and it is the financial equivalent of about a year and a half wage freeze. Now, I don`t like it. I don`t like to have to specify this. I think the bill should give the company and the union flexibility to meet the challenges ahead, but since the Senate bill, the Lugar bill, went ahead and started to specify what the commitments should be and required a wage freeze, we`re trying to find a reasonable way out of this.

LEHRER: Does the compromise specify how the union and the employees ought to come up with this $400 million in sacrifice?

BLANCHARD: It does not; and I think, again, we need to maintain that kind of flexibility. We leave it up to the workers and their union and their leaders and their bargaining councils to figure out how they would come up with it. We don`t tell them how to come up with it. We don`t...

LEHRER: You don`t say it has to be through a freezing of wages.

BLANCHARD: Oh, absolutely not. I wouldn`t expect that it would be that; I think a freeze is unfair and unrealistic, and since I`m convinced that Senator Lugar wants to do something to help Chrysler, we`re tendering this and we hope that he will accept it.

LEHRER: Other than freezing wages or taking deductions in wages or whatever, what other means are available to employees and unions to come up with $400 million?

BLANCHARD: Oh, I`m not sure. I am not an expert on all the possible resources that the union might have. I think that most people overestimate the resources of the union, and certainly of the UAW. But my guess is it would have to come in some sort of forgoing wage benefits; but I`m really not the person to ask, and I`m not all that happy with this compromise. I suppose if it weren`t a real compromise I wouldn`t be happy.

LEHRER: You`re not happy with it, and yet as you say, you`re going to try to do a number on Senator Lugar tonight and others to try to get it passed. Why have you accepted it, if you don`t like it?

BLANCHARD: Because I think in order to get the job done in time we have to compromise. I think the patient is going to die if we keep diagnosing it anymore; I think we should have passed a bill several months ago. I think the Senate committee action seriously harms any chance to get a bill, it`s inhibited our work in the House; I think we should have passed the legislation two months ago, I think the administration was awfully late in coming in with a package; and I think we have to get people off the dime.

LEHRER: Finally, has the administration agreed to go along with this?

BLANCHARD: I`m not sure they have, but I think they`ve had a hand in the looking at its financial integrity and whether it can work. But I`m not sure this meets with their approval, either.

LEHRER: Haven`t you asked them, Congressman?

BLANCHARD: I haven`t talked to them directly, no.

LEHRER: I see. You have a feeling, though, they`ll buy it, right?

BLANCHARD: Well, they haven`t called and said they won`t.

LEHRER: I see. Thank you. Robin?

MacNEIL: The proposed wage freeze for that three-year period was, as Jim said, rejected out of hand by United Auto Workers President Douglas Fraser. He said the Auto Workers would not ratify any agreement containing such a provision if their "jobs depended on it." Mr. Fraser, what do you think of the compromise?

DOUGLAS FRASER: Well, much like Congressman Blanchard, I`m not crazy about it. It puts us in a very, very difficult position, because we have to go back to the membership and have the membership agree to the compromise; and I think we had a sort of Hobson`s choice here: that if we didn`t agree to the compromise there couldn`t be any bill, the Chrysler Corporation couldn`t survive, and I might say in passing, this is not a bill, in my view, to bail out the Chrysler Corporation, this is a bill to save 140,000 jobs for Chrysler workers and their families. This is what it`s all about, as far as I`m concerned.

MacNEIL: Do you understand the administration to support this compromise?

FRASER: Yes, I think they will.

MacNEIL: Will you go back and recommend it to your members?

FRASER: Well, I first have to see the form it takes, and I would urge Congress strongly not to pin us down as to how we`re going to do it. And if I might take a moment, we just concluded a collective bargaining agreement- - the ink is not even dry on the agreement, signed it about a week and a half ago -- in which we made $203 million in concessions. And now we`re asked to go back to the membership, you know, just weeks after we signed the first agreement, so it`s a very...

MacNEIL: Do you understand that you would, under this compromise proposal, be given credit for that $203 million in concessions, you`ve accepted deferment of wage increases, and that this in net terms would mean another $200 million, roughly, to you?

FRASER: That`s a correct analysis of the bill, yes.

MacNEIL: Do you accept what Congressman Blanchard says, that this means in effect a wage cut or reduction of $4,000 per worker annually?

FRASER: Yes, it does. The first group of concessions that we made of $203 million amounted to $2,000, and we`re just doubling that now, so that means $4,000 per worker.

MacNEIL: Would that have the same effect as a year and a half wage freeze?

FRASER: Yes, it approximates a year and a half freeze.

MacNEIL: Now, why were you so adamantly opposed to the wage freeze? What effect would the wage freeze have had?

FRASER: Well, the practical effect is that the current rates of the increases in the cost of living, the escalation in inflation, would have amounted to a thirty-nine percent reduction in the Chrysler worker`s purchasing power and their standard of living. Two things would happen; it seems to me, number one, I don`t believe the workers would accept that as a reasonable proposition. There`s limits beyond which you can`t go. Secondly, if that would be imposed upon us, Chrysler Corporation would lose their finest engineers and technicians and skilled trades workers because they would go where the pastures are greener.

MacNEIL: What do you say to the argument that`s been raised by many people that it was somehow inappropriate for some of the highest-paid workers in the land to be working for a company in this condition and not make some major sacrifice in order to help it stay alive, or to keep their jobs alive?

FRASER: Well, I suppose your definition of major sacrifice; I think if the Chrysler workers a few weeks ago gave up $2,000 and then they`re now asked to give up two additional thousand dollars, I consider that a major sacrifice.

MacNEIL: That is $4,000 out of a typical annual total income of what, roughly?

FRASER: Well, I suppose you could estimate $18,000 in terms of wages, but one must not overlook the fact that there is now at this moment 30,000 Chrysler workers unemployed who have no income; they`re making the ultimate sacrifice, and around the Chrysler Corporation the workers are working, most of them, just every other week. So the hourly rate really is not a reliable indicator as to what the annual income might be in this depressed economy that we find the automobile industry in.

MacNEIL: Thank you. Jim?

LEHRER: Now to Senator Lugar, the Indiana Republican who, with Senator Paul Tsongas, a Massachusetts Democrat, cosponsored and co-hustled the wage freeze version that passed the Senate Banking Committee. Senator, will you support the Blanchard/Moorhead compromise?

Sen. RICHARD LUGAR: No, I won`t support that compromise. I think that a constructive attempt has been made to narrow the issues; that is, language in both bills now may be fairly close to identical, and the disagreements come as to the sacrifices of those who are most affected and how much the taxpayers ought to have in this. The thing that has not been mentioned thus far this evening is that the new compromise calls for taxpayers to go up to $1.5 billion of guaranteed loans, as opposed to the $1.25 in the Lugar/Tsongas proposal. And what is occurring is essentially that the hourly worker`s contribution goes down from $1,077,000,000 to $400 million, a reduction of $677 million. The salaried employees at Chrysler escape the freeze altogether, as I understand the proposal, and the taxpayers are left picking up another quarter of a billion of the package, with the whole thing now only $3.3 billion, as opposed to the four billion we thought was a safer package. In other words, if this doesn`t work, if the Chrysler Company does not continue, then there will be no need to argue over whether wage increases have been given up; there will not be any wages at all. And what most of us are trying to do, and certainly the three of us around the table tonight, is just as Mr. Fraser said, to save 140,000 jobs and the communities and the suppliers, and the whole infrastructure that`s involved.

LEHRER: You also heard what Mr. Fraser said, though, that the Chrysler workers are already taking a thirty-nine percent reduction in wages, or would, under -- I`m sorry, Mr. Fraser., you say as it stands now...

FRASER: If you had a three-year wage freeze, as the Senator proposes, you get a thirty-nine percent reduction in your purchasing power and standard of living.

VOICE: By the end of three years.

LEHRER: By the end of three years. He says that`s unfair.

LUGAR: Well, I`m not in favor of freezing anybody`s wages, as an economic principle. I think this is disastrous. The Chrysler thing is disastrous. In other words, what it seems to me we`re saying is that to begin with, we`re willing to compromise, I suspect, in the Senate committee, and include the provisions Mr. Fraser and the workers won on the ERISA provisions, the pension and medical plans; that was about $116 million. Now, the argument is, from then on, from the $1.1 to the four, where -- and we got to the four essentially because some of the Congressmen have felt that maybe Mr. Fraser could go back to the union and get that kind of an agreement. He hasn`t indicated precisely that he can, but there`s a calculation that that might be in the ball park. Now, that`s an important calculation for me. You know, my purpose is not to make things impossible for Mr. Fraser or the union, or for the House; but at the same time, we`re seeing what seemed to be a stronger package diminish in size and the chances of seeing the company and the jobs saved, I think, diminish with it, and finally, the taxpayers`, security diminish in the process.

LEHRER: Are you willing to compromise at all on your three-year proposal?

LUGAR: Yes. And as a matter of fact, in the Banking Committee we have already said in the third year, if things are going well the three member board can waive the whole business, which would be over half of the sacrifice of management, labor and everybody else. That was a significant compromise.

LEHRER: Mr. Fraser`s point also, that under the contract they just signed he says that the employees are taking an average of a $2,000 wage

reduction; under the compromise that is now on the table here, they would take another $2,000 reduction. You don`t think that`s adequate.

LUGAR: Well, I`m just saying that the money has to come from somewhere. We`re trying to decide what should be an appropriate contribution by those who are most affected, namely people who are working for Chrysler and the people in the salaried positions and the stockholders. My own judgment is that more will need to be done by the hourly workers, that it must not be an impossible burden, politically within the union to sell, or within the Senate to sell. What hasn`t been mentioned tonight is that a lot of people in the Senate right now are not in favor of doing anything for Chrysler. My political predicament is trying to weave my way through a situation to a majority in the Senate. Now, Jim and others are, I think, trying to do ...

LEHRER: That`s Jim Blanchard.

LUGAR: Right. And I think may be successful, I surely hope will be; and we may come to a conference committee and we may need to compromise the two bills. And I`m in favor of doing that, and I think so are most people in the Senate. I`m not certain precisely how we get to that path, but I think we`re narrowing the language so that the conference will succeed.

LEHRER: Mr. Fraser, do you agree with the Senator that if something`s going to emerge from this there`s going to have to be some give, some further give?

FRASER: I marvel at the process where the workers are the only ones that are giving, you know; we`re the only group that has come forward so far. The banks haven`t, the suppliers haven`t, the dealers haven`t, Congress hasn`t. And you know, if you go to a group of workers, if they`re rational and logical, and you ask them -- and we asked them -- and they agreed, to forgo $203 million, we agreed to that, then we come down here to Washington, try to get legislation; we thought it was a respectable, significant sacrifice, and then they want us to give more before anyone else makes the first installment. And that`s really not a fair proposition. If I might say, Senator, you haven`t addressed the question of what is going to happen if a freeze of any kind is imposed upon us further than that which we have imposed upon ourselves, what happens to the engineers, to the technicians who are at greener pastures in Ford and GM; despite the fact they`re laying off, they`re still looking for engineers?

LUGAR: Well, let me just respond to that. I think it`s a good point. And the Blanchard amendment does address that in a sense, trying to quantify the amount of money that would be coming-out of the workers as opposed to a freeze specifically of category by category. I think that probably is a constructive way to approach it so that there is the maximum flexibility with the UAW to think through the contribution...

LEHRER: And then let them work it out with the company where they would get the money.

LUGAR: And because already, on the salaried side, we`ve simply frozen the sum of money that`s involved, as opposed to apportioning it job by job.

LEHRER: Your problem is there`s just not enough.

LUGAR: The problem is the money, what the contributions are going to be.

BLANCHARD: I`d like to address that. There`s an important element here missing in the debate...

LEHRER: All right.

BLANCHARD:...that has to be mentioned. First of all, the Lugar/ Tsongas approach, which Tsongas is willing to compromise on now, never mandated a commitment from anyone other than the workers. And it has be come, at least in the House of Representatives, nothing but the watchword for a union wage freeze. And the issue has shifted from helping Chrysler to how we can settle old scores with the UAW.

LEHRER: That`s exactly what I wanted to ask the Senator...

BLANCHARD: And that`s very disturbing, because I don`t think Senator Lugar intended it that way, quite honestly. We have talked in a constructive fashion to try to work something out, but the fact is that the only thing that the Lugar/Tsongas amendment mandated was labor. It suggested contributions from other groups, but it didn`t mandate them.

LEHRER: That`s a point Mr. Fraser made just a moment ago, too, Senator...

LUGAR: Let me respond that there is a total freeze of the hourly workers, and the salaried...

BLANCHARD: They`re already frozen. It`s already done.

LUGAR: Well, I know, but by law, I think we just make that clear, there`s a dilution of the stock, of the stockholders, through several routes -- an (unclear) plan, which at least in the Lugar/Tsongas bill is a very substantial one, still is substantial in the House version, so the stockholders will not be coming home scot-free; and finally, I suppose we`re saying that a lot of other groups have to chip in or the whole thing is not going to work. In other words, the labor contribution will not be called upon, because unless the bankers come through their $500 million and the state and local governments, it becomes moot. What we`re trying to decide is what the contributions ought to be in the best of all worlds.

LEHRER: All right. Robin?

MacNEIL: Yes. Congressman Blanchard, was it the UAW`s opposition which forced this compromise?

BLANCHARD: I doubt it. I think we have two bills which purport to do the same thing; one is specific as to how it`s going to be done but I think becomes too inflexible to work properly, and the other one is probably much sounder financially, the House bill, but isn`t specific enough to give people a political hook to hang their hat on. We`re trying to forge a compromise. I might add that the Lugar/Tsongas approach requires an amount of money for bailing which no one says is needed, which Treasury and Chrysler say won`t work, the package won`t work, and I really am cautious to be supporting a package which the principal players don`t feel will work and is too inflexible to work. And my concern right now is that as we talk we`re probably costing Chrysler money. And we are going to dawdle while this patient dies, and we`re going to be, under the guise of administering medicine, tiring the patient in bed. And we only have a few days to work, and maybe you can get Senator Lugar here to come down with a dollar figure and we can have a little bargaining right here on live television. Because we`re going to have to do something.

MacNEIL: We wouldn`t want to be accused of interfering with the process of negotiation, Senator, but do you have a response?

LUGAR: Yes. I think that it`s important simply to say that four billion dollars will probably be required; I`m not inflexible in that respect, nor is anyone in the Senate. The question clearly is not whether the UAW and whether the Secretary of the Treasury and the company have come to a conclusion; they`re not negotiating with each other, they`re negotiating with the rest of us as taxpayers, with the public. Now, the question is, will the plan have enough money to succeed, and what should be the appropriate shares? I think there is plenty of give-and-take in that respect, and I would simply say that maybe the Congressman suggests that we continue to negotiate is entirely proper. I think we`re doing that from day to day.

MacNEIL: But Mr. Fraser, all this is beginning to sound terribly reasonable. Is it all going to come out very quickly in the next few days...

FRASER: They want to negotiate with the worker`s wallet without the worker having a voice; and I don`t think that`s quite fair. You know, the process down here never ceases to amaze me. Here you have the Treasury Department, after scrutinizing the Chrysler Corporation, the Chrysler Corporation hiring outside consultants, and they say we need three billion dollars. Senator Lugar says no, you`re not asking for enough; I want you to have four billion. But then they want the workers to pay for that additional sum. And it seems to me that`s an irrational process. A couple of things that I think must be remembered here: that whatever Congress decides, the Chrysler membership, the people that work in the plants, are going to have to make the final decision as to whether or not Congress is being unreasonable in terms of the sacrifice that they must make. Ten percent of all of the Chrysler workers work in Canada and live in Canada, and I can tell you the Canadians do not take a fond view toward what they consider a form of foreign parliamentary body abrogating their collective bargaining agreement, just the same as we would not take with good grace an action by the Canadian parliament that affected our collective bargaining agreements. We have all of these obstacles, and Senator Lugar, I think, understands them and is sympathetic; I wish he`d be a little more sympathetic. But we have an enormous problem on our hands, and the additional $200 million is just about the limit beyond which we can`t go.

MacNEIL: That means you might be able to go that far; that sounds as though you might be able to go that far.

FRASER: If that`s what it takes to get a bill to save the jobs of the Chrysler workers, I would be willing to go to our membership and ask them to ratify an agreement that reflected that increase.

MacNEIL: Right. Let`s pick up on Congressman Blanchard`s point that this may be talked out so long that the patient will die. First of all, Senator Lugar, is there a sizeable body of opinion in the Congress which would block any save Chrysler scheme, that just, like Senator Proxmire, is philosphically opposed to the idea?

LUGAR: There`s a sizeable block of people, but I believe that we`re going to get a majority that will favor it. The problem is not only to get a majority, to have the good will of everybody, because we`re down close to the end of the session; in the Senate we really could not surmount a filibuster right now if we were faced with it. So I`m trying to work with all of my colleagues to see if there are not ways we can progress with the debate quickly, try to get the windfall profits tax off the floor and Chrysler on the floor, and as rapid and final debate as we can.

MacNEIL: In the House, Mr. Blanchard, is there any sizeable number who just hate the whole idea of federal aid to bail out a big private company?

BLANCHARD: Well, I think so. I think there`s a substantial minority. I believe we`re going to have a majority for a reasonable package. I think if we load it up with a lot of crippling amendments we will kill our chances But I think we have the votes; we`re going to have to make that decision very soon, probably within the week. I think it would be helpful if we had a compromise worked out with the Senate, because ultimately we`re going to have to work something out...

MacNEIL: Well, let`s talk...

BLANCHARD: ...anyway.

MacNEIL: Let`s talk timetable for a moment. You`re worried about acting swiftly enough. Chrysler says if it doesn`t happen before Christmas it`s going to be too late. First of all, do all three of you here this evening believe that? Congressman, do you believe that if it doesn`t happen before the Christmas recess it`s too late?

BLANCHARD: We certainly make their chances severely less for survival. I think that we should have acted two months ago.

MacNEIL: Senator, do you believe it`ll be too late if it doesn`t happen before the end of the year?

LUGAR: Probably not, but it would mean the Senate would come back, as I understand it, and deal with what we were doing. It would only be too late if the House had killed it at that point. So long as it`s alive in the House the Senate probably will act at some point in December or January so that we`ll have a bill.

MacNEIL: Mr. Fraser, do you believe it`ll be too late if it doesn`t happen before the Christmas recess?

FRASER: Every day we delay we do great damage to the whole proposition of saving the jobs of Chrysler workers, because as this is booted about in the newspapers, on TV, people begin to question the survivability of the Chrysler Corporation, and they lose sales and then we lose jobs. I just have to accept the word of the people who are in a position to know, that they cannot go, I believe, beyond the middle of January.

MacNEIL: We read today reports of one of the most massive lobbying campaigns ever, with Chrysler dealers and company officials and the union and various people pushing this. Let`s have a little prediction. Are we going to see effective action, Congressman, before the recess? Are you hopeful it`s going to happen?

BLANCHARD: We will have that in the House.

MacNEIL: In the Senate, Senator?

LUGARI think that we will have a bill passed in the Senate, and I would predict, as a matter of fact, we`ll have reconciliation with the House by that time. too.

MacNEIL: And are you afraid the windfall profits tax vote could still delay it too late?

LUGAR: That`s a danger, but if windfall doesn`t go on forever, it seems to me that there`ll be a consensus formed in the Senate that we might be able to act very expeditiously.

MacNEIL: And Mr. Fraser, with all your political intelligence on Capitol Hill, what do you figure is going to come out of this?

FRASER: I`m confident there`ll be a bill shortly. My great concern, of course, is what kind. And I just have a feeling here that everybody`s willing to sacrifice the workers, and no other large segment has come forward and made a contribution yet.

MacNEIL: Well, thank you, Mr. Fraser and Senator Lugar and Congressman Blanchard, very much this evening. Good night, Jim.

LEHRER: Good night, Robin.

MacNEIL: That`s all for tonight. We will be back tomorrow night. I`m Robert MacNeil. Good night.