The Politics of Car Dealers

Thanks to Nate Silver and KO for debunking the claims about political favoritism in which car dealers get closed under the Chrysler and GM bankruptcies. Here’s Nate:

A meme that is currently picking up traction in the conservative blogosphere is that the list of dealerships to be shuttered as a result of Chrysler’s bankruptcy contains a disproportionate number donors to Republican candidates. There have been furious efforts to prove this contention by looking up campaign contributor lists at the Huffington Post, Open Secrets, and other places.

There is just one problem with this theory. Nobody has bothered to look up data for the control group: the list of dealerships which aren’t being closed. It turns out that all car dealers are, in fact, overwhelmingly more likely to donate to Republicans than to Democrats — not just those who are having their doors closed.

[snip]

Overall, 88 percent of the contributions from car dealers went to Republican candidates and just 12 percent to Democratic candidates. By comparison, the list of dealers on Doug Ross’s list (which I haven’t vetted, but I assume is fine) gave 92 percent of their money to Republicans — not really a significant difference.

There’s no conspiracy here, folks — just some bad math.

There’s one more thing that needs to be added to this story. Not only are car dealers disproportionately Republican. But political donations from the auto industry disproportionately come from car dealers. OpenSecrets explains:

The Big Three automakers may be the public face of the American automotive industry, but they are far from its biggest campaign givers. Auto dealers – not manufacturers – are the biggest source of campaign funds from this industry, which also includes truck and auto parts makers, auto repair services and car rental agencies.

It shows that in the 2008 cycle, the National Auto Dealers Association gave $2,990,500 to federal candidates and parties, whereas Ford, the biggest donor among manufacturers, gave $892,533. And note how prominently some individual car dealers show on that list. In this cycle, OpenSecrets show, donations to Democrats are approaching parity, whereas they have preferred Republicans by wide margins in the past, but that’s largely because of a shift in the giving patters of the trade group, the NADA. Also note that the CEO of the largest dealer in the country, Auto Nation, Mike Jackson, has consistently spoken favorably of the bailout, but that’s because their dealers are barely affected by the closings.

And the prominence of car dealers explains a lot about how the bailout ended up like this. Back in November when Bob Corker was getting a lot of props for putting a pretty face on his attempts to bust the UAW, I noted that Corker had left concessions from dealers entirely off the table.

Best as I can tell from the speeches, the takeaway from Bob Corker’s cynical "compromise" bill is this. The US Congress would ask the auto industry’s creditors to take a "hair cut" as follows:

  • The suppliers would not be asked to make a deadline-certain concession
  • The bond-holders would not be asked to make a deadline-certain concession
  • The dealers (who are important constituents in every congressman’s district or state) would not be asked to make a deadline-certain concession

But..

  • The workers had to make a deadline-certain concession–to lower their own wages so as to compensate for the fact that their employers had signed contracts to–and planned to honor–their commitments to retirees who had worked for the in years past

The Republicans in the Senate are risking crashing the world economy simply because hundreds of thousands of real workers wouldn’t make concessions that the local owners and white collars bankers weren’t asked to make.

Now, far far too late, we’ve got an amazing show of bipartisanship as Congressmen call on Obama to slow the closures of the auto dealers.

Thirty-six members of Congress, mostly Republican, told the White House they were troubled by the work of the auto industry task force appointed by the president earlier this year. The panel has worked with GM and Chrysler to try to restructure the companies.

Six months after Congess punted on a bailout, they’re now realizing that more than just union workers will be asked to sacrifice to save the American auto industry. 

Mind you, the closure of these dealers is just as tragic as the loss of all those union jobs; it is just as heartbreaking to see a third generation dealership close as it is a third generation GM or Chrysler worker lose her job.  But those closures are taking place against the background of the huge donations dealers make–which is probably why no one has considered addressing the huge surplus of dealers in a more politically popular way before.

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37 replies
  1. BoxTurtle says:

    And this is the price we’re paying WITH the bailout. I don’t wanna think how bad it could have been if the GOPers got their way.

    GM is going to file Monday according to Fox, though it wouldn’t shock me to see a filing today after the markets close. I haven’t seen any real details on the agreed “Bankruptcy plan” yet, it could make things worse or better.

    Boxturtle (Government Motors and General Motors have the same initials, so at least they won’t have to change all the letterheads)

    • emptywheel says:

      One thing they did do is pay employees and suppliers yesterday, ahead of BK, so that those payments won’t be held up.

      Mr. ew’s former company is on weekly Friday furloughs and similar stuff. The next three months are going to be utterly critical for the entire industry.

      • BoxTurtle says:

        Hmm…that’s rather goodhearted of GM. Or more likely, part of the deal. GM Wages shouldn’t be held up much much by bankruptcy in any case. One of the first a BK court does in Ch 11 is rule on company wages.

        The suppliers might not be so lucky. They’re unsecured creditors, anything not paid before BK will likely be delayed until BK exit. And it’s probable they won’t get 100%.

        It’ll be interesting to see how they handle Debtor-in-possession financing. Is the government going to cover that or have they found a bank or banks to cover it? Not sure what GMs cash burn rate is going to be after BK, but even assuming it’s less (and hopefully heading to zero) that’s still a lot of cash.

        Boxturtle (Wonder if they’ll have to sell GMAC?)

  2. BayStateLibrul says:

    I view all businessmen as Republicans…
    Democrats = working stiffs.
    Republicans = Schedule C filers, businessmen.
    It’s simple…

  3. TheraP says:

    Annals of statistics. Part I.

    There is a reason Dem’s admire intellectual expertise and like to deal in facts, not propaganda. One set of data, independent of the group from which it comes, does not supply the facts.

    If only repubs would study and learn. Instead of spout propaganda!

  4. randiego says:

    I don’t really think that people get just how big the dealership closures are going to be in terms of economic impact.

    Since Republicans seem impervious to concepts such as reality and facts (like what liquidation would REALLY mean), and because our national discourse is abysmally low on substance, Obama will end up getting blamed for the impact of the closures, instead of credit for whatever positive long-term impact his admin’s efforts have produced.

    • emptywheel says:

      Well, we here in MI get it–because we’ve been seeing the necessary corollary of it in slo-mo over the last five years. But yeah. It’s gonna be really ugly.

  5. perris says:

    marcy, you’re gonna get a real kick out of this

    general petraus just tossed his hat into the democratic ring, saying we violated the geneva convention and that the existing methods before bush were more then enough

    stunning stuff comming from his hand picked “general in the field”

    the real kicker?

    he actually said it on fox news, I am wondering when the smear campaign starts

    • TheraP says:

      Perris, question:

      Is it the first blog on Leo Strauss you were asking for? This one?

      I’ll try to get it up tomorrow, when I have time to do all the links and fix all the quotes and so on. (And I can put a link to the following blog as well.)

      Or maybe you wanted the following one that contains both Strauss and Erikson?

      I promise you: This is on my radar screen! Let me know what you prefer.

    • behindthefall says:

      NOW you speak up, you deleted deleted deleted database error deleted!!!!!!!!!!!!1!!!!!! What does that say about your courage, big soldier, you?”

      • freepatriot says:

        response to perris @ 7

        “NOW you speak up, you deleted deleted deleted database error deleted!!!!!!!!!!!!1!!!!!! What does that say about your courage, big soldier, you?

        hey, you two, Get a ROOM …

          • freepatriot says:

            NO Man, get a ROOM

            this place is gonna be a code violation by monday, and we need some place to move the party

            (wink)

            gotta go now …

            If I ain’t back by midnight, check the news …

              • freepatriot says:

                2 grand

                we’re talking cash American, right ???

                that’s a lot in Ecuador (at least I think it’s Ecuador)

                you could probably bail out the whole regiment er, some friends of mine too

                call my lawyer

                he’ll be glad to see that we’re using American money again

                btw, if ya have any trouble raisin funds, tell em I got the hat pin with me

                Hey Tarbender …

  6. freepatriot says:

    I ain’t the best person to choose our sound bites

    so somebody needs to help me out with this

    this is just more repuglitarded white noise

    I need a new word to replace the lined out part

    but it still has to conjure an inherent retrograde stupidity, and be clearly identifiable to the gop

    can ya help a brother out ???

    I’m really ready for this week to end, can ya tell ???

    (wink)

  7. klynn says:

    EW,

    Watched this earlier and thought KO and Nate hit the nail. Thanks for your added insight. Thought you might comment on it after I watched it.

    The kicker was the “journalists” vs “reality based analysts.”

    EW, thanks for being the latter.

    I must say, after all the Oxdowns I wrote about the auto industry, the industry’s impact on our economy and the need for the bailout, I simply feel tired that I am even reading about whining from the Repugs now.

    Typical. When it hits their pocket it is suddenly an issue. Selfish [email protected]^&*&^&%!

      • klynn says:

        How many times did we write about that issue (including Rayne too)? How many times did you point it out to Corker?

        I. Lost. Count.

        Policy craziness. Even Krugman wrote about the dealers as an important aspect to the bailout and restructuring. I cannot stand “last minute lulu” thinking and action. Especially, in the context of there being access to ample information being delivered in a timely fashion allowing for sound economic policy decisions to be made.

        A number of Governors out there are looking at the Repugs and stating, “Told you so.” And, many of those Gov’s are ….Repugs.

        Repugs have “muffed it”. And smells worse when they try to spin their ill played hand as an Obama mistake.

  8. fatster says:

    for the car people

    GM shares fall below $1 as deadline approaches

    May 29th, 2009 | NEW YORK — “Shares of General Motors Corp. fell below $1 on Friday for the first time in 76 years as the struggling automaker approached a government-imposed restructuring deadline and a likely filing for Chapter 11 bankruptcy protection.

    . . .

    “All told, the U.S. government would own 72.5 percent stake in the restructured automaker after it emerges from bankruptcy protection. A United Auto Workers trust that will take over retiree health care expenses will get 17.5 percent, and the old GM, effectively owned by the bondholders, would get the rest. The plan made no mention of the fate of existing shareholders.

    . . .

    “Chrysler, meanwhile, was in bankruptcy court in New York on Friday where a judge is hearing a motion on whether to sell the bulk of its assets to Italian automaker Fiat Group SpA. Chrysler has been operating under bankruptcy protection since April 31.”

    http://www.salon.com/wires/ap/…..index.html
    ************************************************************************
    Magna, GM in talks on Opel
    By PATRICK McGROARTY Associated Press Writer

    May 29th, 2009 | BERLIN — “General Motors Corp. and Canadian auto parts maker Magna, a suitor for GM’s Opel unit, were negotiating Friday on “new ideas” from the bidder, Germany’s economy minister said as top officials gathered for more high-level talks on a rescue deal for Opel.

    . . .

    “Germany is looking for an agreement that will shield Opel — which employs 25,000 people in Germany, nearly half GM Europe’s work force — from a looming GM bankruptcy court filing in the U.S. and extensive restructuring.

    “The government wants to make it legally independent under a trustee so that any taxpayer assistance does not go to the U.S., then would provide bridge financing while Opel looks for a new, permanent owner.’

    http://www.salon.com/wires/ap/…..index.html

  9. TheraP says:

    In case anyone missed it, and I had till now, freepatriot wrote the greatest tribute to Marcy here. It is not to be missed!

    Thank you, freep! It is not really mine to thank you. But you put on my thread. So I do thank you. From the bottom of my heart.

      • TheraP says:

        You are most welcome. My pleasure.

        The blog was also up at TPM and got a good readership there. (I wish it had brought in more donations….)

    • freepatriot says:

      Thanks to you for providing a fitting forum

      an in case anybody wonders, the judge said I was sane, Kinda …

      (wink)

  10. freepatriot says:

    we could post the phone numbers and names of certain southern Senators, along with selected samples of Marcy’s work over the past six months over at freeperville, maybe ???

    or would that be an unfair use of logic and free speech on dumb animals ???

    I can understand why most animal fighting is illegal

    it’s cruel to do that to a defenseless animal

    but is baiting freepers still okay ???

    or is PETA lobbying on their behalf already ???

  11. Teddy Partridge says:

    I wonder if anyone has calculated the impact on local newspapers of car dealers closing. Who’s gonna fill those pages that are now filled with car ads?

  12. freepatriot says:

    hey

    ain’t this a rerun ???

    I could swear I saw this before

    do we get residuals ???

    or is that just the blogs with a unionized peanut gallery gaggle of spell checkes ???

    (wink)

  13. AitchD says:

    Almost everyone’s earned income gets transferred every month to Republicans as rental or mortgage payment, and as a car payment.

  14. bobh says:

    Adlai Stevenson once observed that the election of Eisenhower lead to the replacement of New Dealers by car dealers.

    As long as they do not represent a cost to GM or Chrysler, I think these dealers should be allowed to stay in business. If they feel that can make a profit at reduced sales volumes with servicing, repairs, and the usual customer ripoffs, why not let them?

  15. mracine says:

    My dad worked for the Federal Highways Administration. One of the real blocks to getting anything done to improve ANY aspect of the road transportation system was that every congressional district has multiple small-to-medium businesses donating and then lobbying hard against anything approaching progress. There was a great deal of regret even in the early 90s that SUVs had ever been allowed to get a foothold in the US car market.

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