Opinion: The Big Three to consumers: Pay no attention to the men in front of the microphones

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In their quest for help from Uncle Sugar, U.S. automakers delivered a message to Washington that they can only hope the rest of the country didn’t hear. Leaders of the Big Three warned lawmakers that the credit crisis and economic downturn were causing a precipitous drop in sales, draining them (GM and Chrysler in particular) of the cash needed to survive. UAW President Ron Gettelfinger chimed in, claiming that ‘without immediate assistance, we could see, and I stress could see, a collapse of one or more of the domestic auto companies by the end of this year.’

Congressional leaders weren’t persuaded, deciding today not to move forward on a bailout. Now the question is whether consumers will take Detroit’s message to heart -- and not buy any cars from the Big Three. Think about it: if you were in the market for a new set of wheels, would you want to buy them from a manufacturer that claimed to be on the verge of collapse? What’s the value of a five-year, 50,000-mile warranty from a company with a five-week horizon?

Detroit executives must have understood the risk that their apocalyptic remarks would become self-fulfilling, so it’s a measure of their distress that they made them anyway.

GM CEO Rick Wagoner talked about having to liquidate assets, and Chrysler CEO Bob Nardelli voiced doubt about his company’s ability to make it through the downturn without aid. And Ford CEO Alan Mulally argued that while a bailout wasn’t absolutely necessary to its own survival, the entire industry would be severely damaged by the collapse of any of Ford’s competitors.

Ultimately, their request was sunk by a split between Republicans and Democrats over the source of money for a Big Three bailout and the strings Washington should attach. The split was compounded by some lawmakers’ resistance to any kind of taxpayer-funded rescue -- a position that reflected the general public’s bailout fatigue. The White House, some Senate Republicans and Michigan lawmakers wanted to save Detroit with the $25 billion in loans Congress had already approved. Instead of requiring the money be spent to build more fuel-efficient cars, as Congress originally required, this proposal would have let Detroit use the money to stay afloat while it restructured. (The Big Three and the UAW claim that the contracts negotiated last year will push labor costs down so significantly, Detroit’s production costs will finally come into alignment with its competitors’. But those changes will take a few years to phase in.) But Democratic leaders in Congress wanted to leave the loans for fuel-efficiency improvements in place, and to tap the $700 billion Troubled Asset Relief Program for funds to help Detroit in the near term -- an approach that Treasury Secretary Henry M. Paulson Jr. rejected. In exchange for the TARP loans, these lawmakers wanted the Big Three to promise fundamental changes that would yield sustainable businesses. Here’s how House Speaker Nancy Pelosi put it: ‘Until they show us the plan, we cannot show them the money.’

Rep. Barney Frank (D-Mass.), a key ally of the Big Three in the House, said the main problem for Detroit is that consumers (and, by extension, their elected representatives) don’t have the stomach for another hasty TARP-like bailout. ‘There is a sense that we did not do a good enough job of safeguarding the use of those funds, and providing prevention against abuse,’ Frank said. ‘And you could not get, I believe, through either House of Congress today what some people might think was a repeat. That’s why we need to take time.’ Watch the video below for his full remarks. Senate Majority Leader Harry Reid said he’ll call the Senate back into session in early December if the Big Three come up with a credible restructuring plan. My bet is that this issue that will wait until after inauguration -- provided that car buyers haven’t been listening to what Detroit has been saying.

*Photo of the CEOs by Mannie Garcia/Bloomberg News