Donahue, John

Reich, Robert B.

Yale University

Yale University EliScholar – A Digital Platform for Scholarly Publishing at Yale YPFS Documents (Series 1) Browse by Media Type 1985 New Deals: The Chrysler Revival and the American System Robert B. Reich John Donahue Follow this and additional works at: https://elischolar.library.yale.edu/ypfs-documents Recommended Citation Reich, Robert B. and Donahue, John, "New Deals: The Chrysler Revival and the American System" (1985). YPFS Documents (Series 1). 14257. https://elischolar.library.yale.edu/ypfs-documents/14257 This Document is brought to you for free and open access by the Browse by Media Type at EliScholar – A Digital Platform for Scholarly Publishing at Yale. It has been accepted for inclusion in YPFS Documents (Series 1) by an authorized administrator of EliScholar – A Digital Platform for Scholarly Publishing at Yale. For more information, please contact elischolar@yale.edu. 7/13/22, 10:56 AM New deals: the Chrysler revival and the American system. - Free Online Libraryhttps://www.thefreelibrary.com/New+deals%3A+the+Chrysler+revival+and+the+American+system.-a03959893 1/428,934,759 articles and booksLike 5.6K ShareNew deals: the Chrysler revival and the American system.Link/Page CitationNew Deals: The Chrysler Revival and the American System.  New Deals: The Chrysler Revival and the American System. Robert R. Reich, John D. Donahue. Times Books, $17.95. Atone level, this is an exceptionally detailed, and for the moment definitive, account of the federal rescue of the ChryslerCorporation. On another, and even more interesting level, the book is an attempt by one of the leading Democratic theoristsof positive government to explore the reality of a major federal intervention in the marketplace.  The Chrysler story--described in New Deals with a combination of analytic skill, an eye for the telling anecdote and anunderstanding of detail and personality--is presented in four stages. They are: the deterioration of the number threeautomaker; the drive to gain federal support; the negotiations with stockholders, management, creditors and unions; and theaftermath of restored profitability. The second and third stages--the legislative process and the tough bargaining thatfollowed--provide the most insight.  The central political strategy behind the Chrysler bailout was to persuade the administration and Congressmen that thelegislation was in their self-interest. For Jimmy Carter, the legislation offered a means to try to retain the support of theUnited Automobile Workers in the face of a seemingly strong 1980 presidential primary challenge from Senator Edward M.Kennedy. For wavering members of the House and Senate, the corporation and its lobbyists put together detailed computerprintouts showing, dollar by dollar, the cash flow from Chrysler to every supplier in every town in each district and state. Toline up Democrats, Chrysler hired the lobbying firm of Patton, Boggs and Blow; for Republicans it was Timmons and Co.Joseph Ventura, who ran the Italian-American Foundation, backed by Lee Iacocca, put the arm on the 31-member HouseItalian-American caucus, persuading members to vote as a block for the bill. Even Gloria Steinem was brought into the battleto attempt to persuade prochoice advocate Senator Bob Packwood, although her efforts proved futile.  In the legislative process, two unlikely heroes emerge in the Reich-Donahue scenario: Democratic Senator William Proxmireand Republican Senator John Heinz. Widely thought of as lightweights --Proxmire as a self-indulgent gadfly, Heinz as a richkid who bought himself a Senate seat--both men played significant roles. Proxmire, chairman of the Banking Committee,Like 0 SharePeriodicals Literature SearchKeyword Title Author Topic7/13/22, 10:56 AM New deals: the Chrysler revival and the American system. - Free Online Libraryhttps://www.thefreelibrary.com/New+deals%3A+the+Chrysler+revival+and+the+American+system.-a03959893 2/4recognized that he did not have the votes to stop the legislation, so he used his position to ensure a thorough airing of theissues and to insist on the addition of provisions limiting public liability. Heinz, a politician well experienced in corporateprofits, attempted to require a stock dilution system so that the bailout would not become a government-financed bonanzafor just those affluent shareholders whose investments are supposed to be subject to the risks of the marketplace. Heinzwas, however, unsuccessful and stockholders did make out like bandits.  One of the toughest fights the federal government had with the management of Chrysler was to persuade Iacocca and othercorporate officials to give up their company jets. Iacocca, one government regulator recalled, "called congressmen; he evencalled the White House. That was the only serious pressure we ever faced.'  In the end, Iacocca gave up the jets, but his sacrifice was negligible in the distribution of suffering throughout a majorindustrial retrenchment. The people who took it on the chin were the automobile workers. Despite the company's stunningrevival in 1984, its American workforce was still smaller by a third than it had been in 1979, Reich and Donahue point out.  "The primary beneficiaries of the rescue [were] the company's managers, creditors, and stockholders,' the authors note."These are precisely the groups that our economy rewards, and handsomely, for bearing risks . . . What gave was jobs.'  In addition, some of the innovations of the Chrysler bailout-- profit-sharing and union representation on the board--have"begun to atrophy.' The workers gave up profit-sharing in return for a 75-cent-an-hour raise in 1982, and the company onlyreluctantly agreed to allow the board seat held by United Auto Workers President Douglas Fraser to go to his successor,Owen Bieber.  Reich and Donahue are very cautious in their conclusions: "Many of the participants in Chrysler's revival performed superbly. . .. But the episode left unprobed the messier issues of what obligations we owe each other to share the risks, costs, andrewards of economic change.'  In reality, the distribution of risks, costs, and rewards in a highly political process--like the Chrysler bailout--are not likely tobe determined by abstract concepts such as societal "obligations,' but instead by political power. The automobile industryfaced an inevitable reduction in employment, but the absorption of the most severe penalties in retrenchment by the leastsenior of the assembly-line workers reflects the weakness of organized labor. Conversely, the political ascendancy of thestockholders, upper-level management, and bankers in the late 1970s and early 1980s was reflected not only in theoutcome of the Chrysler bailout, but, on a much broader scale, in the adoption of tax policies benefiting the most affluent andin wide-ranging federal spending reductions directed at the working class and the poor.COPYRIGHT 1985 Washington Monthly Company No portion of this article can be reproduced without the express written permission from the copyright holder.Copyright 1985, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.Please bookmark with social media, your votes are noticed and appreciated: Article DetailsPrinter friendly  Cite/link  Email  FeedbackAuthor: Edsall, Thomas B.Publication: Washington MonthlyArticle Type: Book ReviewDate: Oct 1, 1985Words: 842Previous Article: The news at any cost: how journalists compromise theirethics to shape the news.Next Article: Decline and fall: the ailing nuclear power industry.Topics: Book reviewsBooksBook reviews Related ArticlesLike 0 ShareFEATURED VIDEOSseized with (something)seized with (something)Paralyzed, overcome, or stronglyaffected by something.I was seized with fear when I saw theshadow of someone lurking in our hous .See more… Go To ArticleMore Videosspy on (someone or…spy on (someone or something)Toobserve someone or something ina clandestine or… Watch Videoseal offseal off. To close, bar entry to, orisolate something very tightly orsecurely. A noun or… W tch Videostressed outstressed outExperiencing a lot ofmental, emotional, or physicalstrain or tension. I've… Watch VideoPowered byNextStay7/13/22, 10:56 AM New deals: the Chrysler revival and the American system. - Free Online Libraryhttps://www.thefreelibrary.com/New+deals%3A+the+Chrysler+revival+and+the+American+system.-a03959893 3/4Advertisement. Bad banner? Please let us knowThe Free Library > General Interest/Informational > General interest > Washington Monthly > October 1, 1985The Free Library > Social Sciences > Political science > Washington Monthly > October 1, 1985The Free Library > Date >  1985 >  October >  1 >  Washington MonthlyPublications by Name Publications by Date Authors LiteratureA-D E-O P-T U-Z before 1995 1995-1999 2000-2004 2005-2009 2010-A B C D E F G H I J K L M  N O P Q R S T U V W X Y ZA B C D E F G H I J K L M  N O P Q R S T U V W X Y ZTerms of use | Privacy policy | Copyright © 2022 Farlex, Inc. | Feedback | For webmasters |Bed liner maker picks up.Incumbent Hall, newcomer McCown capture LCC seats.KUWAIT - The Onshore Fields - Wafra.KUWAIT - Part 2 - Profiles Of The Oilfields.Dancing from the heart: for teachers at Maryland Youth Ballet, helpingstudents with cerebral palsy experience the joy of moving was apersonal...Autumn issue: Bravo.Errors mar Autumn issue.7/13/22, 10:56 AM New deals: the Chrysler revival and the American system. - Free Online Libraryhttps://www.thefreelibrary.com/New+deals%3A+the+Chrysler+revival+and+the+American+system.-a03959893 4/4 

New Deals: The Chrysler Revival and the American System

https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=15305&context=ypfs-documents

New Deals: The Chrysler Revival and the American System

Abstract

Similar works

Full text

Available Versions

Yale University