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Automakers plead poverty as they seek government bailout

General Motors ghost advertisement As Detroit seeks a $25 billion bailout, the automakers are pinching pennies so hard that their fingers may start to bleed.

General Motors Corp. (NYSE: GM), which earlier this month axed 1,900 jobs, recently scaled back its presence at the Los Angeles Auto show and canceled its annual star-studded party at Detroit's North American International Auto Show, according to USA Today.

The largest automaker -- at least I think it still is, for now -- is keeping a tight lid on the distribution of office supplies. It's always a sign of a troubled company when the nice gel pens in the supply closet are replaced with cheap Bics that have a habit of exploding in your shirt pocket.

Of course, bonuses and holiday parties are things of the past for employees of GM, Ford Motor Co. (NYSE: F) and Chrysler LLC. Though these types of measures save money, they are like putting a kid's BandAid with a picture of SpongeBob on a patient with a gunshot wound. The reasons for these moves are as much political as financial.



Though the auto industry lacks the votes in Congress now for a bailout package, the odds may be better during the next Congress. And despite some analysts arguing that the automakers cannot wait that long, Congress will not give them a nickel if their executives are seen hobknobbing with celebrities or scarfing down fancy finger foods. President -elect Obama will not support it either.

What American International Group Inc. (NYSE: AIG) is learning the hard way with the flap over its junkets is that perception is reality in Washington, particularly if you have gotten tens of billions in taxpayer money as a lifeline. The automakers got the message loud and clear.

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Last updated: July 10, 2009: 12:32 PM

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