Do the Car Dealers Own Congress? (Hint: Yes)

Congress is considering a bill which would restore car dealerships terminated in the GM and Chrysler bankruptcies. This ought to be a great opportunity for Republicans to drive a wedge between the needs of recovery and the selfish political interests of the Democrats in Congress.

The horror of the car-buying experience has long been an obsession of mine. Why is it so awful? The car rating service Edmunds.com sent an undercover writer to work at auto dealers to discover the answer. He produced an amazing series, which is posted here.

When I took this assignment as an undercover car salesman I knew I was agreeing to join the enemy. Everyone knows that the car salesman or woman is the enemy. He or she is the person we have to do battle with if we want a new car. I had always been on the customer's side of the desk. Now I was crossing enemy lines. But I didn't feel like the enemy until the first time I greeted a customer on the lot. Here's how it happened. I saw a young couple get out of their car and wander uncertainly toward a row of compacts. They were there to buy a car. I wanted to sell them a car. I walked toward them with the best of intentions. As I reached the couple I gave them a cheerful, "Good afternoon!" They turned and, in an instant, I saw the fear on their faces. Fear of me! Let me quickly add that I'm not the type of person who normally elicits fear from the people around me. I've been called shy, reserved and quiet — all euphemisms for meek, mousy and at times practically invisible. But here I was with my white shirt and tie, my employee's badge hanging from my belt. I had become the enemy. And they were afraid of me. What were they afraid of? The short answer is, they were afraid they would buy a car. The long answer is that they were afraid they would fall in love with one of these cars, lose their sense of reason and pay too much for it. They were afraid they would be cheated, ripped-off, pressured, hoodwinked, swindled, jacked around, suckered or fleeced. And, as they saw me approaching, all these fears showed on their faces as they blurted out, "We're only looking!" During my short stint as a car salesman I saw this look of fear from customers many times. It ranged from a mild apprehension to abject terror. Sometimes customers would actually become hostile. I'd cheerfully say, "How can I help you?" And they would lash out with, "Can't you leave me alone for one second? I just want to look! On my own! OK? On my own!" What the customer didn't realize was that the poor car salesman or woman was not really the enemy. The real enemy was the manager sitting in the sales tower cracking the whip. Suppose for a moment a customer told us they were "only looking," and we said, "fine, take your time," and went back into the sales tower. Now we find ourselves looking up into the steely eyes of the sales manager. "That's your customer out there," the manager would say. "But they said they're only looking," I would answer. "Only looking? You're going to take that for an answer?" Foam was beginning to form at the corners of the sales manager's mouth. "What the hell kind of salesman are you? Of course they're looking! They're all only looking until they buy. You want them to go across the street and buy a car over there? Because they have real salesmen over there. Now go back out there and sell those people a car. And don't let them leave until they buy or until you turn them over to your closer." So that's why the car salespeople stick like glue to customers. Their fear of their managers is greater than their fear of offending the customers.

Americans love shopping. And in general, retailing typically ranks in consumer surveys as the most trusted of all industries. When they buy food, clothes, electronic products - really almost anything - Americans expect and get a highly transparent process, low prices, and no-questions-asked guarantees of satisfaction. Automobiles are the one glaring exception. The second biggest transaction in the lives of most Americans is almost always the most miserable. To revert to that earlier obsessional piece of mine:

The source of the evil is the dealership system. The big idea in American retailing since Montgomery met Ward was to accept lower margins in return for higher volume. Cars and trucks however are sold through a vast network of dealerships, 43,000 of them at last count. Even at the top of the home refinancing bull market, that translated into one dealer for every 500 vehicles sold. Too many dealers are trying to squeeze too much profit out of too few customers.

The dealership system would have been destroyed by market forces long ago. But auto dealers are often powerful forces in their local communities, and states have responded by enacting laws prohibiting anyone other than a licensed dealer from selling cars. These franchise laws have sustained an auto retail sector that has more in common with medieval Damascus than your local Home Depot. Bankruptcy of the auto companies might have opened an opportunity to eliminate these anti-competitive practices. Who knows? Perhaps a less repulsive car buying experience might encourage more Americans to buy cars. Alas, as Charles Lane reports in a depressing column in today's Washington Post, Democrats in Congress are intervening to protect the auto dealers.

Congress is considering the Automobile Dealer Economic Rights Restoration Act. It would reinstate hundreds of dealers terminated by General Motors and Chrysler under the terms of their federally financed bankruptcies.

The Obama administration demanded the cuts because the companies have no chance of being competitive otherwise. Toyota's far less numerous dealers sell more cars than do the Detroit Big Three's dealers. But, just as union rules limit GM and Chrysler's control of production, state-protected dealer prerogatives limit the companies' control of distribution. Only bankruptcy law enabled the firms to trump these state laws.

Independent analysts agree with the administration. And without the bailouts, there would be zero GM and Chrysler dealers, not just fewer. But many dealers are angry anyway, and they have the ear of such Democratic House heavyweights as Majority Leader Steny Hoyer and Chris Van Hollen of Maryland, who are among the bill's 202 co-sponsors, as is Rep. Gerald Connolly (D-Va.). Maryland's Democratic senators, Barbara Mikulski and Ben Cardin, support a similar measure in their chamber.

Here's a list of the sponsors of the House bill. Republicans are noted in boldface:

Rep. Daniel Maffei [D, NY-25] Rep. Gary Ackerman [D, NY-5] Rep. Robert Aderholt [R, AL-4] Rep. John Adler [D, NJ-3] Rep. W. Akin [R, MO-2] Rep. Rodney Alexander [R, LA-5] Rep. Robert Andrews [D, NJ-1] Rep. Michael Arcuri [D, NY-24] Rep. Steve Austria [R, OH-7] Rep. Joe Baca [D, CA-43] Rep. Michele Bachmann [R, MN-6] Rep. John Barrow [D, GA-12] Rep. Roscoe Bartlett [R, MD-6] Rep. Robert Berry [D, AR-1] Rep. Timothy Bishop [D, NY-1] Rep. Rob Bishop [R, UT-1] Rep. Sanford Bishop [D, GA-2] Rep. Earl Blumenauer [D, OR-3] Rep. John Boccieri [D, OH-16] Rep. John Boozman [R, AR-3] Rep. Leonard Boswell [D, IA-3] Rep. Bruce Braley [D, IA-1] Rep. Paul Broun [R, GA-10] Rep. Corrine Brown [D, FL-3] Rep. Dan Burton [R, IN-5] Rep. George Butterfield [D, NC-1] Rep. Ken Calvert [R, CA-44] Rep. John Campbell [R, CA-48] Rep. Anh Cao [R, LA-2] Rep. Shelley Capito [R, WV-2] Rep. Christopher Carney [D, PA-10] Rep. André Carson [D, IN-7] Rep. Ben Chandler [D, KY-6] Rep. William Clay [D, MO-1] Rep. Howard Coble [R, NC-6] Rep. Mike Coffman [R, CO-6] Rep. K. Conaway [R, TX-11] Rep. Gerald Connolly [D, VA-11] Rep. Jim Costa [D, CA-20] Rep. Jerry Costello [D, IL-12] Rep. Joe Courtney [D, CT-2] Rep. Ander Crenshaw [R, FL-4] Rep. Henry Cuellar [D, TX-28] Rep. John Culberson [R, TX-7] Rep. Artur Davis [D, AL-7] Rep. Geoff Davis [R, KY-4] Rep. Lincoln Davis [D, TN-4] Rep. Nathan Deal [R, GA-9] Rep. Peter DeFazio [D, OR-4] Rep. William Delahunt [D, MA-10] Rep. Rosa DeLauro [D, CT-3] Rep. Lincoln Diaz-Balart [R, FL-21] Rep. Mario Diaz-Balart [R, FL-25] Rep. Michael Doyle [D, PA-14] Rep. Steve Driehaus [D, OH-1] Rep. Vernon Ehlers [R, MI-3] Rep. Keith Ellison [D, MN-5] Rep. Bob Etheridge [D, NC-2] Rep. Sam Farr [D, CA-17] Rep. Jeffrey Fortenberry [R, NE-1] Rep. Bill Foster [D, IL-14] Rep. Barney Frank [D, MA-4] Rep. Rodney Frelinghuysen [R, NJ-11] Rep. Marcia Fudge [D, OH-11] Rep. Jim Gerlach [R, PA-6] Rep. Gabrielle Giffords [D, AZ-8] Rep. John Gingrey [R, GA-11] Rep. Louis Gohmert [R, TX-1] Rep. Robert Goodlatte [R, VA-6] Rep. Barton Gordon [D, TN-6] Rep. Alan Grayson [D, FL-8] Rep. Raymond Green [D, TX-29] Rep. Parker Griffith [D, AL-5] Rep. John Hall [D, NY-19] Rep. Deborah Halvorson [D, IL-11] Rep. Phil Hare [D, IL-17] Rep. Alcee Hastings [D, FL-23] Rep. Martin Heinrich [D, NM-1] Rep. Stephanie Herseth Sandlin [D, SD-0] Rep. Baron Hill [D, IN-9] Rep. Maurice Hinchey [D, NY-22] Rep. Rubén Hinojosa [D, TX-15] Rep. Paul Hodes [D, NH-2] Rep. Peter Hoekstra [R, MI-2] Rep. Tim Holden [D, PA-17] Rep. Rush Holt [D, NJ-12] Rep. Michael Honda [D, CA-15] Rep. Steny Hoyer [D, MD-5] Rep. Duncan Hunter [R, CA-52] Rep. Jesse Jackson [D, IL-2] Rep. Sheila Jackson-Lee [D, TX-18] Rep. Lynn Jenkins [R, KS-2] Rep. Henry Johnson [D, GA-4] Rep. Walter Jones [R, NC-3] Rep. Jim Jordan [R, OH-4] Rep. Steve Kagen [D, WI-8] Rep. Paul Kanjorski [D, PA-11] Rep. Marcy Kaptur [D, OH-9] Rep. Mary Jo Kilroy [D, OH-15] Rep. Steve King [R, IA-5] Rep. Jack Kingston [R, GA-1] Rep. Larry Kissell [D, NC-8] Rep. John Kline [R, MN-2] Rep. Suzanne Kosmas [D, FL-24] Rep. Frank Kratovil [D, MD-1] Rep. Doug Lamborn [R, CO-5] Rep. James Langevin [D, RI-2] Rep. Rick Larsen [D, WA-2] Rep. John Larson [D, CT-1] Rep. Thomas Latham [R, IA-4] Rep. Robert Latta [R, OH-5] Rep. John Linder [R, GA-7] Rep. David Loebsack [D, IA-2] Rep. Frank Lucas [R, OK-3] Rep. Ben Luján [D, NM-3] Rep. Cynthia Lummis [R, WY-0] Rep. Carolyn Maloney [D, NY-14] Rep. Donald Manzullo [R, IL-16] Rep. Eric Massa [D, NY-29] Rep. Jim Matheson [D, UT-2] Rep. Betty McCollum [D, MN-4] Rep. Thaddeus McCotter [R, MI-11] Rep. James McGovern [D, MA-3] Rep. Michael McMahon [D, NY-13] Rep. Kendrick Meek [D, FL-17] Rep. Charles Melancon [D, LA-3] Rep. Michael Michaud [D, ME-2] Rep. Gary Miller [R, CA-42] Rep. Jeff Miller [R, FL-1] Rep. Gwen Moore [D, WI-4] Rep. Jerry Moran [R, KS-1] Rep. Christopher Murphy [D, CT-5] Rep. Patrick Murphy [D, PA-8] Rep. Tim Murphy [R, PA-18] Rep. John Murtha [D, PA-12] Rep. Grace Napolitano [D, CA-38] Rep. Pete Olson [R, TX-22] Rep. Solomon Ortiz [D, TX-27] Rep. Frank Pallone [D, NJ-6] Rep. William Pascrell [D, NJ-8] Rep. Ronald Paul [R, TX-14] Rep. Erik Paulsen [R, MN-3] Rep. Ed Perlmutter [D, CO-7] Rep. Thomas Perriello [D, VA-5] Rep. Collin Peterson [D, MN-7] Rep. Pedro Pierluisi [D, PR-0] Rep. Chellie Pingree [D, ME-1] Rep. Todd Platts [R, PA-19] Rep. Ted Poe [R, TX-2] Rep. Earl Pomeroy [D, ND-0] Rep. Bill Posey [R, FL-15] Rep. Nick Rahall [D, WV-3] Rep. Dennis Rehberg [R, MT-0] Rep. Michael Rogers [R, AL-3] Rep. Harold Rogers [R, KY-5] Rep. Ileana Ros-Lehtinen [R, FL-18] Rep. Mike Ross [D, AR-4] Rep. Steven Rothman [D, NJ-9] Rep. Edward Royce [R, CA-40] Rep. C.A. Ruppersberger [D, MD-2] Rep. Timothy Ryan [D, OH-17] Rep. Loretta Sanchez [D, CA-47] Rep. Linda Sánchez [D, CA-39] Rep. John Sarbanes [D, MD-3] Rep. Jean Schmidt [R, OH-2] Rep. Aaron Schock [R, IL-18] Rep. Kurt Schrader [D, OR-5] Rep. David Scott [D, GA-13] Rep. Robert Scott [D, VA-3] Rep. Joe Sestak [D, PA-7] Rep. Carol Shea-Porter [D, NH-1] Rep. John Shimkus [R, IL-19] Rep. Heath Shuler [D, NC-11] Rep. Michael Simpson [R, ID-2] Rep. Albio Sires [D, NJ-13] Rep. Christopher Smith [R, NJ-4] Rep. Adrian Smith [R, NE-3] Rep. Adam Smith [D, WA-9] Rep. Zachary Space [D, OH-18] Rep. Jackie Speier [D, CA-12] Rep. John Spratt [D, SC-5] Rep. Clifford Stearns [R, FL-6] Rep. Betty Sutton [D, OH-13] Rep. Harry Teague [D, NM-2] Rep. Lee Terry [R, NE-2] Rep. Bennie Thompson [D, MS-2] Rep. Todd Tiahrt [R, KS-4] Rep. Patrick Tiberi [R, OH-12] Rep. Paul Tonko [D, NY-21] Rep. Michael Turner [R, OH-3] Rep. Christopher Van Hollen [D, MD-8] Rep. Peter Visclosky [D, IN-1] Rep. Debbie Wasserman Schultz [D, FL-20] Rep. Maxine Waters [D, CA-35] Rep. Anthony Weiner [D, NY-9] Rep. Peter Welch [D, VT-0] Rep. Lynn Westmoreland [R, GA-3] Rep. Addison Wilson [R, SC-2] Rep. Charles Wilson [D, OH-6] Rep. Rob Wittman [R, VA-1] Rep. David Wu [D, OR-1] Rep. C. W. Young [R, FL-10]

Let's be very clear that what is being defended here are government-created monopolies highly detrimental to consumer interests.  (I note with an extra-raised eyebrow that supposedly ardently pro-freedom Ron Paul is numbered among the bill's cosponsors.) This ought to be a great opportunity for Republicans to drive a wedge between the needs of recovery and the selfish political interests of the Democrats in Congress - with the extra embarrassing bonus of dividing those Democrats from the Obama administration, which is arrayed for once on the side of greater choice and competition. Looks like it will be wasted, as members of Congress of both parties sacrifice the consumer to scrounge for campaign contributions from a retail sector that owes its existence almost entirely to political muscle.