in a few moments here on c-span 3, the chairman and ceo

of general motors. then a look at super pacs. then a look at negativity in political ads. then arne duncan on racial disparities and how schools punish misbehaving students. i hope that as we move forward in this world, there are a number of problems that we have to resolve. problem of genocide in darfur. a growing problem with iran. we have a lot of problems to deal with. i think diplomatic solutions will be the answer in the future as we start to deal with the problems coming. >> congress member donald payne who passed away this week, was a former head of the congressional black caucus and served on house committees on education and

foreign affairs. watch his videos online at the c-span video library. the military's northern and southern commands oversee u.s. military operations in the u.s. hemisphere. we look at the 2013 budget and what it means for the northern and southern commands. that hearing will be live on c-span 3. last year, general motors reported its large effort profit ever. $7.6 billion. just three years after receiving a financial rescue package from the government. gm's ceo dan akerson spoke about the future of the auto industry last week at the commonwealth club of california. >> this is fantastic. >> i will start the radio program.

we will get going. welcome to climate one. a conversation about america's energy, climate and environment. today we are talking about the u.s. economy and auto industry with dan akerson. three years after the obama administration bailed out the giant, general motors is firing on all cylinders and posted its most profitable year ever. it paid back half of the $50 billion it received. but the 30% stake in the company could be seen as a financial and political liability. over the next hour, we will discuss this american comeback story as well as gas prices and fuel economy and the move to electric cars. along the the way, we will include questions from the audience here at the commonwealth club in san francisco. mr. akerson was head of global buyout at an equity firm in

washington d.c. he was ceo of general industry. please join me in welcoming dan akerson to climate one. [ applause ] >> dan, thank you for coming. >> thank you. >> gm has had a good year. where is it now and where are you taking the company in years ahead? >> we had the best year we ever had in the history. we posted record profits. i hope that is not the last applause i get. >> depends on profits next year. >> you are only as good as last quarter. where are we today? you know, i had been ceo of a couple of companies. being in private equity actually helped coming into this industry. first i was criticized for not

being a car guy. that's okay. there are three non-car guys in detroit today. i think it is the first time in 20 odd years since all three of the major american manufacturers are profitable. we had to go through some difficult times and there has been a lot of political dialogue on that to and fro. anti and pro. after a two-year hiatus, general motors is the largest manufacturer in the world. we had our most profitable year. between '10 and '11 alone, we grew $2 billion. our revenue today is about $150 billion, which would be larger than the gross national product of 100 countries in the world. it is a huge, i think, an

american company. it's a global company in the sense we compete in 117 odd countries. we export around the globe. we are very successful. most of the high growth markets. we have the highest market share of any automaker in the world. we cannot be as internally focused. we had internal metrics. are we better than the last model we made? are we looking at the competition and saying where will they be in three to five years? as wayne gretzky says, he doesn't skate to the puck, estates he skates to where it will be.

we benchmark to the industry. we are producing great cars. i think about what are the things that keep me awake at night, first of all, we cannot left on our laurels. it is a great year. the first thing is we need to attack our cost structure and producing cash and be competitive. our margins are not what our primary competition is. over time, you are still making a lot of money. the other guy is more efficient over a long time. companies don't fail in a year or two. it takes 20 or 30 years for the deterioration and the rot to really impact the viability of the company. so we can't be sitting here in 2030 or 2035 and say what happened? the decisions were made in 2012. so we're in pretty good shape, but we have a lot of work to do.

we still have many issues that need to be addressed and resolved. >> we'll get to fuel and economy and climate change and other things in a little bit. first, the bailout has become quite a national political issue in this election season. you came from a private equity firm. what do you think about -- was there private capital available to bailout instead of the taxpayers? did the deal give the uaw a deal over bond holders? do you have any creditiques of e bailout package? >> i don't want to be critical. having come from private equity, we experienced and we are part of many restructurings. there are multiple options and avenues to a successful restructuring. and i know we have become somewhat of a punching bag in this political season. i don't want to get into the political arena, but i'll say

this much, if you were in private equity and we had $100 billion portfolio around the globe, front row seat, it was coming off the wheels. as americans, we have to be proud that our government stood up regardless of party affiliation. just like blood is critical to the body, liquidity is critical to the economy. and, yes, we liquidate. we provided liquidity into the markets. i'm also the senior director of american express which is one of the larger financial institutions. the question is were they going to be viable. it was a different set of circumstances in the financial arena than the manufacturing in the automotive. at the end of the day, regardless -- i don't want to debate it.

i wouldn't have joined the board if i did not agree with it. pragmatism has to enter into the economic dialogue. i went to the london school of economics. everybody knows that. but it is the london school of economics and political science. you can't separate politics and economics on a macro economic scale. did this company, in my opinion, george bush -- by the way, two presidents of different perspectives put money into this company. it wasn't just one president. and they weren't running for office at the time. they were in the arena. they had to face the hard facts and, in my opinion, they made the pragmatic decision to save this company because it has now been estimated 1 million jobs were at risk. that is 1 million households.

on a personal level, this is a wealthy state and wealthy community. you all look very prosperous and wealthy to me. when you do to detroit and you go to ohio and you go to pennsylvania and indiana and illinois, where a good share of the auto industry resides, whole communities have been negatively impacted just by the downturn. it would have been significantly worse. president bush said 1 million jobs and $150 billion in tax revenue would have been foregone by the state and federal governments had it been allowed to fail. there is the infrastructure. the industrial infrastructure of the nation would have been severely damaged. i don't care how we got there. the question is did it work? chrysler is alive. we're alive. we are not just alive. we are prospering. around the globe and in this country. since the bankruptcy, we hired

1,700 employees in the united states alone. we invested $10 million. i know against a $1 trillion deficit sounds like peanuts. it's not. the ability to build new cars. we are focused on what is the evolution of the industry. we cannot afford to focus on the near term. what is it like in 2030? why are we spending money on the alternates? hybrids or hydrogen fuel cells. if i mentioned names of companies, you would all say wow? that german company is looking at your technology. it is this company which is a depository of property associated with alternative fuels as it evolves. this country now has an industry that has been totally revitalized that can make the necessary investments to

transition our economy to a higher tech and more efficient and cleaner industry. >> one way to separate politics from economics would be to pay back the remaining money that is lent by the u.s. treasury. do you have a time frame when the 30% stock is back? the stock is still below the 30% ipo price. >> you say lent. they lent us money. we paid all that back. they provided preferred interest with a preferred stock with a 9% coupon. we paid that back plus dividends and interest. we held the largest ipo in the history of the world. most of that went to the federal government. they own 27% on a fully diluted basis. they are just like every other shareholder. they can sell when they want.

it is perverse. i have some understanding of capital markets. we produce record profits, why isn't the stock at record levels? we have a big shareholder and we don't know when they will leave. as part of the bankruptcy, you heard the structure in the financial world. let's take the good assets of the bank and call it good bank and bad bank. we had liquidation motors. liquidation motors, we left the toxic assets behind, if you will. there were hundreds of millions of shares that went to -- there was a complicated -- i won't draw any conclusions or make judgments about who got a good deal or who didn't. it had to be done quickly. again, there are many paths to the solution. did it work? we had to give those several hundred millions of shares to the liquidation motor shareholders.

some of those were largely bond holders. when the stock swooned was because we dropped them and they flushed them. the answer is candidly, i don't know. >> you can understand the cry in congress if the u.s. government sold shares that were 30% below the ipo price. tax holders are getting fleeced. they sold at a loss. >> i won't tell you who i asked the question. is the federal government a private equity firm or acting on behalf of "we the people?" was our economy or citizenship properly served? what if we didn't collect that $150 billion in taxes? if we failed, we had a $24 billion pension shortfall which we now worked down to $13 billion. the government would have to

take up that $20 billion liability. it is more complicated than you get in a 20-second blurb on the evening news. this is a complicated bankruptcy on the scale that the average citizen in the country doesn't have the interest, quite frankly. >> how would you like them to sell? >> how would i like them to sell? recognizing this may show up in washington, i think it ought to be a very controlled. a good way is come out and say we sell 5%. >> dollar-cost averaging? >> i would say they are not there to get the last dollar. by the way, there's -- when you say, owns. there is one company that owns the government any money.

that's ford. we were offered $12 billion. michigan delegation was working on our behalf. we could apply and i'm sure we would grant low-interest department of energy loans for clean and high tech. i said we're done with that. we nixed it. so did chrysler. i say the perverseness of it all. governments help their companies to kind of shape and mold without too much of a heavy hand. shape and mold the direction and technology and how the economy evolves. i don't see anything -- it is not a religious issue. it is something that is pragmatic and it's done for companies around the world all the time. >> another pragmatic issue for americans is high gasoline

prices. you told cnn last year that gas sold at $4.50 would affect people going into the showrooms. how is that impacting car buying? >> if you look at the type of trucks and crossover suvs and sedans, we have seen a shift of the production to small-to-medium sized sedans. away from large trucks. that is a factor of energy costs and producing smaller cars and more fuel efficient cars. i remember president obama when i was in private equity and i think in an unguarded statement of exasperation with the industry and at the depths of recession say why can't they

build a car like the corolla. we did. the best selling compact car in america today is the chevy cruze. it is not just the corolla. all of them. it makes about 40 miles per gallon. >> do you make money on the cruze? >> yes, we do. >> the general prevailing wisdom is bigger cars, bigger margin. you can make money on the medium-sized cars? >> you make a lot more cruzes than others. we don't make money on the volt on an incremental. the volt, we sold as many volts in the first year as toyota sold prius in their first year. sometimes you have so shape and mold our own future. we will make investments where we think the long-term future is in our interest. >> last year you said $1 a gallon gasoline tax would be

preferable to the standards talked about at that time. it essentially became law in california. do you think the increasing the 18-cent a gallon gasoline tax is a good idea? >> i think there are a number of approaches to how you want to impact consumption. there are economic laws just like there are physical laws. one is you don't tax production. you tax consumption if you want to change behavior. there are a number of ways to get to that. that was an example. one of several. but i do think you can affect consumer behavior by a number of different ways. >> so maybe a gasoline tax increase? >> i think it ought to be on a list of potential alternatives, yes. >> we put this program on

facebook and immediately got a bunch of questions about an issue. i would like to read a question. please ask mr. akerson why gm funds the heartland institute. a group that tries to push climate change into our public schools. is this funding consistent with the company's message and marketing of the chevy volt? >> i am glad you asked me that. i wasn't aware of this until the last day or so. a couple of things in terms of good governance. i cannot sit on the foundation's board or steer anything. >> you are saying it was the foundation that gave the money to the institute? >> yes, not the company. let me say another fact. the first time i was interviewed by the press. the guy said do you believe in global warming. i said i do. executives said you don't say that in public. this may surprise you, my underwear doesn't have gm

stamped on it. i am an individual. i have my own convictions. sometimes they agree and sometimes they don't. i think it's actually healthy to have different perspectives around the table. let's talk about -- i always say actions matter more than words. just last week, the apa named us the star energy provider because of the mission controls. we are 60% more efficient in the use of fuel than we were just five years ago. landfall usage coming off our plants is essentially zero. you can pull it in a coffee can. [ applause ] >> most of our plants are completely run off of landfall methane. they are zero emissions. we have plants that are the size

of small farms. 200 or 300 acres under one roof. we put $40 million behind the chevy program with the cruze and said we would reduce 8 million metric tons of co 2 in this country in one year. we bought and paid for a forest the size of the state of connecticut. this is $15,000 that was committed to before i came in. i also think the heartland institute, i'm told, does other things. i find this interesting. i won't go any further. i'll take another look at it when i get back to detroit. i'll leave it at that. >> we had a lot of conversations here. will there be a price on carbon? a lot of prices around the country and the globe, europe has a price that is low.

australia put in a carbon tax. when do you think there will be a price on carbon and how will that affect your planning for selling gm cars around the world? >> when i was a midshipman at the naval academy, we were told, yes, sir, no, sir, i don't know. >> lots of people have metrics and scenarios. >> all i have to say is i try to be very pragmatic. we have to allow for all possibilities. we were an active participant in cafe standards this year. we will do our level best to be a responsible corporate citizen and if the wisdom of our political leadership is to put in a carbon tax, we will react to it and react to it as best we can in the interest of our

shareholders. >> in the past, california put through carbon emissions that governor schwarzenegger passed and signed and other members wrote. in the past, there was a lot of time spent against this sort of thing to meet these goals. so, the auto industry signed up for the current to increase mileage to 55 miles per gallon. >> we were parties to it. we could have. there were factions in the company that i -- this -- >> the lawyers wanted to go at it? >> this is the new gm. rather than sit in the corner and be ex-trep rust, we want to be part of the solution. we do not want to be part of the problem. we live in this country. i have grandchildren and children and i want them to

inherit a better earth than we did. i think, quite frankly, our generation, in 1970, the epa was put in the water. the air and water is cleaner than i was growing up in the '60s. it should be cleaner than the next year. we will not get there for free. i don't think a huge manufacturer such as general motors or any other company cannot be part of the solution and that's what our goal is to be. so, we were active participants. we weren't dragged to it. >> not because the government owns 27% of gm? you could not sue your boss so you had to go along? >> what he said. [ laughter ] >> so, cafe mileage standards were basically flat for 25

years. from 2010 to 2025, they will double from about 28 miles a gallon to 55 miles a gallon. here in california, there is a law to decrease the carbon intensity fuels. lawyers are fighting that tooth and nail in court. i would like in our juxtaposition. auto companies increase 100%. the oil companies are fighting 10%. your response? >> i'm in a car company. you know, i respect they have to serve their owners as their owners want them to behave in the marketplace. you know, what i'm proud of is in our company, if you look back 25 or 30 years, we have taken almost 99% of pollutants out of

the emission of the car. it is still a lot. i don't know if it is a lot or too much, but we want it to be better. we are producing cars like the volt. we are producing cars like the b.e.l. the battery electric vehicle. this week, we came out with a new engine that will burn liquid gasoline as you see it at exxon or chevron or anybody else today. the same engine, not two engine, the same engine will burn compressed natural gas. we had to spend a little bit more on lifters and sealants and piston. i will not give you a number. it is not prohibitive. it allows us to migrate away to a cleaner form of energy over time. we want to be part of the solution. that comes in different level l. when we looked at cafe, you

probably did not know this. if your mercedes, as long as you produce 99,999, you were not subject to the gas tax. i don't get that break in germany. why in the hell did someone agree to that back in the old days? i said we're at the table and ready to talk turkey. why give an advantage to a foreign competitor. we are not getting it in germany. guess who did not show up at the announcements of the new cafe standards which i thought was a mistake? >> some of those european companies exceed the rules, they get a slap on the wrist and go on. >> we are pushing everything on cleaner energy, more fuel efficient. we have many cars now that are epa rated at 40 and