Republicans Right ------ Bush WRONG on Auto Bailout ?

After all the unconstitutional things President Bush has done, now finally he has done something to upset Republicans. He isn't going along with their scheme to destroy a major American industry.

For once, Bush has it right.

Southern senators like Shelby and Corker who led the filibuster represent non-union states which have given milllions in incentives to foreign automakers. In Alabama, Hyundai got $252 million in incentives, Toyota received $29 million, Honda $158 million and Mercedes $253 million. Tennesses is giving VW hundreds of millions to build a plant there.

 Detroit probably wouldn't need a bailout if not for the fact that Southern states have been willing to give away all these taxpayer dollars to lure foreign automakers.

People like Shelby and Corker  think if the Big 3 fail, their  auto plants will make  more money and that in addition, they will deal a death blow to the union movement.But even Toyota and Honda recognize that if the Big 3 fail, the auto parts suppliers they also depend on will probably go under too.

 It's not the job of the U.S. Senate to strip benefits from UAW workers. Our politicians gave much more money than this to the banks, let them go negotiate with Wall Street executives about cutting all their perks and then I'll listen to their concerns about what assembly line workers make.

The south receives far more in federal funding than it pays in taxes. If their senators really want to play this kind of  regional hardball, next time they have a crisis, let them figure it out themselves instead of coming begging to the rest of the nation for  farm subsidies and help for their substandard education systems.

Maxsmom's answer makes some strong points about those who most vigorously oppose the Detroit 3 Automaker bridge loan legislation.  They certainly have the appearance of being partisan in favor of the interests of automakers in their home states, though I do not think that the consequences of refusing to grant this set of bridge loans is going to mean anything like the immediate demise of the American Brands of Automobiles. 

The voices of reason came quickly to the conclusion that bankruptcy under a "debtors in possession" procedure, (aka a "pre-packaged bankruptcy) especially one under the special supervision of the federal government and with the backing of Congress would be the only way to effectively deal the complex knots of entanglement that have evolved around the "Big 3" automakers over the years.  Bloated duplication of brands that used to have stylistic differences resulted in multi-brand marketing strategies that worked at least to some extent, back when those style differences were substantial in at least some of the cars from those competing divisions, but now virtually nothing but the nameplates change from Mercury to Ford, or from Chrysler to Dodge. or Pontiac to Chevy.  But the laws that have been created to "protect" dealships from predatory practices of the automakers cost hundred of millions of dollars just to SHUT DOWN the Oldsmobile line of cars, and close the dealerships (few of which actually closed, they just switched brands).

Only bankruptcy can cancel the obligations of the existing Union contracts, and despite some conciliatory words from UAW representatives, their main message was that “we’ve given up a lot already, where are the concessions from the other side”.  Actually accepting the provision that workers would have to be paid wages that were competitive with non-union workers at Honda and Toyota plants was something they considered completely unreasonable.  The same goes for the legacy pension and healthcare benefits from the long history of the Big 3.  Bankruptcy is the only way out, the burden of which is part of the reason they have such difficulty competing with foreign firms (and their American divisions) on price and quality at the same time.

While the opponents of going the bankruptcy route shout and wave about the specter of Chapter 7 (dissolution) as virtually the only possible outcome of a Chapter 11 (reorganization) (especially a “pre-packaged” bankruptcy which is what the saner voices are proposing) there is no demonstrable connection, since after all, the worst that could happen is that the Detroit 3 come begging to Congress again in a few years.

I would suggest that some of the duplications being eliminated in a reorganization could, like the adaptations to the WW II mobilization of American Industry in response to the global threat they were facing could well be a model for some of the steps this situation could benefit from as well.  That is, if some of the “abandoned” auto factories (those currently empty and those which might soon be closed) could be sold off to General Electric (or some similar energy oriented company) and re-tooled as high-tech wind generator factories.  We are going to need a TON of them and very soon it the Renewable Power Standards of many states (and possibly of new federal rule making) are to have any hope of meeting their mandated levels of “green” energy.

Further that rather than relying so much upon the Canadian firm Bombardier for locomotives and modern subway and LRT carriages, that similarly other auto plants could be converted to provide domestic production of these vehicles.  Trains are far more fuel efficient than either planes or automobiles as to either passenger or freight miles.  Couple this with the upgrading of the transportation corridors (railway roadbeds, additional urban and suburban LRT, subways and high speed trains) and the infrastructure stimulus added to the fuel savings could be a significant step toward reduced impact of greenhouse gases and their effect on climate change.

In my opinion (and those of some other sensible folks who are less worried about the opinions of the powerful voter blocks of union members) the answer is pre-package bankruptcy, with the clear intent of the government (including Congress) to support the process to a successful outcome.  Reform in the automakers needs to be built into the conditions of this kind of reorganization, including specific guidelines on energy efficiency, electric hybrids, CAFE standards and so forth, but unconditional bridge loans, or loans with too few conditions to make a difference are just not in the best interests of either the taxpayers or, for that matter, of the automakers themselves.  They NEED to obviate those union contracts and start again, fresh, on a “level playing field” with those foreign automakers who have proven that making cars in America can be profitable and a “good deal” for all concerned.

Sincerely,

Stafford “Doc” Williamson

http://daochienergy.com

Eighty percent of consumers would not consider buying a car from a bankrupt manufacturer, according to a recent survey. Airlines have gone bankrupt and survived but when one buys a plane ticket, they commit only to a flight. When [people buy  cars, they need to know the company will still be there for years to  fulfill the cars'  warranty and provide service.

If the Big Three go Chapter 11, they will not be able to get parts because they won't have credit to buy them. Chapter 11 companies generally depend on DIP loans, but those have dried up with the bank meltdown.

And the Big 3 have made progress in getting concessions from the UAW and increasing their productivity and reliability. At the same time, American cars imported to Japan are subjected to heavy tariffs. The only reason the Japanese built factories here is because we were limited their imports into this country.

And when you buy a Japanese car assembled in the US, the bulk of the money goes to Japan, not to the American economy.

Tooling up for mass transit and alternative energy could be part of a solution but they need to survive in the meantime and I don't believe they will if they go into Chapter 11. I's interesting that you mention WW II. What would have happened then when we needed to mobilize if we were dependent on Japanese and German companies instead of having our own manufacturing base?

I do not have your economic expertise. I'm just somebody who buys cars. And I'm a taxpayer who would much rather see the money the government takes from me used to help working people than to continue fighting the Iraq war ($15 million per month) or let bankers continue going on posh retreats while foreclosing on millions of homes. It is wrong for anti-union Senators who have a vested interest in the failure of GM, Ford and Chrysler to try to use this situation to break the back of the UAW.

I think Bush is right to give them emergency aid to at  give the President-elect's team a chance to try to figure out a solution which would not just penalize the UAW but also require bondholders and dealers to share the losses.

Ha! People worried about Bush not following the legislative process! Where have you been the last 8 years!

Although I agree that the President should respect the legislative process I believe that the partisan wrangling over the issue of saving an industry that provides 10's of thousands of jobs vs. financial institution whose primary focus is the use of money to make money is an example of the partisan politics that has lead us to the brink of economic destruction.

Jobs for working Americans are of greater importance to more of us than any other problem that is a result of eight years of failed economic policy. It may be that President Bush has had his eyes opened and is trying to change the focus of the nation to that which is of utmost importance. If in fact there is hope for the United States of America it will come through increasing the tax base by decreasing the unemployment and under-employment rolls.

We are a nation whose economic success has come because we have believed in a balance of power. We have also practiced a balance in socio-economic ideology. Without control, either side of the balance beam will get out of control. I recall a visit that I had with then Senator, Sam Nunn, about a bill before the Senate to strengthen Occupational Safety and Health Act (OSHA). The distinguished gentleman told me that he believed that the fewer restraints placed on business the better. I responded "At the cost of worker's health and safety?" He referred me to his aids and walked away. We have erred on the side of believing that business is always carried out by honorable men and that workers and those of us without money will be properly looked after by those who are wealthy and privileged. Well always remember that "The love of money is the root of all kinds of evil." Power corrupts to the utmost. In the name of profits companies always make decisions that are ultimately anti-worker.

On November 2, 2008 Americans voted  for and elected the first African-American President and they also voted for change in the way our government does business, in our economic focus, in our international focus and to make our system of government and the American way about that which is of, by and for the people. Democracy is about that which is best for majority as decided by that majority. I believe that a referendum on where our tax dollars should be spent will get a resounding vote in favor of jobs for more citizens and not to support the rich and super rich who have benefited themselves at the cost to the rest of us. 

The difference for most workers is whether or not a worker is unionized. Don't hate because you have chosen to believe that your education is all that is required to get you the kind of wages and benefits that you deserve. The $70.00 per hour that you quote is a combination of wages, healthcare benefits, pension and other rights that these workers have been able to negotiate for themselves for the past 60+ years. Don't hate, organize!

 Automobile workers have made concessions over the years when the industry and their jobs were threatened. What concessions have those at the top and others who are benefitting from the industry's profits made to insure the survival of the industry?

Beyond this rather pedantic argument is the far reaching effect of the failure of the U.S. Automobile Industry on the U.S. economy and that of the world. Get over the choices that you have made. Learn from your mistakes and move on to something new. The question for you is "How can I make my job what it should  be?" You know the answer. Grow a pair and get the job done.