The House yesterday voted to approve $14 billion in below-market loans to the major U.S. automakers. Some discussion has revolved around the term to use for this situation and I’m going to provide support for why I call it a bailout. It’s not the giveaway that the financial industry has received under Paulson, that’s for sure. But anytime an industry receives conditions that living, breathing Americans can’t get, I don’t see how you can call it anything but a bailout. The taxpayers, under this legislation, are bailing out the auto industry. GM, Ford and Chrysler aren’t going to banks to get these loans. Why? Because they wouldn’t qualify. So they turn to their crack dealers in the government and beg for them instead. These loans have provisions that Americans aren’t getting from their government. It’s a bailout.
It’s also important to realize where this money is coming from: not as part of the $700 billion Congress authorized Paulson to give away however he saw fit. No, the $14 billion is coming out of the $25 billion authorized to go to the automakers for the explicit purpose of developing more fuel efficient cars to meet the higher CAFE standards passed recently. The auto corporations said they couldn’t afford to change their operations to meet those standards (despite selling cars with better efficiency in Asia and Europe already), so Congress was going to bail them out from that too. That’s why I have a hard time swallowing the $14 billion bailout. Money was going to be spent to increase efficiency of U.S. sold vehicles. 56% of it is now being directed somewhere else, which means the corporations will be 56% less capable of delivering on their responsibilities. If they survive the crisis of their own making at all, they’ll be less able to make the kinds of vehicles necessary for 21st century operations. Which means they’ll be back before too long begging for more bailouts. When will it stop?
I’d like to shift focus to what’s really going on with respect to this bailout. In the same Yahoo article I link to above, Sen. Minority Leader Mitch McConnell (Con-KY) provides a request that is stunning in its chutzpah. The Kentucky Republican also called for a different bill — one that would force U.S. automakers to slash wages and benefits to bring them in line with Japanese carmakers Nissan, Toyota and Honda — in return for any federal aid. Did you get that? Mitch thinks American workers make too much money since there are foreign automakers that pay their workers less. That statement should be the focus of future discussion of this bailout and make its way into even greater discussion about U.S. workers as a whole. I heard the same argument from a caller to a local talk show this morning. Just reduce the worker’s wages so our companies can “be more competitive”. That’s a race to the bottom. Why not see if they’ll work for a dollar a day? Why not pay them nothing? Then the automakers wouldn’t have any labor costs to worry about. The problems with this are obvious. Is the question then, “How low can wages go?” No.
The U.S. government should protect its markets. Do you know why fewer American cars are sold abroad than foreign cars are sold here? Because other countries protect their markets. They support their own workers.
The U.S. workers should protect themselves. All workers, not just auto workers. It amazes me that instead of trying to replicate the successes of unions – increased wages, benefits and working conditions – so many Americans instead want to punish those union members for having the foresight to fight for themselves. Americans’ anger and hatred of its own workers is an amazing paradox. Auto worker unions will make additional concessions as part of the bailout proceedings. What about executive and director compensation? Yes, a couple have offered to be paid $1 in 2009. Big deal. It’s an insult to Americans that they would offer that because it exploits Americans’ ignorance of how executive compensation works. Move beyond the salary and get at the compensation: giving up less than 1/10th of your total compensation isn’t noteworthy, especially when auto workers will be forced to give up more than 1/10th of theirs. Did the executives offer to slash their benefits too? No. Well, then why do workers have to give up more of theirs?
This conversation needs to happen in America. I have hardly touched on the breadth and depth of material that that discussion should contain. In the meantime, I dare Sen. McConnell and his Con-colleagues to filibuster this bill. Go ahead – don’t just vote against it, fight it with everything you’ve got. It’s apparent to me that the Cons haven’t figured out how frustrated the American people are with them. While I’m not a huge fan of the bailout, I understand the arguments for it. Stronger requirements surrounding the money should be made – on the part of executives and Boards who have run these corporations into the ground, not the workers. If it doesn’t pass, the industry does face the very real chance of collapse. Millions more jobs are at risk. (On a small tangent, millions of other jobs have already been lost economy-wide and I don’t see any bailout offers to other industries. More to the point, I don’t see any relief to actual Americans (not corporations) from the government. That’s a failure.) If millions more people go unemployed, the Cons can kiss their future goodbye. Of course, Democrats would have to actually work at maintaining the narrative of who forced those job losses to happen, but that’s a different story.
[Update: CP had a recommendation on loan restrictions a few days back:]
These restrictions should include protection of workers and retirees health care and pensions; limits on executive compensation; independent oversight; commitment to continue research, development and production of significantly more fuel efficient cars; and, an agreement that the Big Three will cease their legal and lobbying efforts to block or weaken motor vehicle fuel economy or greenhouse gas standards.
It was good advice. Unfortunately, Democrats didn’t pay attention to anythink like it in their mad dash to appease Mr. 23%.