Thursday, December 11, 2008

It's The End Of The Auto Bill As We Know It

The AP reports that the GM and Chrysler bailout failed because the United Auto Workers wouldn't agree to bring wages immediately into line with those paid by Japanese automakers. Key Republican senators balked as a result. As I write, the text below seems to have gone missing from the version of the story now appearing at the New York Times web site:

Hourly wages for UAW workers at GM factories are about equal to those paid by Toyota Motor Corp. at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour. But the unionized factories have far higher benefit costs.

GM says its total hourly labor costs are now $69, including wages, pensions and health care for active workers, plus the pension and health care costs of more than 432,000 retirees and spouses. Toyota says its total costs are around $48. The Japanese automaker has far fewer retirees and its pension and health care benefits are not as rich as those paid to UAW workers.
The UAW was reportedly willing to consider phased reductions, but that wasn't good enough for the GOP senators.

I concluded in October that the Paulson bailout was essential. The idea of buying up toxic mortgage assets to buoy banks and the housing market made considerable sense, based on the expertise gleaned from my degrees in political science and divinity plus an undergraduate minor in literature. I lambasted the House Republicans who voted against the bailout the first time through as a "Hoover Caucus."

Then, after the bill finally passed, the Bush Treasury Department shifted gears and doled out nearly half the money to banks with virtually no strings attached, hoping in its wisdom that bankers would loosen credit and stimulate the economy. In the word of Ron Howard, ha! Was my face red.

Greater prudence is therefore in order as I assess the failed auto bailout, lest my three followers and four readers be misled. What are wiser heads saying?

Actually, before we get to them, here's the White House statement:
It's disappointing that Congress failed to act tonight. We think the legislation we negotiated provided an opportunity to use funds already appropriated for automakers and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable.
(Who's "we"?)

Over at the "Atlantic Monthly" stable of bloggers-- Actually, as of midnight eastern time, none of them has a comment. Snug in their beds, I guess. And these are the people who are going to replace journalists?

At "The New Republic," John Judis is wide awake and calling the Republican obstructionists "craven":

If you look at the history of Great Depression, what tipped that event from a global recession to depression was precisely a series of dumb, craven – or in Keynes’ word “feather-brained” -- moves by politicians blinded by ideology or by narrow self-interest. An interest rate hike here, a balanced budget there, and spending reduction or two, and we went from ten to twenty percent unemployment. Don’t imagine for a moment that the failure to bailout the auto companies isn’t one of those moves.

Put it this way. What we have learned from the economics of the Great Depression is that in order to end the spiral of unemployment, government has to throw money at companies and consumers. It should be trying to raise wages not lower them. Of course, the Wall Street bailout was a fiasco, but it was probably better than nothing. And the auto bailout was considerably better thought out. Now there is a good prospect that two of the Big Three will fail, jeopardizing, perhaps, as many as a million jobs. That’s exactly the kind of thing that Americans should not be doing.

"National Review" seems pleased, expressing hope that Paulson's ATM will also be closed to the Big, Broke Two:

This means no congressional bailout for now. But the fight goes on. The automakers will now turn to the White House, which urged the Senate to pass this bill. The Detroit three will ask Bush to allow Paulson to use some of the bank-bailout money to save the car companies. It's possible that Bush will cave, but one hopes he won't want to go out on that note.

Majority Leader Harry Reid:

Because Republicans failed to act, three million Americans are more likely than ever to lose their jobs and our economy is at risk of suffering even greater damage. Our hearts go out to those families who will now have to deal with this burden as the holidays near.

Republicans may think that rejecting this legislation sent a message to the auto industry. Instead, they sent a message to every single American that they are more interested in settling scores than solving problems.

Writing before the vote, Robert Tracinski said the bailout was communism:

The term "car czar" is not quite right. As a metaphorical description of the bailout, it evokes the right location--Russia--but the wrong era. "Car commissar" would be much more exact. Perhaps he will begin his work by issuing a five-year plan for the revival of the Big Three.

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