I’m not surprised that the U.S. automakers’ letter to Santa Congress won’t be answered this year with a gift bailout of a few billion under the Big Three’s tree. No one should be surprised at that.
First, an embarrassed Congress is rightly suffering buyer’s remorse over the pig in a poke bailout for the financial industry a few months ago after being sucker punched by the Decider and Treasury Fool Paulson. After allowing some $350 billion to be sent into an abyss with little to show for it, it’s a slam dunk case that Congress would now posture over the chump change the automakers are bleating for.
Second, I’m convinced the Republicans have done some shrewd political calculating this time around. With the financial industry bailout, it was a Republican administration literally begging for it. (Newsweek reported that Paulson dropped to one knee and pleaded with Pelosi to get the bailout through the House. What an overacting wussy he is!) So between party loyalty and some bribery, the House Republicans allowed the bailout to go through after initially stopping it.
The automakers are a different story. The Democrats dreamed this bailout up. So the Republicans have a lot more freedom to just say no, especially since it may pay off for them politically. And after being repudiated at the polls in November, the GOP needs some morale building.
By taking a tough stand now, the GOP can gain some political points for when the automakers come back after January 20 to a Democratic administration and a Congress very much dominated by the Democrats, who I believe will push through a bailout in some form. And if an automaker bailout passes next year, the Republicans can hope their pivotal role in the financial industry bailout will be overlooked.
I hope, but am not confident, that the Democrats will have the good sense not to approve a bailout unless the Republicans buy into it, which I believe they (Republicans) will not do. Just as the financial industry bailout has been pretty impotent, I don’t believe an automaker bailout will succeed in anything more than postponing bankruptcy for a few months since the unions will not make wage concessions.
Anyone who believes the automakers can come up with a feasible recovery plan within three months has been inhaling too much too long. The automakers have had three decades, since the Chrysler bailout in 1979, to reorganize. And look where they are today… looking for a handout.
That’s why I say – let them eat bankruptcy court. Because failure is an opportunity.
Bankruptcy will allow the automakers to get away from that average $75 per hour wage and benefit package it pays production workers. Is it any wonder the Big 3 have a tough time being profitable with that kind of competitive disadvantage? The automakers can abandon the SUV models for all the green models they want but when their labor cost is $75 per hour compared to the $47 per hour that Toyota and other foreign automakers pay their U.S. workers, then it’s time to do the math. Maybe the union won‘t work for $46 an hour but I think a lot of folks will conclude that a $46 an hour package is a great deal for a job not requiring a college degree.
The unions had an important and essential role in history. But the autoworker unions are dinosaurs, trying to preserve a way of life that’s not sustainable because we ar no longer the only economic engine in the world, as was the case after World War II. As a taxpayer, I won’t support them through a bailout. If they want to take their employer into bankruptcy, that’s fine with me.
The Republicans failed us with the financial industry bailout. Let’s see if the Democrats can do better…