No bailout for Detroit!?

[Harlan Huckleby]

I see that the Republicans have blocked the money to keep GM afloat.

I hear a lot of you republicans talk big about letting GM and Chrysler die, but I think you are not realistic about the consequences.

The asian markets are crashing tonight on news of the non-bailout.

My brother analyzes manufacturing companies and recomends acquisitions for a big corporation, he knows business and markets. His opinion on auto bailout is that it is essential - not to save GM, which he thinks is unlikely, but to delay their bankruptcy by a year or so. He thinks the economy is dangerously close to a depression-like state, and 30 billion or so is money well spent to delay the shock of a GM failure now. In a way this is an optimistic viewpoint, in that he thinks the economy will be less fragile in as soon as a year.

[HarveyWallbangers]

Bill Clinton agrees. He said the economy should turn around in 12-18 months.

[Kiwon]

Cheers to the Republicans! They finally got something right.

"We were about three words away from a deal," said Sen. Bob Corker of Tennessee, the GOP's point man in the negotiations, referring to any date in 2009 on which the UAW would accept wage cuts.
.................................................. .................................................. .

Union balks and $14B auto bailout dies in Senate

Dec 12, 1:19 AM (ET)

By JULIE HIRSCHFELD DAVIS and KEN THOMAS

WASHINGTON (AP) - A bailout-weary Congress killed a $14 billion package to aid struggling U.S. automakers Thursday night after a partisan dispute over union wage cuts derailed a last-ditch effort to revive the emergency aid before year's end.

Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit's beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.

The breakdown left the fate of the auto industry - and the 3 million jobs it touches - in limbo at a time of growing economic turmoil. General Motors Corp. (GM) and Chrysler LLC have said they could be weeks from collapse. Ford Motor Co. (F) says it does not need federal help now, but its survival is far from certain.

Democratic leaders called on Bush to immediately tap the $700 billion Wall Street bailout fund for emergency aid to the auto industry, whose fate - along with that of the roughly 3 million jobs it touches - was in limbo.

Majority Leader Harry Reid, D-Nev., called the bill's collapse "a loss for the country," adding: "I dread looking at Wall Street tomorrow. It's not going to be a pleasant sight."

GM said in a statement it was "deeply disappointed" that the bipartisan agreement faltered. "We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis," the company said. Chrysler also said it "will continue to pursue a workable solution to help ensure the future viability of the company."

The White House said it was evaluating its options in light of the breakdown on Capitol Hill.

"It's disappointing that Congress failed to act tonight," Deputy Press Secretary Tony Fratto said in a statement. "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."

That bill - the product of a hard-fought negotiation between congressional Democrats and the Bush White House - was virtually dead on arrival in the Senate, where Republicans said it was too weak in its demands on the car companies and contained unacceptable environmental mandates for the Big Three.

Thursday's implosion followed yet another set of marathon negotiations at the Capitol - this time involving labor, the auto industry and lawmakers. The group came close to agreement, but it stalled over the UAW's refusal to agree to the wage concessions.

"We were about three words away from a deal," said Sen. Bob Corker of Tennessee, the GOP's point man in the negotiations, referring to any date in 2009 on which the UAW would accept wage cuts.

The Senate rejected the bailout 52-35 on a procedural vote - well short of the 60 required - after the talks fell apart. Just 10 Republicans joined 40 Democrats and two independents in backing it. Three Democrats sided with 31 Republicans in opposition. Reid also voted "no" for procedural reasons.

Congress is not scheduled to return for legislative work until early January.

Some Senate Democrats joined Republicans in turning against the House-passed bill - despite increasingly urgent expressions of support from the White House and President-elect Barack Obama for quick action to spare the economy the added pain of a potential automaker collapse.

"In the midst of already deep and troubling economic times, we are about to add to that by walking away," said Sen. Chris Dodd, D-Conn., the Banking Committee chairman who led negotiations on the package.

Alan Reuther, the UAW's legislative director, declined comment to reporters as he left a meeting room during the negotiations. Messages were left with Reuther and UAW spokesman Roger Kerson.

The stunning disintegration was eerily reminiscent of the defeat of the $700 billion Wall Street bailout in the House, which sent the Dow tumbling and lawmakers back to the drawing board to draft a new agreement to rescue financial institutions and halt a broader economic meltdown. That measure ultimately passed and was signed by Bush.

It wasn't immediately clear, however, how the auto aid measure might be resurrected, with Congress now set to depart for the year.

Democratic House Speaker Nancy Pelosi called Senate Republicans' refusal to support the White House-negotiated bill irresponsible and urged the Bush administration and the Federal Reserve to provide short-term relief for the automakers. "That is the only viable option available at this time," she said.

Congressional Republicans have been in open revolt against Bush over the auto bailout. Senate Minority Leader Mitch McConnell of Kentucky joined other GOP lawmakers Thursday in announcing his opposition to the White House-backed bill, which passed the House on Wednesday. He and other Republicans insisted that the carmakers restructure their debt and bring wages and benefits in line with those paid by Toyota, Honda and Nissan in the United States.

Hourly wages for UAW workers at GM factories are about equal to those paid by Toyota Motor Corp. (TM) 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.

Republicans also bitterly opposed tougher environmental rules carmakers would have to meet as part of the House-passed version of the rescue package, and the Senate dropped them from its plan.

The House-passed bill would have created a Bush-appointed overseer to dole out the money. At the same time, carmakers would have been compelled to return the aid if the "car czar" decided the carmakers hadn't done enough to restructure by spring.

The House approved its plan late Wednesday on a vote of 237-170.

A pair of polls released Thursday indicated that the public is dubious about the rescue plan.

Just 39 percent said it would be right to spend billions in loans to keep GM, Ford and Chrysler in business, according to a poll by the nonpartisan Pew Research Center. Just 45 percent of Democrats and 31 percent of Republicans supported the idea.

In a separate Marist College poll, 48 percent said they oppose federal loans for the struggling automakers while 41 percent approved.

http://apnews.myway.com/article/20081212/D95106M80.html

[Oscar]

I don't know what to think about this bail out thing. I've spent my entire life in the automotive field as a mechanic. I know a few guys that work at the GM plant in Kansas City and one that works for Ford down there as well. My friend down at Ford is making 46 dollars an hour! To me that's huge money. I asked what the thought about taking a cut in pay to keep things going? His reply was that he had no problems with it as long as the "big boys up top" took one as well. That made me think......Who exactly are these people and what do they make a year?? Also, if there were a plan to lower wages (I'm all for) how do we know who exactly takes the cut? I think the cuts should start from the top and work there way down. I'm just really confused by the whole thing.

[texaspackerbacker]

I am conflicted on this. I was with the House Republicans going against the tide on the big financial services bailout--$700 billion or whatever because it was not IMO gonna affect common people anyway--just a big con to line somebody's pockets on Wall Street.

The automaker bailout--a mere $15-20 billion--might have been the same thing, but it seems to me, there could be consequences that are really felt by a lot of people by not doing this bailout.

That assumes two things, of course: one, that they really are that bad off, and it's not just a sham, and two, automaking wouldn't continue in this country without significant reduction--just under different ownership--foreigners or bargain-hunting investment companies picking up the pieces for pennies on the dollar.

If the latter happens, the workers land on their feet--a good thing, but a whole lot of GM, Ford, and Chrysler stockholders--a large cross-section of Americans--get screwed--in favor of either the foreign companies or the Wall Street sharks.

The last I heard, the automakers were NOT asking for a giveaway, merely a "bridge loan" to get them through some hard times--similar to the Chrysler in the late 70s. I really don't see a problem with that--especially for a tiny fraction of the financial bailout and many times greater benefit.

[Iron Mike]

My friend down at Ford is making 46 dollars an hour!

Do you realize that the average hourly wage for a Physician's Assistant is $37.00/hr??? That's right, a person with an advanced degree who makes decisions about medical care, prescribes medications, etc. makes about $10/hr less than your friend.

I have a great idea.....let's pump MORE $ into that system.

[sheepshead]

Not a nickle until the UAW is out of there.

[Harlan Huckleby]

Not a nickle until the UAW is out of there.

I suspect this is exactly where some republicans are coming from. They think that the presence of unions is the problem, and the solution is simply to crush them.

My dad was a labor negotiator for a big company for about 30 years. So he spent most of his career trying to break or outmaneuver unions. He says the obvious truth that the foreign car plants in this country (non-union) are far more efficient because they were able to cherry-pick a fresh, younger, cheaper work force. But my dad is not so foolish to think that a whole industry would be better without unions - its the THREAT of union organization that keeps management on its toes, it is healthy and important to keep unions alive at some level of activity.

BTW, my dad does not particularly blame UAW for the the auto-industry mess, even though the labor contracts are obviously a big part of their dilemma. His view is that the companies signed the contracts.

The idea that our country would be better without any unions is mental. Or at least it shows an ignorance of history. The world may have changed a lot in the last 150 years, but human nature has not.

It appears that the Republicans have been shaken by the market collapse today. Bush (who earlier spoke of not throwing good money after bad) is now saying maybe they can divert money from the bank bailout to the auto companies.

[Harlan Huckleby]

Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit's beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.

I don't see why this article says the Republican Senators broke sharply with Bush. Bush made comments that were negative towards the automakers this past week, my impression was he was against the bill.

The way this article characterizes the Republican position, I don't have any problem with their vote. I wonder if this story really has things right.

[Kiwon]

It appears that the Republicans have been shaken by the market collapse today. Bush (who earlier spoke of not throwing good money after bad) is now saying maybe they can divert money from the bank bailout to the auto companies.

I read the same thing.

However, if Bush is talking this way then it proves that the Senate Republicans got it right.

Bush has been MIA for months now. The country needed leadership and he's struggling to cross the finish line at the end of his 8 years. Treasury and the Fed have done nothing to create confidence anywhere in this economy.

He should have pointed out and took on the authors of the whole mess, the Dems, over the Fannie and Freddie bailout. But he signed the emergency, have-to-have-it-now-bailout and look what good it did.

It's all a sick joke now.

The government has meddled enough in the auto industry with the CAFE standards, fuel blends, and on and on. For them to basically nationalize and assume administrative control via a "Car Czar" is ludicrous. Once they get in, they will never get out. Bureaucrats and environmental ideologues with no practical expertise will determine which type of cars should be built and the labor unions will never be pressured to seriously reform. The Dems will ensure that they have their votes via preferential treatment.

The free market works. Companies fail, reorganize, and emerge again to compete if they are worthy. It's a myth that any company is "too big to fail."

Detroit has failed itself. No bailouts for the UAW and its members. They'll probably get their money one way or the other anyway but it's a mistake and just postponing the inevitable.

[GrnBay007]

The idea that our country would be better without any unions is mental. Or at least it shows an ignorance of history. The world may have changed a lot in the last 150 years, but human nature has not.

I say help them out.....BUT, also cut wages a reasonable amount according to the cost of living....AND it includes union members AND management wages. To include management in the cuts will bring about solidarity. It's needed, esp. in tough times.

[Harlan Huckleby]

For them to basically nationalize and assume administrative control via a "Car Czar" is ludicrous. Once they get in, they will never get out. Bureaucrats and environmental ideologues with no practical expertise will determine which type of cars should be built and the labor unions will never be pressured to seriously reform.

I pretty much agree with this, when I started hearing about this "Car Czar" it sent shivers up my spine. The auto companies have made some bad decisions, but we're supposed to believe that an appointed governement official would be wiser!!??

And listening to Nacy Pelozzi talk tough was chilling. I think she is a very stupid, dangerous person, I really do. She is EXACTLY the wrong sort of person to be steering anything right now, she's vindictive and rash.

I am not worried about pressuring unions to reform. They are not stupid people, they can see their self-interest is tied to making the companies more competitive. Truly, unions are the least of the problem. The companies and unions can and will trim the excesses.

The auto companies need some cash to limp along for a bit while the economy stabilizes. Whether they break apart or survive intact in the long run is not critical.

[texaspackerbacker]

Definitely correct about the government meddling--for the fiction of manmade global warming, etc.

Definitely correct about the role of the UAW in holding up the companies (as in bank holdup).

The latest is that Bush may use part of the already appropriated bailout funds--the $700 billion. It's ironic--or something--that Bush really DID split with House Republicans to ram through the big bailout--what is this TARP acronym anyway? Now, on this mini-bailout, which is a lot more oriented toward common people, he balks.

Nobody in this or probably any forum has stood with Bush more than me. However, I have seen a pattern of behavior of union-breaking and siding with the Wall Street big wigs over good normal Americans. That is a form of elitism that rivals nanny-state over-taxing and over-regulating inflicted on us by the political left. Bush has literally saved this country with his security and defense policies. His tax cuts have America back from 9/11 to the highest levels of prosperity. He has, however, displayed this disturbing tendency toward the eltiism from the right that I spoke of.

Bailing out the automakers with TARP funds, basically countermanding the Senate rejection, would be the right move. The UAW would be saved--not necessarily a good thing; The workers would benefit, although they probably would not suffer horribly even if the Big 3 were allowed to fail, as undoubtedly, about as many vehicles would still be made in America--mostly in the same factories by the same people.

So what would be the difference? If the companies fail, the stockholders--generally NOT Wall Street big wigs, but a cross section of literally millions of Americans--would suffer the most.

Who would benefit? Well, the assets of the automakers would be sold at fire-sale prices. To whom? Either the foreign auto companies or to those Wall Street big wigs I have spoken of--hedge funds, Warren Buffett-types, the vultures now circling our auto companies.

Given those choices, I'd prefer siding with the stockholders.

[swede]

Reading this thread, what I love about these times is that they have become so scary that everyone is having to do a gut check about what they believe in.

Our government is starting to be run like a bad PTA with conflicting stupid ideas adding to the turmoil and stupid leaders grabbing microphones. I believe that.

Unions are corrupt entities. Period. I should know since I belong to a teacher's union that has all the political nuance of the Japanese mafia. I believe that.

I wonder where the shareholders have gotten to? Shareholders were supposed to protect the elegant self-interest of the free-market system. Once again, corruption, obfuscation, and executive greed are ruining businesses in this country. I believe that.

Government is usually a big part of the problem and rarely part of any solution. I believe that.

[Freak Out]

If it gets to the point of total collapse Bush and his Admin will step in and give them money out of the 700 B that they have to spend.....count on it.