Democrats Go Down on the Auto Bailout

As I write, passage of the $15 billion dollar bailout package for Detroit auto makers is far from a done deal. But should it pass, know that it did so because Democrats yet again folded like cheap lawn chairs.

There had been language in the package to force the car companies to drop lawsuits against California and other states which sought to enact tougher-than-federally-required emission standards on new cars.

The car companies said "no" to that.

The Democrats said "okay."

Which means, one way or another, your tax dollars will be used to sue your legislators to keep them from forcing the Big Three to make more consumer-friendly cars.

And by the way, that bailout money is being tapped from the cash that was supposed to fund the retooling of factories to make more fuel-efficient vehicles.

We've just run out of orifices for which the Dems to violate us.

If the Democrats had stood firm, what exactly would the car companies have done? Just slipped off quietly in the night like that old lady dying at the end of Titanic? And if they had, then we'd know their clack about a "new way of doing business" was just the empty promise of alcoholics trying to fake like they're sober between benders.

There is a slight provision "requiring" the car companies to respect the state-imposed limits. But that means little if courts rule against states.

Meanwhile, Republicans are looking to get "give backs" from the Unions. And they should. But the Democrats capitulating on both sides is hardly a compromise. Particularly when it's the Dems who are trying to help out Detroit.

But if they couldn't hold their ground on something as important as Iraq, are we surprised by their current lack of spine?

It's always funny to me when people accuse President-elect Obama of abandoning the left and moving toward the Center now that he's got the White House. Based on the ineffectiveness of the current Democratic congress, Obama can't get to the Center quick enough.

Comments

[ntmessage]

So expected.

Just today, GM said that they must delay building their plant for the Volt.
GM just wants to blame someone else for their constant systemic failures and congress goes along. Anyone paying attention knows that the Volt was a car body wrapped in an excessive and huge marketing campaign. Of the 26 new models, the domestics are working on (and 26 are excessive and demonstrate lack of leadership), one would believe that the Volt would be the highest priority funded program.

Same old games, same old management, same old UAW and the same results. If this is not a perfect example of the constant and flawed calculation of GM (and Chrysler) that marketing is more cost effective than true innovation then nothing is. Innovation creates demand for products so less marketing is required to “push” bad product onto consumers. Look at some of the new vehicles and their specifications. Pretty much same old cars from the same old lines. Look at the marketing and associated “spec spin” one must believe there are 1000’s of people trying to figure out how to put lipstick on those pigs.

We need to help them, BUT they, must be restructured with outside trustees to avoid the blind spot that GM, Chrysler, the UAW and the congress possess. All the marketing and PR in the world will never fix this mess. Innovation? Change? Anyone?

We should at least demand some common sense.

[cadawa]

Pelosi and Reid have let the minorty party set the agenda and tap dance all over them for the past four years.
Unless the Demcrats elect new, credible leadership, we and Obama are in for a very disappointing four years.

[stevespelling]

Those evil Republicans want to cut the Big 3 auto worker's pay and benefits package down to $44 an hour from the $78 they currently get before they put the tax payers on the hook for a couple of hundred billion dollars to save half their jobs. Half of these workers will be laid off even with the bailout.
Unions kill jobs. How much proof do you need? What investors will pony up hundreds of millions of dollars to build a factory in some rust belt state or Michigan so they can do business in a hostile environment and be subject to a Union stranglehold monopoly on their work force? Anybody know the answer? NO NEW MANUFACTURING JOBS IN MICHIGAN, OHIO, AND ANY OF THOSE ANTI BUSINESS PRO UNION JURISDICTIONS! UNIONS = NO JOBS!

[spinns17]

enjoy making less yourself if unions go out.

[HillbillyBob]

Drink the R koolaide much? actually its more like 28$ it its R propaganda unfounded , frankly lies that come up with the 78$ figure, but think on this they pay exec up to 700x what they pay the workers who actually MAKE the product, why can't the dead wood be fired and or take major cuts?

[scottymac11]

Economic disasters can be corrected by raising workers pay. Ford built his empire on the concept that his employees must earn enough to purchase his automobiles. A Ford mustang is hardly a luxury automobile yet it can cost around 25,000 dollars. that's a lot of money to finance for 5 or six years on an average workers salary. Maybe we just drive the old clunker we own till the wheels fall off. Forty or fifty more dollars a week and maybe I could afford those payments and help the economy move along. But no. These Republican millionaire politicians want a tax cut for billionaires so they can double up on foreign investments and reap even more political contributions from foreign investors. All this done at the American workers expense. How in the world could average people in Tennessee vote for Corker?

[stevespelling]

Brilliant! The Big Three are going broke and need more than a hundred billion dollars for their bailout. Therefore they should be forced to pay their work force double what their Foreign counterparts pay as part of their re-organization and survival plan. Did you get a fully ride scholarship at the Karl Marx school of economics or did you have to pay the full 99 cents to get your diploma?

[YouThinkAndTalk]

I wonder if Ford read Marx or Marx read Ford. But I forgot, Ford lived in an era when America was building things, and Ford didn't need to read Marx, all he needed was his instinct.

By the way, in Germany today, a very popular gift for the Holidays is a nicely wrapped copy od Das Kapital. May be that's why they have health insurance, like any other industrialized nation.

But here we don't want commie stuff. We really love to see a few people getting incredibly wealthy from us. Who knows, in this land of opportunity, we may gat to be like one of them one day. Right?

[scottymac11]

First off the big three are in financial trouble because they strayed from what should have been their goal. That was to produce the best automobiles possible at an affordable price. American labor is an enabler of that goal not a deterrent. You were wrong about double the price of what foreign counterparts make if you are comparing American labor for foreign companies to unionized American automakers. Your way is to kill the unions and depress honest wages for honest work. Make a vast populace squeezed of discretionary income. commerce will grind to a halt among working people. The economy then consists of the uber wealthy shuffling fortunes back and forth between each other. We've have had a taste of that the past eight years. No more please.

[Stupid]

Here we go again the political blame game by the media.

How about some facts, number one the non regulation of the GOP that they have been pushing since the criminal Ronald Reagan and his screw the public Supply Side Economics, a huge farce form to git go.

The auto makers spending 50 million last year to grease the palms of the GOP to gut clean air standards and safety regulations, so soon we forget about the Ford Explorer and its track record.

Oh yah lets take even more money out of the American Workers pocket and put them out of work or better yet give the jobs to the third world for 250$ a month. That is a real smooth move exlax.

The American Worker is to blame for everything by your thought process, can you explain why in hell do the top three coporate crooks at Ford walked off with 14.98 million as their compensation, how in the hell does one justify that.

[Michale32086]

No one is claiming that the workers are completely to blame for the auto industry's demise..

But the greedy Unions DO share a measure of the blame, along with the greedy CEOs and the greedy management.

Why is this concept so hard to understand??

As for blaming the GOP for non-regulation, perhaps you didn't hear what President Clinton said about this...

"Well, maybe everybody does that a little bit. I think the responsibility the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me when I was President to put some standards and tighten up a little on Fannie Mae and Freddie Mac."

Michale.....

[realpolitic]

Deregulator Looks Back, Unswayed

"On Capitol Hill, Mr. Gramm (R) became the most effective proponent of deregulation in a generation, by dint of his expertise, free-market ideology, and perch on the Senate banking committee.

He led the effort to block measures curtailing deceptive or predatory lending, which was just beginning to result in a jump in home foreclosures that would undermine the financial markets. He advanced legislation that fractured oversight of Wall Street while knocking down Depression-era barriers that restricted the rise and reach of financial conglomerates.

And he pushed through a provision that ensured virtually no regulation of the complex financial instruments known as derivatives, including credit swaps, contracts that would encourage risky investment practices at Wall Street’s venerable institutions and spread the risks around the world.

From the start of his career in Washington, Mr. Gramm aggressively promoted his conservative ideology and free-market beliefs.

From 1999 to 2001, Congress first considered steps to curb predatory loans — those that typically had high fees, significant prepayment penalties and ballooning monthly payments and were often issued to low-income borrowers. Foreclosures on such loans were on the rise, setting off a wave of bankruptcies.

But Mr. Gramm did everything he could to block the measures. In 2000, he refused to have his banking committee consider the proposals, an intervention hailed by the National Association of Mortgage Brokers as a “huge, huge step for us.”


http://www.nytimes.com/2008/11/17/business/economy/17gramm.html?pagewanted=3

[realpolitic]

"Private sector loans, not Fannie or Freddie, triggered crisis"

The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.

Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership available to riskier borrowers with little concern for their ability to pay the mortgages.

Fannie and Freddie don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans.

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent... One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector...

During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie..

In 1999, the year many critics charge that the Clinton administration pressured Fannie and Freddie, the private sector sold into the secondary market just 18 percent of all mortgages.

http://www.mcclatchydc.com/251/story/53802.html

[realpolitic]

"Most Europeans and some Americans attribute the crisis to subprime lending in the US housing market, but that was only the trigger for contemporary events," Hall argues. "The deeper roots of the crisis lie in shifts in banking practices that led many financial institutions to borrow heavily in short-term capital markets to finance the purchase of riskier securities than they once held. The 'financial innovation' behind the development of these securities was said to diffuse risk. Indeed, it did and now everyone is at risk. These developments are symbolized by the practice of many European banks of using credit default swaps to purchase 'insurance' on risky securities, thereby allowing them to count them as part of the asset base required to meet regulatory requirements on the banking sector."

The US, in this view, will pay the price for the misjudgments of the Bush administration. "The last eight years have seen US political and economic leadership reach a nadir in the ratio of cognitive capabilities to destructive capabilities. There is a great unwillingness to recognize this limitation, particularly within American culture. The Bush years have all the appearance of a Greek tragedy. Greed, hubris, and short-sighted pursuit of political advantage have been placed in the pressure cooker and the heat turned on high.

http://www.huffingtonpost.com/2008/10/13/global-economic-crisis-li_n_134393.html

[Michale32086]

@realpolitic

}}}}
Yes, well we never said Obama is always perfect! Even he can make mistakes!
{{{{

Agreed, Obama ISN'T perfect...

But, since you trust him to run your country, isn't it possible that he is RIGHT about FISA and you are wrong??

Or are we back to that situation whereas everyone who agrees with you is right and everyone who disagrees with you is wrong??

Michale.....

[realpolitic]

2)

Also, FISA lets the governent listen to our phone calls to other countries, which is unconstitutional. Again, our phone calls are not supposed to be listened to unless we are suspected of a crime and then after authorities get a judicial warrant, which is not difficult for them.
Just because we are talking to someone in Dubai does not mean government has a right to listen in. There was a scandal already involving NSA employees listening to the phone calls of our soldiers in Iraq talking to their girlfriends, although I am sure you do not know about any of this.

So I have to say that I think many parts of the FISA BIll are unconstitutional and I hope the courts will strike them down, as they already have many parts of the Bush fight against terror such as denying detainees habeas corpus. I think Obama's vote was a mistake, but of course I still support him. I wish he would prosecute the war criminals in the Bush administration who lied us into war and condoned torture.

[Michale32086]

And yet, Obama is a Constitutional Scholar, has taught Constitutional Law and he voted for the new FISA measures.

That indicates to me that he is right and you are wrong about the Constitutionality of the measures...

Michale.....

[realpolitic]

1)

Well, if the argument is that 1998 was the hottest year on record then whomever disagrees with me is wrong, according to the GISS.

If the argument is whether Republicans supported the initial financial community bailout, it is much more a matter of interpretation as 1/3 did and 2/3 did not in the House of Reps. The Bill passed with Republican help. Without Republican support it would have failed.

The entire FISA bill is not bad and I can not say I am an expert on it. The language where it gives the FBI wide use of national security letters to spy on us without a judicial warrant is very anti-democratic. There have already been widespread abuses and the Congress said it would take the power away if the program ws not supervised more closely

[dobberdoss]

Only two people to blame on this one, Pelosi & Reid. They are not serving us at all,Both Pelosi and Reid putson a brave tough image but it's totally fake!

They are treasonist, have we not yet had enough of them?

[ErikW65]

Imagine... instead of Reid and Pelosi watering down the bill, taking all the teeth out of it, they refused to offer a biil in which funds were was not conditional on substantial reforms and a clear plan to future viabilty for Detroit. That would have been cool. Here the Dems have this charismatic, wise leader in their party, Obama, and they can't even follow his strategy.

[Maezeppa]

We must raise the import tarrifs on imported cars.

[firelord5000]

Multinational corps make cars in US also, quite a few incase of Toyota, which unlike big 3 has flexibility at its plants where they can make different type of cars.

[rockne]

Having worked in basic industry for many years, I can flatly state from firsthand experience, this situation was created by a two headed monster--greedy union bosses and greedy executives. The only prayer the Big 3 have is if they are allowed to reorganize under Chapter 11. Throwing money at the situation now is nothing more than allowing management and the UAW to conduct business as usual. It simply wil;l not work.

[fumes2]

great idea, lets raise tariffs during an economic downturn. Who are you Smoot or Hawley?

[ErikW65]

lol!

[firelord5000]

Letting big 3 go down is not the option, however you have to take out the unions if you want them to be competitive with Toyota and Honda.

[ErikW65]

What if you leave unions in, and take health care costs out of the equation? Which is larger the increase in labor costs at union car companies vs. non-union, or the health care costs paid by US companies but not by those companies on foreign soil? And what if you take away the state-level subsidies given to the Japanes automakers in the Southern US?

I'm reading alot of comments that seem like scapegoating of unions.

[firelord5000]

I don't scapegoat the unions necessarily, they did what was productive to their constituents, and it worked fine when the US economy was booming, and people were buying the bigger cars, unfortunately that can't work if you compete against Toyota, Honda, etc in the "green" era.

While taking health care costs would help, bigger issue is the early retirement, and legacy payments etc.

Also, while unions are at fault, so are big 3, their management isn't as good as Toyota, which has led with the legendary TPS, and taking away their state-level subsidies isn't the answer considering they are multi-country corporations that have invested heavily in the US, and also hire a massive amount pf population.

[TXfemmom]

The problem with the Big 3 is not completely the unions. The unions have to make concessions, but the management made the decisions on which cars to produce and when. They are the ones which led them into disaster.

The Republicans were not demanding that the Big 3 tie executive compensation there to the executive compensation packages at Toyota and Honda, where the executives are paid far less. In many cases, just ten percent of what U. S. execs were paid. Personally, I think the guys who made the disastrous decisions on what to build should be the first to have to cut back to the Honda and Toyota executive compensation packages, not the little guys who build them.

[terramartom]

I am not a Union guy but the automobile problem of Detroit stem mainly from poor and failed management. What should have been started in the 70's, still is not in existance. Complete failure of insight. Instead 100's of Millions to lobby against what they will be forced to have to do now!
Let them die, and start over with new leadership and new goals. It will be painfull at first, but it will lead to better times ahead.
Staying the course with only slight corrections only delays the inevitable!
Detroit as it is today is like beating a dead Horse. It is over for these fools!

[firelord5000]

True, but we can't let it be over for 2.5 million + ppl either, there are ways to solve the problem.

[cigi]

The problem with your plan on this is that millions of retirees will be the "BIG LOSERS" when Detroit goes into bankruptcy...you are not going to hurt the upper management or the real culprits here...you only hurt retirees. It will spread throughout our whole economy. If you can give the banks $750BILLION with no strings, what is $34 Billion but chump change??? The big winners will be the LAWYERS who hande the deal and they will make millions.

Maybe the Senate did this to give George the chance to clean up his legacy...save Detroit and the Unions...better than all the other mistakes he made on his watch. How do you know that maybe this is the way it was supposed to go down so that next week Paulson/Be­rnanke/Bus­h can "give" Detroit the money with "no strings or concessions"????. You have a huge number of companies that stand to go under, not just the Big Three. If we can use our tax dollars and we do, to subsidize foreign car companies in this country..ie, Mercedes in Alabama...state of Alabama gave them the land, put in all the infrastructure, had the State of Alabama pay for training, bought 2500 Mercedes vehicles for State use, got Federal funds to pay for a good portion of it....cost to you and me per job created...­$175,000.0­0. Thank you Senator Shelby. Germany, Korea, China, Japan aren't reciprocat­ing...wher­e is the sense in this model?

[yorkmapper99]

I agree with all you said except about the unions. They have already made cuts to their benefits while the auto companies have not lived up to their contracts by defaulting on paying into the pension funds and other responsibilities they agreed to. The auto executives still expect to get their million dollar bonuses. And the unions did not create this mess, the financial industry, investment banks and credit banks did. and now it is the banks that are not lending to the auto industry not the unions.

[strangerinthenight]

I beg to differ. Union workers brought the Big 3 down. This country can have a vibrant and techonological advance auto industry sans Unions.

Where once this country industrial landscape is 30, even 40% unionized, it is now just 10%, the rag tag auto industry. They have touted fear that the country will break, but look, we are still here. They continue to bring the economy down. The Big3 is not profitable because all funds are diverted to Union pay,perks and pensions. So why bail them out.

Fear mongering - that's all it is.

[RealityBaseCamp]

"All funds"? I admit I'm not familiar with the big 3's financial structure, and I do have problems with the behavior of some unions, but I have trouble believing the unions are the factor that caused the companies' financial problems after the better part of a hundred years. Do you have a breakdown that proves any of that?

Also, why did you THINK there are less union workers now? The last 30 years have seen every union-busting trick in the book. The firing of the air traffic controllers. Moving jobs overseas and to non-union states "because it's the only way we can compete against cheap foreign labor," instead of imposing tariffs as other countries have. Looking the other way on illegal immigrants, only going after them when politicians want to make people angry. Labor is not the villain here.

[ErikW65]

Re. This country "CAN have a vibrant... auto industry sans unions"
Well, I guess you could say that, but it's a moot point. The right to organize and collectively bargain is the law.

How much money is diverted to corporate waste/CEO bonuses vs extra labor costs?

[El]

Wow, that's some bad logic. When the country was "30, even 40% unionized" it was fine. But now that it's 10% it's going down the toilet. And yet you fault the unions? Maybe you should be the new CEO of GM.

[wagthedog1001]

Unions brought the Big 3 down? How is it in Oz these daze? Who designed and marketed the crap they're producing? Unions? I think not.

[YouThinkAndTalk]

When I go to an American car dealership, and I did it many times before I went for a Toyota, and get inside an American car, and it feels like a piece of tin, how could a union assembly worker have anything to do with it? I went to the dealership because I wanted to support the union worker and I left the dealership because of management.

I would like to have been a fly on the wall in that conference meeting, when the designer made his/hers presentation for that piece of tin, and the product manager at the head of the table said: "Good job, let's go with that." I would really like to have seen what the guys responsible for those cars look like.

[lastams]

Seems that you can always trust the GOP to use a disaster to further their own ends.
What I simply cannot be fathomed is this:
If their overall agenda is to reduce wages, eliminate unions, outsource American jobs, and import cheap foreign labor, whom do they think are going to consume and pay taxes when they finally manage to crush the middle class?

[andyg]

No it payback for the $80 million to Obama from the union.

[ErikW65]

Non sequitir. Answer the question.

[realpolitic]

Democrats capitulated on every Republican demand to get the auto bailout deal done and the Republicans still killed the deal. So Ridley somehow arrives at the conclusion that it is the Democrat's fault.. He is a master of twisted logic.

[ErikW65]

I take JR did not know the outcome of the vote on the Big 3 Bailout when he wrote this (reread 1st sentence...)
I also don't think you got the gist of what JR was saying, Realpolitic. He was saying that if it had passed, without the reforms that would assure longterm viability, which was one of the concepts that Obama talked about conditioning these funds to, then that would have represented a failure on the Dems' part, a capitulation. I agree with him.

[realpolitic]

Well, Ridley is a conservative who takes anti-Democratic party positions here weekly. I would have advised the Dems not to capitulate to these demands either, many of which were made by the Bush White House. But Ridley is just trying to gin up anger at the Dems. It was Republicans who killed the bill, many with foreign auto manufacturers in their states who do not want to become unionized. Democrats should have greater backbone, but Republicans should not always take an ideological postion even in a crisis. They are the inflexible ones whose policies steered us toward the precipice.

[Melkor]

"It's always funny to me when people accuse President-elect Obama of abandoning the left and moving toward the Center now that he's got the White House. Based on the ineffectiveness of the current Democratic congress, Obama can't get to the Center quick enough."

That is the most amazing transmogrification of political reality I have ever seen. You are laying the pro-corporate wimps that make up the Democratic Party leadership on Liberals? Obama will cure the problem by becoming more Centrist? Even you can't believe that and I know your hatred of everything Left is utterly unreasoning. The Liberal wing of the Democratic Party has not had any power for a long time. The triangulation, the selling out of the public interest for the benefit is classic Centrism courtesy of the DLC. If Obama tacks rightward you'll get more of the same.

[rollingdivision]

EIGHT Democrats didn't vote for the bill, that's why it lost. Four no votes and four absent.

[onenation]

What was the actual yea-nea vote? It lost by how much?

[realpolitic]

http://michellemalkin.com/2008/12/12/final-roll-call-vote-on-the-uaw-bailout/

[who38]

Who were they? I assume that Obama and Biden were absent. Why?

[thefringecenter]

Obama is no longer in the Senate.

[realpolitic]

Wow, Rolling Division will always find some way in his unoccupied mind to blame Democrats, even though only four Democrats voted against the bill! What about the 31 Republicans who voted aginst the bill and the eight who did not vote at all? Rollingdivision, can always break a complex problem down into meaningless simplicities.