Friday, December 12, 2008

JMO - Auto Bailout

I've been only half-following the auto bailout bill in Congress, not reading all the details about this or that Representative or Senator's view of the bill or the issue, but still getting the jest of it, and while I'm still personally against it and recognize it's an unfortunate necessity, I've come to the conclusion it won't work, and therefore shouldn't be allowed to pass. Why?

Because first and foremost, the big 3 auto companies got themselves in the mess. We didn't create the mess, they did by building and selling low(er) mileage cars and especially trucks and SUV. They bet the farm on trucks and SUV's and it's not working now. They had years to set aside profits and develop better cars, and they simply didn't, until it was obvious the other (foreign, many now building cars in the US) were building better or better priced cars.

And second because a significant cost of their cars are due to union wages and benefits, namely wages, healtcare and pensions and to require them to become lean enough to be cost and price competitve would mean jettisoning their healthcare costs and pensions. As it is right now all three are $Billions behind on their pension oblgations with no clear plan to repay it, excused by the President and Congress too.

And restructuring the wages would be mean invalidating the union contracts or worse allowing them to hire non-union workers, at the same or lower wages than other auto companies currently in the US. This would be mean a long protracted fight in the courts over the contracts or in Congress over either requiring it or allowing it, and the political backlash would be enormous against the company and Congress.

And it's clear providing short term loans won't work because none of the big 3 companies will use the money for the long term change necessary to build better cars at affordable prices. It's taken 50 years to get here, you can't fix it overnight, but the companies have had the information and resources to be in a better position than they are now, they just didn't do it.

And now when at least one is facing chapter 11 protection or worse bankruptcy, we're supposed to panic and give them our money? With what for assurances they'll actually change when the problems are systemic to their history, structure and operation?

I'm against the bailout but not for the reasons the Republicans are against it. They want the companies to jettison worker rights with their contracts giving them affordable wages, healthcare and pensions. They want to cheapen the American worker to benefit the companies. I'm against the bailout because it's not what the Republicans have long believed and sold us, about free enterprise and the market economy, and it's failed badly.

The question is if we're willing to change the big 3 companies into something similar to the foreign companies producing cars in the US, which is likely the better solution, but without sacrificing the hard earned benefits the employees have worked hard for all these decades. We can't jettison them at the expense of making a better company, unless the taxpayer is willing to pick up the bill for their healthcare and pension plans.

And that would essentially get the companies off the hook, which I suspect is their goal, which leaves the question, since when is the government the one to decide what business should do when they (companies) have long argued and won the right to decide and act on their own, free of government intervention. Simply because they failed isn't ground for them to ask government now to see them through their stupidity.

Shouldn't they face their own music? Is it fair for the taxpayer to bailout the big 3 auto companies who simply want to jettison the workers' wages and benefits for their own profit? I don't think so. Any deal has to ensure the workers have longterm liveable wages with affordable healthcare and pensions, and not push them back on the public for corporate profit.

It's time the drive the car they're selling, and if they can't sell it, who's fault is that? Certainly not the taxpayer and definately not the worker. So why should we accept the blame and write the check?

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