The $15 billion auto bailout died yesterday in the Senate.
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 U.S. plants of Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.
Some people are gleeful. Others are worried about potential fallout for Republicans. Still others are beginning to sour on bailouts and Barack.
The problem with the auto industry bailout is that it comes after the huge financial industry bailout, which hasn't stabilized Wall Street and has irritated taxpayers (what with fatcats thinking they still deserve bonuses and whatnot). As usual, John and Jane Doe will take it on the chin, either in lost jobs or reduced wages.
I hate to sound like a cynic, but this is the way it goes. CEOs keep their ginormous salaries and employees are asked to cut theirs. It happened in the airlines, when pilots and others were asked to take 50% paycuts but the bigwigs still got their bonuses. As one woman has said, it depends on if you want 50% of your pay or no percent.
Most Americans look at the U.S. auto industry and shrug. I have no loyalty to any particular brand of car, unlike my father or other men I've known. The first new car I bought was a 1989 Hyundai Excel and, unlike other people, I had no problems with it. In fact, I loved that car so much that we've bought several others. But I've also owned an assortment of American cars during the same time period, including a 1995 Buick LeSabre and the Ford Focus I now drive. I suspect most people drive the biggest car they can afford that performs the way they want. And when taxpayers hear that union workers for the Big 3 make far more money tightening bolts on cars than do their counterparts at the foreign car plants in the South, they have a hard time working up sympathy.
The United Auto Workers doesn't want to give up its advantage in compensation. But just like with the airlines, half is better than none.
UPDATE: I promised Mike at Iowa Liberal that I would denounce President Bush for supporting a bailout of the Big 3, just as I have Democrats. We have had an interesting discussion about what should happen with the auto industry on this thread at CSPT.
I reluctantly went along with the $700 billion financial bailout, largely because I wasn't sure what else we could/should do. Now, weeks later, it seems that we're going to have a breadline of industries wanting the taxpayers to bail them out of their bad business decisions.
But as Mike and I discussed, why is bankruptcy not on the table for the auto makers? Bankruptcy allows the business to restructure debt, renegotiate contracts and reexamine the business model to make it profitable, something that bailout after handout hasn't done for the car builders. I disagree with the hysteria that if the Big 3 go belly up, you aren't going to be able to get parts for your Chevy pick-up. There will be suppliers that pick up that business. That's not to say some people won't be hurt, but some of the writing is a Scream.
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