Senate Republicans kill auto bailout proposal

The $14B rescue plan to flailing automanufacturers General Motors and Chrysler pretty much died last night in the Senate.  The White House is now considering changing course and endorsing using Troubled Asset Relief Program (TARP) funds for the short term loans to the automakers.  While the House had passed the loan assurances earlier in the week, Senate Republicans threw up a roadblock when they demanded immediate large wage concessions by the United Auto Workers union.  When no agreement was made, the deal was considered kaput.

White House press secretary, Dana Perino, said today:

"Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms. However, given the current weakened state of the U.S. economy, we will consider other options if necessary -- including use of the TARP program -- to prevent a collapse of troubled automakers," she said, referring to the Troubled Assets Relief Program, or Wall Street bailout.

Perino said the collapse of the automobile industry would have a severe impact on the economy, and "it would be irresponsible to further weaken and destabilize our economy at this time." (Link)

The Republicans are making a big bet in the face of some scary odds here.  By claiming they're adhering to some principled position around out of control labor costs and denying the loans, they run the risk of watching the economy take a deep dive in response to an American automaker going down the tubes and then being perceived as the responsible Party.   Modern day Herbert Hoovers, if you will.

The Big Three automakers have a labor cost issue, but it's been overblown by those with an anti-labor bias.  As the Republicans pressed on the UAW to make immediate wage concessions to match wages at American factories manufacturing Japanese autos, they ignored the fact the UAW had already conceded wage cuts last year and anticipated making more next year.  The Republicans also chose to ignore that GM and Chrysler are continuing to lose market share despite pricing their cars, on average, $2500 less than comparable Japanese products.  Here's the bottom line: GM and Chrysler are in the tank because too many folks rejected their product and chose more expensive foreign autos.

So, you might wonder why Republicans are not all over the automaker management for developing strategies that didn't adequately assess the market and competition and make automobiles folks want to buy.  Instead they've chosen to attack the workers for the automaker failures.  Now, all this Republican outrage over how the UAW workers are getting over on the average worker sounds pretty good on television.  They'll argue that if that crooked UAW would just concede big wage and benefit cuts and then everything would be peachy for the Big Three.

But all that righteous indignation sounds a bit hollow when the price tag is $14B and Congress just approved a $700B Wall Street bailout and the federal government has stepped in to save grossly mismanaged financial giants Fannie, Freddie, AIG, Bear Stearns, etc, etc, etc.

It does seem the Senate Republicans have some odd principles, spending money like it's going out of style for eight years and now  willing to let an industry that directly or indirectly employs a couple million people go belly up because they believe the workers are being paid too much money.

By the way, U.S. Senators earn $169,300/year, have a very expensive benefits package including a sweet pension plan.  Those costs are paid by taxpayers.

Comments

[don shooks]

I HAVE WATCHED WITH INTEREST ON THE US AUTO COMPANYS PROBLEMS I ALSO SAW A LOT OF STUPID IDIOTS MAKING MAJOR DECISIONS ON MANY MANY PEOPLE, THEY ARE EITHIER LIERS ,STUPID OR ON THE TAKE .LETS GO BACK A FEW YEARS REMEMBER WHEN GAS WAS 25 CENTS A GALLON? THE BIG THREE MADE AUTOS THAT THE AMERICAN PEOPLE WANTED (ALL LARGE CARS) THEN OUT COMES THE (SMALL FOREIGN CARS) WHO BUYS THEM? OUR CHEAP RELATIVES ETC. SO THE BIG THREE THEN HAS TO BUILD SMALL CARS TO TRY TO CAPTURE THE CHEAP SCATES BUSSINESS BACK . NOW MOVE UP TO TODAY -DO YOU KNOW HOW MUCH GAS WILL COSTS (EXAMPLE APRIL 2009)? WILL IT BE 4.00 GAL OR 50CENTS A GALLON ? YOU HAVE TO BUILD ALL SIZES NOW . THE IDIOTS IN THE WHITE HOUSE SAY WE MUST BILL HYBRIDS NOW . LAST MONTH THE HYBRIDS DROPPED OFF 50%. IT IS A TOUGH MARKET NOW THE PLAYING FIELD IS NOT EVEN CLOSE TO BEING LEVEL BETWEEN FOREIGN AND DOMESTIC CARS- THE BIG THREE IS 20% UPSIDE DOWN ALONE BECAUSE OF STUPID LAWSUITS . YOU WOULD NEVER WIN A LAWSUIT IN A FOREIGN COUNTRY. THE FOREIGN CAR COMPANYS DO ALL RESERCH,DESIGN, ENGINEERING AND MACHINE/EQUIPMENT MAKING OVERSEAS GIVING THEM AN EDGE.THE PROFITS GO BACK TO THERE COUNTRY. THE FALSE STATEMENTS MADE BY ALABAMA, KENTUCKY, AND TENN, HAS HURT THE AMERICAN PEOPLE BADLY- THEY HAVE FOREIGN AUTO PLANTS THERE AND THEY ALL GAVE MAJOR CONCESSIONS TO BRING FOREIGN CAR COMPANYS INTO THEIR STATES I WOULD THINK IT WOULD BE A CONFLICT OF INTREST FOR THEM TO EVEN COMMENT ON THE AUTO INDUSTRIES. THEY SAID THE AMERICAN CARS DO NOT GET GOOD MILAGE-FALSE AGAIN THEY SAID THE BIG THREE GET 75.00 AN HOUR. WAY FALSE AGAIN-IN FACT THE AMERICANS WORKING IN FOREIGN AUTO PLANTS ARE PAID MORE PER HOUR. THEY SAID THE QUALITY OF THE BIG THREE IS BAD. FALSE AGAIN IN FACT CARS DON'T GET TRADED IN BECAUSE OF QUAULITY PROBLEMS OR THEY ARE WORN OUT. THEY ARE TRADED IN BECAUSE WE GET TIRED OF DRIVING THEM AND WANT NEW.THEY SAY WE SHOULD BUST THE UNION .AT 25.OO PER HOUR WAGES THE CORRECT HOURLY RATE OF HIGH SENIORITY WORKERS AT 30 HOURS TO BUILD A CAR -YES IT ONLY TAKES 30 MAN HOURS TO ASSEMBLE A CAR EQUALS 75.00 DOLLARS PER CAR THE DESTINATION CHARGE IS MORE THAN THAT IF THEY WORKED FOR FREE IT WOULD NOT HELP MUCH.I NEVER WAS IN THE UNION BUT A LOT OF MY WAGES WERE ADJUSTED BECAUSE OF THE UNION IN THIS COUNTRY. HOW ABOUT WORLD WAR 1??? WORLD WAR 2??? 9/11? WHEN THEY GAVE THE FIRE DEPT. AND POLICE NEW VEHICLES WITH NO CHARGE. HAVE YOU EVER HEARD OF APPLE PIE AND CHEVROLET? CANADA HAS ALREADY OFFERED SEVERAL BILLION DOLLARS TO THE AUTO INUSTRIE.THEY SAY IT IS A BAILOUT AND THAT IT IS THE TAXPAYERS MONEY-LAST TIME I CHECKED IT WAS THE GOVERNMENTS MONEY NOT MINE ANYMORE IF THIS IS NOT TRUE DID YOU GET A STIMULIS CHECK BACK WHEN CRYSLER PAID BACK 350% OF THE MONEY THEY BORROWED? THESE GUYS WANT TO MAKE YOU THINK THAT IT IS THE TAXPAYERS YET THEY ARE IN THE DRIVERS SEAT GETTING PAID FOR IT AND WANT TO DUMP ON US. THE FOREIGN CAR MAKERS ARE ALSO FEELING THE CRUNCH AND THEIR COUNTRYS HAVE ALREADY GIVE THEM MONEY. HOW ABOUT PRESIDENT ELECT OBAMA SAYS GIVE THEM THE LOAN? HOW ABOUT PRESIDENT BUSH SAYING GIVE THE LOAN YET THESE IDIOTS STILL SAY NO!!! DO YOU WONDER WHO THEY ARE AND WHO THEY REPRESENT? HOW ABOUT THERE WAGES BENIFITS ETC ETC ETC ? WHO IS CALLING THE KETTLE BLACK? THEY NEED TO GET AMERICAN OR GET OFF THE BUS . I WAS A REPUBLICAN UNTIL I WATCHED CONGRESS AT WORK?? SLEEP?IF YOU NEVER WATCHED THE DEBATES ON T.V YOU SHOULD AND WITH THE SOUND OFF YOU CAN SEE THINGS GOING ON AT THE WHITE HOUSE THAT WOULD MAKE YOU THINK WHO ARE THESE IDIOTS? DID WE REALLY ELECT SOMEONE LIKE THIS? NOW I SEE WHY THE REPUBLICANS LOST AND MANY ARE GOING OVER TO THE DEMACRATIC SIDE . FORMER REPUBLICAN DON SHOOKS MERRITT IS. FL