President Bush appears to be moving towards offering some relief to the auto industry, as he has reportedly dropped his opposition to utilization of the T.A.R.P. funds allocated by Congress earlier this year. Talks have begun, with details hard to come by now but it appears fairly certain that President Bush will not allow a G.M. bankruptcy on his watch. From the Washington Post:
Bush administration officials kept details about any emerging plan closely held. They are talking with automakers and have yet to make final decisions on the size or length of the help.
White House deputy press secretary Tony Fratto said officials “are continuing to gather financial information from the automakers, assessing the data, their cash position going forward. We’ll take a look at that information, make some judgments and review our options.”
He said the focus is on “trying to get the policy right while considering the best interests of the taxpayer and our economy, and we’ll take the time we have available to do that right. No decisions have been made.”
The attacks from the right have been quick and furious, with the Wall Street Journal editorial page leading the charge.
Who’d have thought Mr. Bush would want to join the long line of Detroit executives in caving to the UAW?
Senate Republicans had more gumption. Led by Tennessee Senator Bob Corker, they asked the auto workers to show they were serious about making Detroit competitive again. In exchange for a lifeline from Washington, Mr. Corker wanted the union to set a “date certain” in 2009 for lowering the Detroit Three’s hourly labor costs to the average of foreign-owned auto makers in the U.S. He also wanted creditors to bring down Detroit’s total debt by two-thirds through an equity swap, making sure debtholders share the cost of restructuring.
The union’s counteroffer was that it would bring down labor costs in 2011, when its current contracts run out. Maybe we missed something, but we thought GM and Chrysler were facing bankruptcy now, not in three years. As Minority Leader Mitch McConnell said on the Senate floor, that sounds like “taxpayer money today for reforms that may or may not come tomorrow.”
And while it is certainly the case that the Senate Republicans sought to put a stick in the eye of the U.A.W. Democrats need to be mindful of the fact the laws of math do not change because the goals are well intentioned. The automakers must produce a plan that rectifies the terrible condition of their balance sheets. G.M. will not survive unless debt is dramatically reduced no matter what short term fix is applied here. In todays auto market their debt load means one thing: BANKRUPTCY! President elect Obama has repeatedly said that the big three must produce a business plan that shows viability. If the attempt is made to rig that concept to protect ANY of the existing stakeholders the result will be bankruptcy. It will just take a little longer.
Bill Manzi.com 
Interesting that the Republican Senators demand that American wages be LOWERED to that of competing countries.
Well then, let’s lower our standard of living to that of Mexico, the Domincan republic and Puerto Rico..that should solve our illegal immigration problem in a hurray and then our college graduates can enjoy wages just above minimum wage and the executives of American countries can enjoy higher wages based on profits gleamed from outsourcing…
.oh wait that is what those ececutives do now..this puts the real positon of republicans and the Eagle Tribune’s Republican Editorial Board in clear perspective.
LikeLike
Your Honor,
Does anyone understand free enterprise? It’s up to the Management and labor to resolve their differences and decide if they will fail or become a strong competitive industry. All must compromise. The federal government must remove all impediments.
The Republicans who drove the bailout to failure have as much right to their opinion and vote as anyone else. IT WAS THE RIGHT THING TO DO.
What is Bob Leblanc smoking?
Does anyone think the Automobile companies are going to shutter the business and walk away from all those assets, human and otherwise?
I believe more than half of America feels it is wrong to bailout the companies.
Jules
LikeLike
Bush is wrong to release that money.
LikeLike
Mr. Speaker,
I think what Bob is smoking used to be called the American Dream.
Since 1980 and the beginning of the Reagan Revolution, we’ve gone from the world’s largest creditor nation and largest producer of manufactured goods, to the world’s largest importer of goods and largest debtor nation. All it took was 28 years of Republican theory (and to forestall your next comment, when it comes to trade theory, I count Bill Clinton as a Republican). We’re now racing to the bottom to compete with the rest of the third world. Mission Accomplished.
Do I think the US auto companies can be shuttered? Yes. Without question. Your party seems determined to test the theory (and again, that theory seems to be based more on attempting to break the UAW than it does on sound economic principle, see NBC acquired memo).
Would you miss them?
The Republicans themselves opened the door: if it’s right to bail out the banks (so that, ironically, they would still refuse to loan money, but at least the bonuses are safe), it’s right to bail out industry suffering from this speculator manufactured crisis.
I think Mr. Bush is right now thinking of his legacy, and how history will judge him in his final test. In other words, he’s looking for partial credit and severe grading on the curve …
Welcome to Hooverville, Mr. President.
-FM
LikeLike
Fred,
You have memorized the little red book issued by the DNC. I see you have all the sound bites down good.
We are the victims of the political class. Part of that class is your friend Barney Frank and Chris “I got a good rate on my home” Dodd. These are the guys who were in chagre of over site in the congress when everything went down.
THERE ARE NO INNOCENT POLITICIANS HERE.
I don’t care what happens to the UAW. They are going to play hardball. They made their bed through successful negotiation. As I remember the steel industry went down the tubes for the same reason.
Now it should be up to the idiots who got themselves into trouble have to sit down and iron out their differences. They have to create a competitive industry or lose it altogether.
Have you checked into the BHS vacine, you ned a shot.
Jules
LikeLike
Mr. Speaker,
I give you original thinking, you give me readings from the Rush Limbaugh Standard Talking Points manual.
You’re phoning it in, man, you can do better than that … argue for the success of the Reagan Revolution, comrade foot soldier! (hey, I’ve got graphs!) Tell me more about the principles behind the recent Republican vote, when the playbook is exposed for all to see!
Are you forgetting who wrote and championed the bank deregulation legislation that put us in this latest jackpot? Why, that upstanding “America is filled with whiners” Phil Gramm!
Sheeeeeeeeit. As they would say in Texas.
I know you hate government and politicians, we get it. I got it when I listened to the first and last 20 minutes of Rush in my life, when he first got on the air. I get the gig.
And, I even partially agree with you. The democrats are no more filled with angels than the republicans are filled with devils. There’s enough mud to go around, especially lately.
But to perpetuate the myth that they are ALL bad, that government is HOPELESS, is just silly. I choose to believe that there are still people of principle who run for public office for all the right reasons, and try their best to serve their constituents. Call me naive. You might be right. I hope you’re not.
It’s ironic: I’m never sure why Republicans run for office at all, when they not only not believe in the concept, but actively believe that it’s evil. But, that’s not the really ironic part. No, the ironic part is that people vote for them to do a job that they not only not believe in, but actively try to destroy it!
It’s the only job interview in the country where you can walk into the room, tell the hiring manager “well, what you’re doing is completely wrong, so wrong that when I get here i will work night and day to make sure it’s ineffective”.
And get the job.
Now, that’s funny.
Hey, wait a minute.
Something about your post — what was it — “walk away from all those assets, human …”
Human assets are important? Be careful, sir — there may yet be a liberal in there straining to get out! You need to be careful … they might be listening. They’ll revoke your red card if they find out!
I won’t tell. I promise.
-FM
LikeLike
Mr. Mayor,
Thoughts on your final paragraph ….
If you find your neighbor’s house on fire (and, of course, you’re on speaking terms with your neighbor), you call the fire department. If you form a government committee on fire, the only sure thing is that there will be nothing left to save.
I think that any business plan that GM or Chrysler come up with in the short term, in this economic environment, is essentially a crap shoot. No one, inside or outside the administration, has a crystal ball.
I read that bankruptcy experts think it will take anywhere from six months to a year to reorganize themselves into something that might be viable again.
These guys don’t have that long to live. Kind of short sighted on management’s part, but there you are. Who knew that Wall Street would melt down, and that banks would refuse to be banks? Or that they could lie to themselves for so long?
The only way everyone’s skin is in the game is in bankruptcy court. As this recession deepens, I’m sure it will become obvious to all that there is no short term way out.
The only valid decision in the short term to me is to decide whether or not America should still be in the car business. Either loan them enough to essentially get them to go through bankruptcy (either real or through a “car czar”), or not. Wait long enough, the decision will get made by default, and neither will likely survive. A lot of innocents (suppliers, dealers, repair shops) will suffer the collateral damage.
I’m not sure I know what the right answer is, either way (though I think I’ve made my preferences known). As long as the taxpayers are first in line for any asset liquidation event if we loan money, should it occur.
I do think that government, however well intentioned, should stay out of trying to run the car business. They have absolutely no experience at it, and become another constituency with an agenda in an already dysfunctional family. They’ve got quite enough to do already. This is one point on which I agree with The Speaker.
I just refuse to blame the union for the woes of the American auto business. If you build the right thing, they will come.
-FM
LikeLike
Fred,
I am trying to organize a response to your rant. I do respect your strong socialist views. I am a free market conservative.
My view of the Republican party is that it has abandoned conservative policies and has consequently suffered deep loss.
I also believe that Ronald Regan was one the greatest presidents of the 20th century.
I believe from your earlier posts, that you hate the NAFTA et al. I also assume that is why you seem to dislike Ronald Regan and Bill Clinton. You blame these agreements for job losses.
Well, no matter what you believe, we are in global competition. The most efficient companies will survive in this tough environment.
If a company can’t compete, then it must take action or go out of business.
Fred, what is your solution to this company’s dilemma?
Jules (to be continued)
LikeLike
Mr. Speaker,
Socialist views? I don’t think I’ve ever espoused any state or collective ownership of production, in fact, just the opposite. Nor have I suggested that each should share equally of wealth. I’m surprised you’ve drawn that conclusion, as much as I’m surprised that you probably voted for one as a VP candidate.
To directly answer your question, I should think that either path comes to a conclusion. It really seems to depend on the goal.
I do look for a thoughtful conversation with you: there are some things about modern conservatism that I do not genuinely understand, and I recognize your intelligence level. I was hoping that it would get beyond the sound bite.
I may pose a few questions of my own from time to time, and ask for your response, but as you’ve generously offered your view, you have the floor, sir.
With respect,
-FM
LikeLike