Unreasonable demands
The automakers are in dire need of some loans to tide them over for a few months. Democrats have, after grilling the executives and demanding plans for action, chosen to lend out $15 billion of the $25 billion which should already be in the automakers’ hands.
The White House managed to prevent that $25 billion from being disbursed, so they could break the law already passed by Congress which authorized the retooling loans. Then, after proposing that “bipartisan compromise” (”bipartisan” means “I order you to obey, and you obey”), the White House backtracked and demanded a car czar be appointed. Then, when foolish Democrats agreed to that without enough of an argument, the White House added a new demand: the czar can now force any automaker into bankruptcy.
What a thought! One man, appointed by a lame-duck “leader” whose approval ratings are historically low, will be able to send General Motors or Chrysler into bankruptcy, if he does not approve of the UAW’s concessions.
Are we to trust this man? He will be appointed by the same White House that demanded different terms every time a concession was made. His name is unknown. It could be Lee Iacocca, it could be Rush Limbaugh, it could be Senator “I hate the automakers and want them to go bankrupt” Corker. We don’t know.
What concessions does the UAW need to make to avoid bankruptcy? Again, we don’t know. That’s not stated up front. What if Car Czar Corker demands they accept minimum wage, no health care, no pension, and no benefits whatsoever? Well, then, Chrysler is gone. Liquidated. Good-bye.
Will anyone in the White House care? Not likely. They don’t need to answer to anyone now; they don’t need to stay in the United States. They don’t need to live with their actions.
Congress, of course, does. But in their eagerness to get a bill passed, the Democrats have, as they have done so many times before, conceded too quickly and too eagerly.
Oh, and one more White House demand: automakers can’t be blocked from pursuing their lawsuits against states that have their own emissions controls. (So much for the “states’ rights” issue.) That means our tax dollars will be given to high-priced lawyers to sue our states which are using our tax dollars for their own lawyers. Oh, that’s a good deal for taxpayers.
It must be nice to be independently wealthy and to have God telling you what to do. Otherwise, I can’t help but think our leaders would go insane.
(The advocacy site is at http://grabdemocracybythehorns.com/takeaction/)
None of this surprises me. Most of Congress and the White house do not care a whit about this industry. That is clear in the harsh treatment of the CEO’s compared to kid glove treatment of financial leaders (most of which performed much worse than the automakers leadership ever did). The only reason for any of this is posturing, so Congress isn’t blamed for the 3 million jobs that would be lost if nothing is done, and may well be lost despite this ill-wrought effort.
The whole scheme is wrong and doomed to fail. Congress should have either decided to do loan gauarantees or not. Government has no business (no pun intended) dictating how these companies should be run. Too many strings attached, too many cooks in the kitchen will sour this whole industry. The 1979 loan guarantees to Chrysler worked because private enterprise was allowed to work–if a car “czar” had been appointed then, there would have been no Chrysler recovery under Iacocca.
I wouldn’t worry about what Bush does in the next month and a half. My worry is that, despite his ability to change whatever Bush does, Obama will make it even worse by demanding more oversight of the industry. What it needs is less government dicates, not more. His comments stating that the bIg Three have made “Some” progress in wuality and fuel-efficiency frightens me in its lack of appreciation for the TREMENDOUS efforts made in quality and solid efforts in fuel economy in recent years.
Let’s dismiss liberal-conservative, Republican-democrat for a minute and ask what will make this industry viable long term: for one thing, getting rid of CAFE (which artificially drove up the demand for SUV’s to begin with and would now make it more expensive for the Big Three to do business, and again, artifically distort the market); second, lowering corporate taxes; third, allowing the big three to manufacture their European models here with no changes (emissions or safety); fourth, a health tax incentive program to encourage building cars in the US, and encourage consumers to buy fuel-efficient models. Carrot, carrot, carrot, not the federal stick.
Congress and the executive agencies can not even manage social security–they have no business trying to run car companies.
As an aside, allowing the States to set different emission and fuel econ standards is a nightmare–might as wll let them impose import tariffs on cars crossing state lines. “States rights” is one thing (and something we need to rememeber as a safeguard against the central government growing too powerful), but a patchwork of 50 standards is not what the Big Three–nor our nation–need right now.
What I should have said was a “healthy” tax incentive program, not “health.” Typing too fast.
I’d argue that getting rid of CAFE is not the answer. I think it’s still needed though I’d rather see a market-based system (that is, gas tax). Instead, they should eliminate all delineations between vehicles… still making exemptions for commercial vehicles — that is, vehicles that cannot be licensed to an individual without additional training / licensure.
Regulation isn’t what got us into this mess; I realize the Detroit leaders like to say it is, but I can’t agree. All companies have to follow the same regulations. I believe there are numerous issues, including fair trade issues, health insurance, etc., etc. It all comes together; no one thing was to blame. For that matter, each company has its own problems. GM has gigantism and had a corrupt internal culture; Ford (I won’t get started); and Chrysler had Daimler. Without Daimler, I have NO doubt that Chrysler would be taking full advantage of Ford and GM’s travails today.
PS> I agree most of Congress doesn’t care much about this. I think it’s to the credit of Dodd and his gang that they chose to move with whatever speed they could manage. Pelosi, for all her gabbing, ended up being reasonable when it came time for legislation. The oversight demands are being made by the White House now — including the power to force companies into bankruptcy, which is rather irresponsible of Democrats to allow, given that we know what the White House does with blank checks, and we know the party line on the Three — namely, they SHOULD go bankrupt.
It’s all so short-sighted and frustrating. They’re playing ideology games with our country’s economic life and the people are standing around making dinosaur comments and slamming the UAW and arrogant executives.
Now they’re playing idiotic games with banks again. Reminds me of those insane health savings plans – no, we can’t give you a simple tax deduction, we need to route everything through insurance companies so we can maximize the administrative costs and take your money away if you don’t plan perfectly. Now we’re back to “we’ll take the risk and banks will get the profits.”
At this point, I think the Democrats’ wisest move would just be to give up. Forget about it. GM and Chrysler will be forced into bankruptcy one way or the other if we take this plan. At least it wouldn’t cost the taxpayers any more than the $250 billion or so we’ll pay for unemployment and extra cops and repairing the damage from the riots.
Or simply wait until they have both houses and the presidency and they can come up with a better deal. But, in my cynicism, I know that won’t be any better. Again, the solution / problem isn’t Democrat/ Repub. Because there are “free-trade” Dems, and there is the hard left that wants the Big Three slapped down for different reasons than the “free-trade” repubs.
You are right— a game is being played with our ecomonic health. Truman, Ike, JFK, would not have played it this way. But they were statesmen, not merely pols.
I hope people will stop looking to the government for solutions. Our Founders had a healthy skepticism of it–people (like Reid and Dodd and Bush and Corker), if given too much power, act to their own aggrandizement, rather than benefitting their nation. We have given way too much power to government under the BUsh term and it scares the heck out of me. Government has grown too powerful–when it can write checks totalling $7.4 trillion and not say who gets the money, and decide which industries will fail and which will be propped up, our liberty is in grave danger.
It is the worker, the guy that bolts the wheel on the car, the engineer, the lady that deisgns an engine, the salesperson, the guy that works at your local dealer, that makes our economy work. I am tired of seeing those folks trampled on. For no fault of their own, the working and professional people in the US are getting the shaft–largely because of the decisions of an out of touch government, and a few bad business leaders.
Corporations market and build things, the things we need and want–to my knowledge Congress has never invented or created anything I want to buy or can’t live without. Congress should stick to what we need–defense, making sure food isn’t adulterated, making sure the water isn’t poisoned, making sure the mail gets delivered. Other than that, stop trying to control the economy and stay out of the way.