Finally, the bail-out debate.
It has been said that: “ Nations fall when the population realizes it can vote it self money from the treasury.” This has been proven time and time again (Rome, the various Soviet states). It is being proven again with all of the social programs and pork that exist in the country, at every level (Social Security, California's perpetual budget woes). The first $700 billion dollars as created a clamor for companies, states, and cities to have the fed solve there own fiscal mis-management or just yelling 'gimmie' to anyone who'll listen. If the auto industry gets a bail out, when will the hand outs end? I am fundamentally opposed to a bail out as a solution for any situation. That being said, I do thing that things must happen to prevent a complete collapse of the American auto industry.
Will the auto makers go into bankruptcy? Will they survive? Who knows? What is fairly certain is that even if one fails the number of jobs that will be affected it almost inconceivable. The ripple of even one going down, will hurt suppliers, vendors, the towns that house plants, and so on down to the 7-11 that sells coffee and a paper to the workers in that plant.
"The industry is so interdependent," Mulally said. "We're nearly 10 percent of the US GDP, and if one of the automobile manufacturers gets into serious trouble, it has just tremendous implications for the entire industry."
Will the country survive the loss of so many jobs? Yes. It will hurt for sure, but we'll weather that storm. It will almost certainly cause recession. The ailing auto industry as effected a recession in Michigan that has lasted for some time. As an aside: we know what won't help the economy if the worst happens. Just look!
Will the UAW? Possibly not, but that won't necessarily be a bad thing considering the state of unions in this country today. Even if the UAW survives; it will be severely weakened and hopefully will become a much more reasonable organization to deal with. Unions (the leadership, not necessarily the rank and file) have become a political entity and a bully with a focus on power and not a symbiotic relationship with the companies they work in. Just ask Colt. Unions do do a lot of good but it appears to most people looking in that that the worker is only a secondary concern.
As of Wednesday night the decision on what to be done has been delayed until December 2nd. "Until they show us the plan, we cannot show them the money," said Speaker Nancy Pelosi, C-Calif. I think there are a few reasons for the delay. Ostensibly, the (Democratic) leadership in Congress do not believe they have bill that will pass both houses with adequate Republican support or would be acceptable to President Bush. I think there is a certain amount of grand standing – making the auto executives grovel for a couple more weeks. I know that the leadership would love to delay a vote until after the inauguration so that Obama can have a big feather in his cap early in his first term. I'm pretty sure that many in Congress have no idea what to do. Certainly, many (true) conservatives oppose the plan on principle, and that more than a few other congress-critters are reading the tea leaves before making a last minute decision. I am also quite certain that the proposal from Wagner and the other included a major reduction in their retirement and health care liabilities.
The following quote from the AP article is one of the things that frightens me the most:
'Automakers ran into more resistance from House lawmakers, who chastised the executives for fighting tougher fuel-efficiency standards in the past and questioned their use of private jets while at the same time seeking government handouts.
"My fear is that you're going to take this money and continue the same stupid decisions you've made for 25 years," said Rep. Michael Capuano, D-Mass. '
It is no secret that Pelosi and many on the left have been pushing for higher efficiency standards and other environmentalist regulations for years; some bordering on the absurd. This, despite the lack of consumer wholesale interest or the technological feasibility. As I mentioned before, they are, in part, a cause of the current mess. I, also, distinctly remember a few of these monkeys telling us that high gas prices are a good thing. The mentality of these people places an environmental agenda above the vitality of any American industry. What is really shameful is the disregard of the big three's improvements in this area. GM will have the Volt in 2010, has had cylinder deactivation since the '07 MY, and hybrids before that. Ford and Chrysler have made similar improvements to economy and emissions, but this progress has been over looked in favor of an agenda that is pushed with out regard for American industry or the needs and wants of the consumer.
I feel it incumbent of me to point out: that nearly no congressman or senator has any experience running a business - especially one as large and complex as GM and Ford et el. They have not shown a willingness to contain government spending. The federal government is a case study in mismanagement and always will be. These are the people who gave the Secretary of the Treasury the sole authority to dispense the $700 billion they alloted the to sure up the credit market, without control or oversight, and are now bitching that what money was spent didn't go were they thought it would or should go. I think that Paulson's little 'bait and switch' caused a swing to the other extreme and may lead any bill to have a lot of stings and earmarks attached to it as a result.
It is important to note that Obama has said very little on the issue since he was elected. He and his team may view it as a hot potato and not be willing to put their mark on it in fear of failure.
I do not think that direct government intervention will help. Especially considering the current leadership of Congress. Forcing the trade issue, reducing regulation, lowering taxes, and removing any law that forces the hiring of only union workers will help in the long run. The only way that believe the fed can offer immediate and substitutive assistance is by removing the burden caused by retirees. If congress would take over the pensions and health care of retired workers and allow the auto makers to renegotiate with the unions it would almost immediately put them into, or close to, the black and allow them be more competitive.
I do not like this option either since it make a large number of people a ward of the state and advances socialism a little further, but I see it as the best of a whole mess of bad options.
