New Wheels For GM And Chrysler - Or Not
A draft bill has been introduced by the House on an auto recovery plan, which everyone knows will only last until the next Administration (for some reason we had to go big with the financial bailout, though).
The legislation provides up to $14 billion in short-term bridge loans and includes accountability measures banning corporate excesses, including no golden parachutes, no bonuses for the 25 most highly paid employees at each company, and no corporate airplanes, with requirements to sell or end leases on any existing aircraft.
The money's coming from the already-appropriated funds to help automakers build energy-efficient vehicles, which sucks. The new "car czar," who has pretty expansive powers, will be selected by Bush, which sucks. The clause saying that the automakers have to drop their lawsuit against California to regulate greenhouse gas emissions has been stricken, which sucks.
This piece is good:
Each Automobile Manufacturer will analyze the potential use of excess production capacity to manufacture vehicles (including buses and rail cars) for sale to public transit agencies. Also includes provisions to guarantee leases of qualified public transit agencies.
The automakers have giant factories and transit companies, not to mention defense firms, have needs. I have no idea why they hadn't been paired up to this point.
In short, there's not a lot to like about this bill, other than it will at least get the carmakers to January. But that's not good enough for the neo-Hooverist Republicans:
Senate Republicans say they have grave concerns about the agreement between congressional Democrats and the Bush White House to speed billions of dollars to struggling U.S. automakers.
Sen. George V. Voinovich, a Republican from Ohio and a leading supporter of the emergency measure, says it doesn't have the necessary Republican votes to pass Congress.
Voinovich is relatively moderate, so if he's saying that, it's probably true.
I can't believe that we're going to force blue-collar companies into bankruptcy while lavishing hundreds of billions onto Wall Street. And based on convenient lies like "auto workers are richie riches!"
That figure — repeated on television and in newspapers as the average pay of a Big Three autoworker — has become a big symbol in the fight over what should happen to Detroit. To critics, it is a neat encapsulation of everything that’s wrong with bloated car companies and their entitled workers.
To the Big Three’s defenders, meanwhile, the number has become proof positive that autoworkers are being unfairly blamed for Detroit’s decline. “We’ve heard this garbage about 73 bucks an hour,” Senator Bob Casey, a Pennsylvania Democrat, said last week. “It’s a total lie. I think some people have perpetrated that deliberately, in a calculated way, to mislead the American people about what we’re doing here.”
So what is the reality behind the number? Detroit’s defenders are right that the number is basically wrong. Big Three workers aren’t making anything close to $73 an hour (which would translate to about $150,000 a year).
But the defenders are not right to suggest, as many have, that Detroit has solved its wage problem. General Motors, Ford and Chrysler workers make significantly more than their counterparts at Toyota, Honda and Nissan plants in this country. Last year’s concessions by the United Automobile Workers, which mostly apply to new workers, will not change that anytime soon.
Just to clarify, Detroit doesn't have a "wage problem." Leonhardt's own chart shows that legacy costs and pensions, which apparently aren't allowed anymore, make up for the entire "problem." Leonhardt does correctly argue that the real problem here is getting Americans to buy American cars. But look. GM and Ford have a business overseas. They have a business in the US. They were getting the message on fuel economy and were on the road to profitability when this disaster struck in the credit markets. That is not of their own doing. And yet, for a pittance of what we're throwing down AIG's gullet, we could get them through this tough time and come out on the other end with a sustainable auto industry. Scott Lemieux has this right.
First of all, is there any other context in which progressives would uncritically use the conserveratrian formulation "wage problem"? Am I supposed to be cheering for Wal-Mart to crush Costco because of the latter's "wage problem" while shopping at the former besides? When he watches American Dream, does Kevin cheer for the Hormel executives? Call me crazy, but I'm inclined to think of the generous wages and benefits accorded to their workers is a point in Detroit's favor. (And if you think that wages at non-union American factories will remain at their current level if Detroit stops competing for labor, I have some beautiful condos in Flint to sell you.)
The devil is in the details, of course. But Ford and GM, at least, are producing some quality cars that people in fact are buying, and it's by no means obvious that they can't be profitable companies after the Bush Depression turns around. Given the stakes involved for the American economy and American labor, government money that permits product line consolidation and development with longer time horizons certainly seems like a good gamble to me.
But not to the neo-Hooverists who are putting us on the road to a completely deindustrialized and unsustainable America.