They Work Hard For The Money

So after driving to Capitol Hill this time, the heads of the Big 3 auto companies are due for their ritual stoning in front of Congress today, as they continue to prostate themselves and beg for funding to keep them alive. This time, they came prepared with plans for viability, and the promises are wide and deep. The three top executives will lower their salary to $1. They'll cut product lines and consolidate operations. They'll work on comprehensive health care reform, fair trade and even producing more fuel efficient cars, though many like Robert Reich are skeptical about that last offer, especially considering that gas has fallen back to under $2 a gallon and demand for bigger vehicles and SUVs may be creeping back up. I've read that getting the real junkers off the road and replacing them with even moderately efficient cars saves a lot more gas than getting everyone in an economical car into a Prius, so incentives for trading in those cars on the low end would actually be the best policy, and Ford has suggested that as well.

Even the UAW is offering concessions in return for the loans, which flies in the face of conservative propaganda about fat-cat unions destroying the industry (which makes sense, because, you know, without the industry, there is no union):

The United Auto Workers said Wednesday it is willing to change its contracts with U.S. automakers and accept delayed payments of billions of dollars to a union-run health care trust to do its part to help the struggling companies secure $34 billion in government loans.

United Auto Workers President Ron Gettelfinger said the union will suspend the jobs bank, in which laid-off workers are paid up to 95 percent of their salaries while not working, but he did not give specifics or a timetable of when the program will end.

"We're going to sit down and work out the mechanics," Gettelfinger said at a news conference after meeting with local union officials. "We're a little unclear on some of the issues."

In truth, the union contracts are not a problem, it's the fact that a country without high wages and benefits and free healthcare is competing with a bunch of countries that have all that, and hopefully we'll see people finally understand that fact. And by the way, this is on top of UAW restructuring from 2007 that lowered the wage structure under even nonunion auto plants in the South and transfered responsibility for the pension plan to the union as well. So this is not the first time the UAW has lent a hand.

GM and Chrysler are even considering a pre-arranged bankruptcy in exchange for bailout money, to reorganize the entire sector.

My point is that the auto companies are bending over backwards for an accommodation with Congress, all for a mere fraction of what Emperor Paulson has spent on the TARP program, without hardly any oversight at all. And yet the votes still aren't there, at the moment.

One day after the auto companies sent survival plans to Capitol Hill in an urgent plea for bailout billions from the fund, Sen. Harry Reid told The Associated Press in an interview, "I just don't think we have the votes to do that now."

I don't think the automakers are saints or anything. They're still spending a fortune on lobbying and campaign contributions. And Ford wants Congress to block California's plan to regulate tailpipe emissions, saying that there ought to be one national standard (and it should be California's - 16 states have signaled they would adopt it, and it is completely in government's interest and mandate to reduce greenhouse gas emissions). But this really shows how completely in bed Congress is with the financial industry. The CEO of Citigroup didn't have to agree to take $1 in salary. The head of Goldman Sachs didn't have to drive to Washington. Nobody on Wall Street had to agree to major reregulation as a precondition for a bailout.

An auto industry bailout is unpopular but so was the financial bailout. But that didn't stop lawmakers from taking seriously the threats of depression if the banks didn't get practically no-strings-attached money. Automakers are also playing up fears of serious economic collapse but lawmakers seem less concerned.

I think one difference here is that Congress actually understands how auto companies make money, while they can't fathom the financial industry's complex arrangements, and tend to just trust the "very serious people" that the banks need hundreds of billions to survive. Also, if Detroit contributes to campaigns, Wall Street bankrolls them. And there's the skillful PR campaign from the right that the carmakers' struggles are all the fault of the unions, when that doesn't come into play with the financial industry.

It's still pretty shameful that an industry that pushes paper back and forth and pretends to create wealth can ask for and receive hundreds of billions of dollars by snapping their fingers, while companies representing working people that make things for a living have to grovel and beg. A deindustrialized America is an America that will not function as a first-rate power in the future.

CAP has a good report on the way forward for the auto industry - they call it a "bridge loan to the 21st century."