Auto Bailout

Republican Senators have voted against the auto bailout.

Who do you believe?

The people who say a failure in the auto industry will have such devastating effects on unemployment and ripple throughout the economy that its not in the country's best interests to allow it to happen?

Or the people who feel the Big 3 auto makers hasve created the situation they find themselves in today (mismanagement) and its up to the free market to allow them to suffer the consequences.

It appears that the first group have won. There will be a bailout. So, that question has been answered.

The question is now in the details.

Senato Republicans were involved in the negotiations to get a bailout passed in the Senate (it passed in the House), but it all feel through when the UAW would not agree to match the pay rates of American workers at Honda, Toyota, etc with a specific date. The Republican Senators wanted it done in 2009 or 2010, but the union wouldn't agree to any specific date. That is a characterization of the issue based on a CNN interview with Repbulican Senator Tom Coburn of Oklahoma.

Reading between the lines, I think the union wanted to give rate concessions but they wanted them to take effect slowly over time. That's the union's way.
It makes sense to me. The Republican Senators want the American auto makers to pay the same amount of money for present workers as the foreign automakers are paying - who aren't unionized. According to Tom Coburn, the American automakers have a 60% disadvantage in total absorbed payroll costs.
Which tells me the American workers are paid about 130% of the foreign auto workers. ?? I don't know if that's accurate, but whatever. The point I want to make is that its unreasonable to ask the workers to take a huge pay cut immediately (even 2010 is practically immediate) when they've had a contract and created a financial lifestyle based on that contract. Can you imagine if suddenly nearly half of that income is gone? If you think there's a foreclosure problem now, this would just add to it.
And why should the workers take that huge a paycut when the top management staff aren't going to take the same percentage cut? (I don't know the details but I suspect that's true - I could be wrong though).

The Republicans are trying to bust the unions.

Update: David Brooks on The NewsHour said the reason the parties couldn't come to an agreement is because there wasn't any reason to; they knew the government was going to get the money to the automakers so they had no reason to compromise to make a deal.

That comment disappoints me because it implies the parties were never negotiating in good faith. How can I ever expect to formulate reasonable opinions about anything when I can't trust what I read. I have to be an 'insider' to really know. Or be cynical? No wonder people don't want to stay informed. We don't know the real facts so why bother trying to care? I hope I can figure a way out of that way of thinking.

Here is Obama's statement on Friday December 12, 2008.

"I am disappointed that the Senate could not reach agreement on a short-term plan for the auto industry. I share the frustration of so many about the decades of mismanagement in this industry that has helped deliver the current crisis. Those bad practices cannot be rewarded or continued. But I also know that millions of American jobs rely directly or indirectly on a viable auto industry, and that the beginnings of reform are at hand. The revival of our economy as a whole should not be a partisan issue. So I commend those in Congress as well as the Administration who tried valiantly to forge a compromise. My hope is that the Administration and the Congress will still find a way to give the industry the temporary assistance it needs while demanding the long-term restructuring that is absolutely required."

Barack Obama is saying the right thing.

I still blame the Republican Senators because they're putting too much emphasis on busting the unions. Why don't they require as much concessions from the executives as they do the labor unions?

I guess I find it easier to be cynical about more right leaning people and ideas than left leaning people and ideas.

Sigh.