November 11, 2008

"Too many jobs rely on the auto industry, and the psychological impact of losing one of the Big Three to bankruptcy..."

"... would have a real effect on economic confidence. But that doesn’t mean we should just peel off a chunk of the bailout to cover them," writes TNR's Clay Risen.
The $700 billion was intended for the financial sector; expanding beyond that risks a public backlash at a time when Washington needs broad support for more spending. And what’s to stop other industries from begging for a piece of the bailout? Moreover, any auto-industry bailout needs to be tailored as a reconstruction of the industry: Detroit has too much capacity, it has huge labor legacy costs, and it is still too oriented toward producing gas-guzzling super-cars. There is an opportunity here for the U.S. auto industry to refashion itself as a producer of highly fuel-efficient cars and trucks, but to do so while struggling with its enormous financial onus requires government assistance.

Obama should call for a separate bailout package for the auto industry. If the case is so strong, then it should be able to stand up to Congressional scrutiny. Fortunately, in this instance “deliberate” and “haste” are not equal imperatives: Unlike the banks circa late September, Detroit won’t implode tomorrow. We now have the time to slow down and have a debate--not just about keeping Detroit afloat, but making sure it doesn’t need another bailout down the road.
Yes, can we get some sober deliberation out of Congress for once?

76 comments:

MadisonMan said...

Well, Chrysler was bailed out in -- what -- 1979? That worked out pretty well for taxpayers, didn't it? Didn't the US Govt get back in tax money and productivity all that it gave to Chrysler back then?

But I don't think the auto makers learned anything from that. Their business model is still mired in the 1970s and the mindset is that cheap gas will forever flow.

The problem with letting GM go bankrupt? Who do you think will swoop in and buy up the assets? And then where will automaking profits go?

AllenS said...

How times have changed. I remember when every time Bush spent money, it was called wasteful by the same people who now want him to spend billions upon billions.

Hoosier Daddy said...

But that doesn’t mean we should just peel off a chunk of the bailout to cover them,"

Why are we bailing out any of them? Speaking as a conservative, bailing out banks, insurance companies and now the auto industry is simply welfare and nothing more. If you make poor business decisions then you should fail. Is Honda or Toyota getting a bailout? Oh that's right, they don't need one.

In the last couple months we have spent more money bailing out failed businesses than we have in Iraq in five years.

Maguro said...

"...the psychological impact of losing one of the Big Three to bankruptcy would have a real effect on economic confidence.

But aren't bankruptcy laws designed for precisely this situation? Insolvent companies like GM need to reorganize and Chapter 11 gives them the some protection from creditors while they do so.

Throwing a bunch of money at Detroit to build cars no one wants to buy seems like the worst - and most likely - option.

Original Mike said...

But aren't bankruptcy laws designed for precisely this situation? Insolvent companies like GM need to reorganize and Chapter 11 gives them the some protection from creditors while they do so.

Exactly. The reason we won't get sober deliberation out of Congress (besides the fact that they are incapable of it in any case) is that this isn't about bailing out GM, it's about bailing out the UAW.

Hunter McDaniel said...

What scares me even more than the money is the "opportunity" that Clay Risen sees - to start telling Detroit exactly what kind of vehicles they can produce.

ricpic said...

The too big to fail meme* has got to go.


*I don't like the overuse of meme either. Couldn't think of another word. Got one?

Darcy said...

I'm so torn on this. I have family heavily invested in Ford and GM.

But I have to say that I agree with Maguro...throwing money at it isn't a solution to their problems.
And I'm pretty sure the Democrats would have no interest in delving into how much the unions have contributed to this situation.

As a Michigander, it is very scary.

Quayle said...

The plant assets are valuable and will certainly be reused even after a full collapse of GM or Chrysler.

The union contracts and pensions are what is killing the US automakers.

Any bailout that doesn't relieve the US automakers of the union retirement liabilities will fail.

Which means that a democrat crafted bailout will fail, because they won't touch the unions.

Sofa King said...

Exactly. The reason we won't get sober deliberation out of Congress (besides the fact that they are incapable of it in any case) is that this isn't about bailing out GM, it's about bailing out the UAW.

Yes! That is exactly what is going on. Without its legacy labor costs, GM would be profitable. In truth, bankruptcy is exactly what it needs to regain solvency and flexibility.

The political problem is not that too many jobs rely on the auto industry, it's that too many retirees rely on the auto industry.

SGT Ted said...

Non-Union Auto plants in the US are profitable. That's the true bottom line.

Like most Unions, UAW doesn't really care about its workers. They care about power and money and insider influence. Why else would they support those who view business and successful people as primarily a cash cow to fund socialist programs that don't work?

Simon said...

I thought that the left - to its credit - rejected corporate welfare. Lookit: companies that can't or won't make products that the market wants at the price the market will pay, fail. If you start bailing them out, you distort the incentive structure and the companies will have no reason to change the behaviors that brought them to this point in the first place, with the upshot that in a period of time, they'll be back with hat in hand again.

Rich B said...

As far as I can tell, there are about 1 million employed in the auto industry. According to what I can find, about 230K are employed at GM, Chrysler and Ford - I think that is about 0.2% of total US employment. If all three failed, production at other auto makers could easily make up the slack and workers would be added at other plants.

This is a union bailout, simply.

Dust Bunny Queen said...

The union contracts and pensions are what is killing the US automakers.

BINGO!! The greedy grasping of the Unions, excessive and inefficient costs of Defined Benefit Pension plans and Cadillac (pun intended) health care plans are bankrupting not only the auto industry, airline industries but government agencies across the country.

Why do you think Vallejo declared bankrupcy? Pension and benefit package costs negotiated with unions by extortion.

The solution for GM is to go into bankrupcy, fire all the union workers and then either rehire them at sane and sensible salaries/benefit packages. If they don't want to come back at reduced wages.....there are probably 3 people lined up behind them that would like those jobs, which aren't rocket science since most of the opertation is done by robots.

Simon said...

"Yes, can we get some sober deliberation out of Congress for once?"

I'm sure that's exactly what we can expect to see from a Congress with a hungry Democratic majority liberated from any shackles on their action by the election of a liberal President.

And more generally, I submit that we're not going to see any sober deliberation in Congress until we lose our obsession with seeing Congress. Removing the cameras won't fix what's wrong with Congress, but it's a necessary first step.

rhhardin said...

Jobs lost means union jobs lost.

Auto parts suppliers will sell the same parts to American Toyota and Honda factories instead. The same cars are built by American workers, just efficiently.

Bissage said...

It’s the squeaky wheel that gets the grease.

Simon said...

Quayle said...
"The union contracts and pensions are what is killing the US automakers. ¶ Any bailout that doesn't relieve the US automakers of the union retirement liabilities will fail. ¶ Which means that a democrat crafted bailout will fail, because they won't touch the unions."

So it will. The Democrats think that the unions are part of the solution - hence their continued dedication to passing card check, which they will likely bundle in with the Detroit bailout to make the "bailout of Detroit" seem "more palatable to the unions" (yes, they'll pretend that that's necessary).

Arturius said...

What scares me even more than the money is the "opportunity" that Clay Risen sees - to start telling Detroit exactly what kind of vehicles they can produce.

Well in fairness, if the Federal government is going to provide them with billions, why shouldn’t they impose conditions? The banks were bailed out yet credit is still tight because the banks are sitting on the cash or making acquisitions rather than lending the money. GM is failing because as Madison Man correctly stated, it is still largely using the 1970’s playbook. Naturally there are other factors such as the onerous benefit packages imposed by the unions dragging down competiveness but suffice it to say, GM, like many other US companies quarterly driven as opposed to say, what is the market expected to be five or ten years from now.

I’m firmly opposed to any further bailouts. If a company cannot get its books in order through a Chapter 11 reorganization, then it doesn’t deserve to survive.

rcocean said...
This comment has been removed by the author.
rcocean said...

It makes sense to take 40 billion from the Financial Bailout and help the Auto Industry.

That industry employees large numbers of Americans and is crucial for national defense, unlike say Goldman Sachs or AIG. BTW, AIG will receive $150 billion.

Arturius said...

Just a further point that I think is consistently being overlooked and that is, how long can we expect China, the UAE and others to continue to finance these expenditures? Bush doubled the debt in eight years and we've already committed nearly another trillion between the bank and AIG bailout and that's just in the last couple months.

It's going to be a very rude awakening when we have a bond auction and no one shows up.

rhhardin said...

AIG doesn't get the money. It's preventing a chain of defaults throughout the financial system.

As to doing nothing, that's what middlemen do and have always done. They find and exploit opportunity.

The classic example is the chaplain in a German POW camp who, when Red Cross packages arrived, would barter the broken-out contents, trading with everybody who preferred dried fruit to candy and so forth, going through the whole camp; and when he was done, he owned the equivalent of two Red Cross packages.

Yet everybody else was better off too. Every trade made both sides better off, as to having what they preferred.

The middleman arranged that all.

The paradox that is never understood by the yahoos is that the chaplain wound up with more, yet everybody else wound up with more too.

Yet all that happened was moving stuff around, middleman work.

Sofa King said...

GM is failing because as Madison Man correctly stated, it is still largely using the 1970’s playbook.

That's NOT why GM is failing.

Arturius said...

That's NOT why GM is failing.

I said in large part, not solely.

rdkraus said...

While unions are a big part of the problem, with their legacy salaries, bene's, retirement, etc., let's not let mgmt and prof's off the hook so easily.

Years of bad decisions on what cars to make when were made by management. And bad engineering for years (especially compared to the Japanese and German cars) lost American consumers. Once you've bought a lemon, you don't go back to that car company.

The "bad quailty" stench on American car companies' engineering and assembly continues. Even as they improve, the foreign cars seem better.

If the Democrats are at all involved with the "fix" (ie. it is other than Chap 11), it will not get done (or will and then fail later) because they are not going to do anything to hurt the unions. Not unless they all want to look for another job next election.

An Edjamikated Redneck said...

Why is GM failing? Look at these stats from 2005:
http://www.npr.org/news/specials/gmvstoyota/
(Sorry about the lack of a link; i can't ever get them to work.)

The high costs are are basically because of the union contracts.

Its anecdotal evidence, but too prevalent to ignore; I have talked to many of these union workers who are being paid for an 80 hour week, yet would be able to make their production goals in 30 hours. Bear in mind those second 80 hours is paid at time and a half and double time.
I talked to a guy with less than a year in at a Ford plant who was making 100k a year in pay and overtime, plus benefits for a menial job, not sweeping floors, but not a highly skilled position either.
Look at the Delphi Electronics plant in Michigan a few years ago; the union workers were asked to asked an $8 an hour pay cut to save their jobs. They refused, and the plant closed. So now, instead of making $32 (instead of their original $40) they are now making unemployment.
And Obama promises us more union jobs.
I can’t wait to see Obama’s poll numbers in 2010. Even with the media in his back pocket, the truth will come out.

rcocean said...

Yes, of course lets get rid of all those "lazy union workers" in the middle of a recession. Brilliant.

Maybe, we can replace those "stupid autoworkers" with some hard working school teachers or subprime loan officers. Is the head of WaMu available?

And AIG *is* getting $150 billion and the USA is propping them up as a going concern. And people need to be consistent. Supporting a $700 billion bailout and then opposing a small bailout of the auto industry is bizarre. Especially considering the impact on the economy and the country.

Sofa King said...

rcocean -

First, not everybody who opposes the UAW bailouts supports the financial bailouts.

Second, I think you can make a reasonable distinction between financial institutions whose failure would mean total liquidation and a major economic collapse, and industrial concerns whose failure would mean a reorganization into a more profitable enterprise. GM filing Chapter 11 doesn't mean GM stops manufacturing automobiles.

An Edjamikated Redneck said...

Bob filing a Chapter 11 would mean GM COULD drop thier expensive and productivity killing union contracts.

Less face it, the only difference between GM and TOyota (in the USA) is their contracts with the workers. Toyota doesn't have one (for the most part) and GMs sucks.

An Edjamikated Redneck said...

Sorry; that should start as 'BUT'

Arturius said...

Yes, of course lets get rid of all those "lazy union workers" in the middle of a recession. Brilliant.

I don't think they're lazy. Uncompetitive yes but not lazy.

Paul Snively said...

rcocean: It makes sense to take 40 billion from the Financial Bailout and help the Auto Industry.

That industry employees large numbers of Americans and is crucial for national defense, unlike say Goldman Sachs or AIG. BTW, AIG will receive $150 billion.


Where on earth does this level of economic ignorance come from? Seriously. How does one get to the point where one's understanding of money and finance is this irretrievably broken?

Dust Bunny Queen said...

Where on earth does this level of economic ignorance come from? Seriously. How does one get to the point where one's understanding of money and finance is this irretrievably broken?

Public education system. Also unionized.

Simon said...

Arturius said...
"[I]n fairness, if the Federal government is going to provide them with billions, why shouldn’t they impose conditions?"

That's exactly the chain of reasoning that my co-blogger Pat warned against here. If federal subsidies provide the feds with the right to impose conditions, and they do, we should conclude that the subsidies are problematic, not that conditions should be imposed.

And herein lies the problem, because with an unlimited taxing and spending power, the feds have the tools to control absolutely everything; they can tax you 100% of your income and give it back to you as subsidies with conditions attached. Regular readers here and at SF will know - to the point of weariness - that I'm an advocate for robust judicial policing of the structural constitution, but judges can only do that kind of patrolling where there are judicially-cognizable standards for measuring an enactment. Defining such a test or standard is a difficult and parlous business. Do we really want to breed the unconstitutional conditions doctrine with National League of Cities? I am all for finding a way, but not at the cost of transferring policymaking to the third branch.

MadisonMan said...

I'll ask again: If you want GM to fail -- or are just resigned to seeing it happen as part of the marketplace -- are you content with seeing all future profits for automaking flow overseas?

I'd like the US to retain some (ideally all) ownership of these plants. When plant ownership becomes far removed from the plant -- in geographic space -- it becomes far too easy for a Corporation to close a plant as part of a large global design, irrespective of whether that plant is or is not profitable. This has already happened in WI in the paper industry, in which profitable plants have been shuttered by Corporations far from WI. A locally-owned Corporation would never do that.

Sofa King said...

I'll ask again: If you want GM to fail -- or are just resigned to seeing it happen as part of the marketplace -- are you content with seeing all future profits for automaking flow overseas?

You're putting up a big stinky red herring. There is absolutely no reason to think that GM would not emerge from bankruptcy a far stronger and more profitable company.

Are you content to keep sinking future losses domestically?

Rich B said...

Contrary to Risen's unsupported claim, there are not huge numbers of jobs at GM, Ford and Chrysler.

Profits? What profits? Should we count the bailout against future profits?

Dust Bunny Queen said...

I'd like the US to retain some (ideally all) ownership of these plants. When plant ownership becomes far removed from the plant -- in geographic space -- it becomes far too easy for a Corporation to close a plant as part of a large global design, irrespective of whether that plant is or is not profitable. This has already happened in WI in the paper industry, in which profitable plants have been shuttered by Corporations far from WI. A locally-owned Corporation would never do that.

While I agree that industry should be encouraged to stay in the country, how are you going to force this? Socialize? Have the government get into the auto industry by seizing the plants? Yea... that'll work. /sarcasm/ The government can't operate anything efficiently.

As the the WI paper industry, I bet you will find the reason that they are no longer there is the over reaching Federal, State, Local taxes rules and regulations. Not to mention the hassles of the industry perpetrated by the enviro-nazi movement.

The best thing that could happen to the auto industry is to dismantle the unions. Keep the workers at 'reasonable' pay and benefit packages. The workers at Delphi committed job suicide by trying to cling to the outmoded 50's union model. Too bad for them (stupid shits). They would rather have no job than one paying slightly less. The union refused to negotiate and people lost their jobs. I imagine that many of the members would have taken the deal. Oh well, when you let someone else play your poker hand and they overbid the pot and lose, you are a fool.

Personally, I would rather see GM go out business or move overseas than to continue to feed the union beast.

boldface said...

GM and Ford (maybe not Chrysler) can survive and do fine only if they are able to clean house top to bottom and start over. That means Chapter 11, and every single constituency has to feel the pain: management (clean 'em out and hire new), employees (reject the insane UAW contracts and put in new competitive ones), retirees (they now get free health care for life, or close to it - pretty nice deal, eh? except that it's unaffordable), suppliers (they'll have to take haircuts on the stuff they sold), shareholders (bankruptcy will wipe them out, but I'm not really crying for the Ford family), etc. Yes, there will be pain, and people will clamor about the "unfairness" of it all, but one thing I have found about "fairness" arguments - usually it means "hurt the other guy, not me."

Propping these companies up with government funds is a recipe for further propping up; it will defer the day when they have to actually come to grips with their problems; and we'll continue to see subpar products and subpar financial performance as far as the eye can see.

Arturius said...

That's exactly the chain of reasoning that my co-blogger Pat warned against here. If federal subsidies provide the feds with the right to impose conditions, and they do, we should conclude that the subsidies are problematic, not that conditions should be imposed.

Simon, just for the record, I don't necessarily disagree on any particular point, but was rather pointing out the likely outcome of providing these bailouts. It is folly to think that accepting a few billion from Uncle Sam is as benign a transaction as borrowing it from Tony Soprano.

My point was meant to be neutral in that borrowing money to bail out a failing business should come with conditions to change the behavior that got them there in the first place otherwise we're simply propping up a failure.

MadisonMan said...

There is absolutely no reason to think that GM would not emerge from bankruptcy a far stronger and more profitable company.

Someone is going to whisper in a Congressman's ear: Can you be sure that the company that emerges is a stronger American company. Or will its profits be going overseas?

I have to say I enjoyed Bissage's 9:14 AM comment.

holdfast said...

I am not worried about profits going overseas - I can always buy stock in Toyota and keep those profits here.

An Edjamikated Redneck said...

I bet you will find the reason that they are no longer there is the over reaching Federal, State, Local taxes rules and regulations. Not to mention the hassles of the industry perpetrated by the enviro-nazi movement.

Which is a good point; we don't need teh governemnt to bail out the automakers financially; how about just dumping 3/4s of the useless regulation, starting with the CAFE standard?

GM and Ford both make most of their money from the big vehicles, because like it or not friends, that is what the buying public wants. It is the CAFE standards and their accompanying gas guzzler tax that has forced us into the tin cans, not public choice.

Best of all, this solution does not require any extra- governmental activity; regulation is well within the government's realm.

rcocean said...

Ye, the amazing lack of economic knowledge on this board *is* amazing.

There is no point in discussing economic policy with people so ignorant they'll justify denying aid to GM and Ford while supporting hundreds of billions in Crony Capitalist bailouts to AIG and Goldman Sachs.

Arturius said...

If you want GM to fail -- or are just resigned to seeing it happen as part of the marketplace -- are you content with seeing all future profits for automaking flow overseas?

The key phrase that jumped out for me in that statement was seeing it happen as part of the marketplace . I'll ask you: Do you support a free market economy or one subject to heavy state control? If it's the former you let the chips fall where they may. If it's the latter then support Federal takeover of 51% of GM stock and let DC call the shots.

Bailing out a company with no conditions set on modifying existing business practices is the worst of both worlds.

Arturius said...

There is no point in discussing economic policy with people so ignorant they'll justify denying aid to GM and Ford while supporting hundreds of billions in Crony Capitalist bailouts to AIG and Goldman Sachs.

I think you will find most people are opposed to bailouts period.

Perhaps a better question is after GM, who is next? At what point do you turn off the faucet which, keep in mind is only kept flowing by those who continue to purchase US Treasuries.

MadisonMan said...

Do you support a free market economy or one subject to heavy state control?

Neither.

Maguro said...

Can you be sure that the company that emerges is a stronger American company. Or will its profits be going overseas?

If the company that emerges is stronger, that is a good result regardless of where the corporate HQ is located. Toyota's US profits are reinvested in the American economy, not hoarded away in some Tokyo bank vault.

Original George said...

The major automakers — G.M., Ford and Chrysler — are each using up their cash at unsustainable rates. The Center for Automotive Research, which is based in Michigan and supported by the industry, released on Election Day an economic analysis of the impact of one or all of them failing. If the Big Three were to collapse, it said, that would cost at least three million jobs, counting autoworkers, suppliers and other businesses dependent on the companies, down to the hot-dog vendors and bartenders next door to their plants.

The center also concluded that the cost to local, state and federal governments would reach to as much as $156.4 billion over three years in lost taxes and higher outlays for things like unemployment and health care assistance. Separately, some economists say the demise of even one of the automakers could tip the current recession toward a depression.

For Mr. Bush, however, the hard-line approach is his only leverage to make the trade agreements part of his legacy. The Colombia deal, especially, is strongly opposed by organized labor groups, which are a major force in the Democratic Party, and by human-rights activists.

From today's front page NY Times story..

It looks like we are going to get a train wreck that will defy description. Hello, 6,000 Dow. Or lower.

MadisonMan said...

Personally, I would rather see GM go out business or move overseas than to continue to feed the union beast.

Yes, moving overseas would be great because Corporate Officers in China would certainly have the best interests of American Workers at heart in their decision making.

Waving a magic wand and getting rid of the Union Beast will not solve America's problems.

Arturius said...

Do you support a free market economy or one subject to heavy state control?

Neither.


Well when you can suggest an alternative economic system that doesn't involve massive taxpayer bailouts of corporate failures I'm all ears.

Arturius said...

Yes, moving overseas would be great because Corporate Officers in China would certainly have the best interests of American Workers at heart in their decision making.

That is more than a bit disengenuous considering the amount of outsourcing American corporations have done over the years.

Waving a magic wand and getting rid of the Union Beast will not solve America's problems.

Perhaps not but it is certainly a step in the right direction for GM. See Honda, Toyota.

MadisonMan said...

The key adjective, arturius, being heavy.

Why is your world so black and white?

Sofa King said...

MM: GM is under substantive-but-not-heavy regulation under the status quo. It evidently is not working all that well.

Or were you proposing "total" as an alternative to "heavy?"

Paul Snively said...

rcocean: There is no point in discussing economic policy with people so ignorant they'll justify denying aid to GM and Ford while supporting hundreds of billions in Crony Capitalist bailouts to AIG and Goldman Sachs.

I'd be keenly interested in hearing who here supports the AIG and Goldman Sachs bailouts without caveats.

My claim of your economic ignorance, however, stemmed from your obvious lack of comprehension of the impact on the economy of the failure of either AIG or Goldman Sachs relative to the failure of, e.g. GM. Neither is something to be wished for, but if you are going to do either, the simple fact of the matter is that AIG and Goldman Sachs affect far, far more of the economy than the big three auto makers combined.

Whether that last observation is a good thing or not is left as an exercise for the reader.

Arturius said...

The key adjective, arturius, being heavy.

Why is your world so black and white?


Well as I pointed out earlier, I don't think you can ask the Federal government for tens of billions to bail out a failed business model and expect non-intervention.

I also don't think you can provide tens of billions to a company and expect the taxpayers would demand a modification of that failed business model.

Otherwise there is no difference between GM's CEO and your stereotypical welfare queen.

Dust Bunny Queen said...

For those of you who don't understand the ramifications of this never ending bail out of companies and the distortion of the market.

http://www.cnbc.com/id/27641538

Think it can't happen? Think again.

Arturius said...

Think it can't happen? Think again.

Honestly, I'm surprised we've made it this far.

"In the United States there is already a funding crisis, and they will have to sell a lot more bonds next year to fund the bailout packages that have already been signed off," Hennecke told CNBC.

I said earlier in the thread, it will be quite the shock when Treasury holds an auction and no one shows up.

In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world.

Quite frankly I fail to see how this is a bad thing. I don't have any particular inclination for further foreign adventures, foreign aid packages or domestic aid packages for that matter.

Dust Bunny Queen said...

I said earlier in the thread, it will be quite the shock when Treasury holds an auction and no one shows up.

Quite so. It is already happening with highly rated corporate bond offerings. Recently CAT floated a bond offering and no one (or not enough) people would buy at the rate and terms offered. They withdrew the bond issue. Same thing can happen with US Treasuries. The people who would be willing to take a chance on buying bonds will demand a higher interest rate in return for the default risk.

In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world.

I don't have a problem with this either, except for the 100% troop recall and abandonment of bases from all around the world. The security danger would be high and might cost us more in the long run. In addition, once we abandon a base that is strategically necessary, we may never be able to regain that. Entitlement programs need to be frozen, no more COLA or automatic increases of any size. No more subsidizing of sub prime borrowers. No more subsidizing of failing industries (GM) The fraud in government programs, which is huge, also needs to be weeded out. No free lunch. No subsidised expensive health care. Government offices that are redundant and unproductive need to be eliminated. Government agencies that are set up for the sole purpose of impeding development (EPA FDA) need to be eliminated or at the least scaled back.

Sorry people. Having a government or union job for life is not a "right".

Original George said...

Ah, Dust Bunny, wouldn't it be the joke of all jokes if our new president started to implement the policies you advocate. That would be rich.

All this global euphoria over Obama is bound to lead to some sort of hard, painful political/economic landing.

John Stodder said...

The bailout of the big three is about protecting the lavish pensions negotiated by the UAW. If the Democrats want taxpayers with dwindling 401-k's to fund autoworkers' nice retirements, I think they'll wake up to find their mandate will have disappeared.

How the government reacts to the gross underfunding of defined-benefit pension promises given to unionized private and public sector workers is going to be an explosive issue in the next four years. If Obama really wants to avoid this shit-storm, he better pray for a Dow Jones comeback, big time.

s1c said...

Yes, can we get some sober deliberation out of Congress for once?

Did I miss the call back of Pelosi and Reid for a special session? They want Bush to just do it so that they have cover. If it works they'll claim credit if it fails "well we told you the economy has been broken" (of course that has been the message for the last 7 years.

MadisonMan said...

How the government reacts to the gross underfunding of defined-benefit pension promises given to unionized private and public sector workers is going to be an explosive issue in the next four years.

That really is the next big shoe to drop. Well, one of them. Sorry for the mixed metaphor.

Johng said...

I would rather see auto profits go overseas than to have billions of auto losses handed off to the taxpayers out of fear that future profits might go overseas.

Arturius said...

I don't have a problem with this either, except for the 100% troop recall and abandonment of bases from all around the world. The security danger would be high and might cost us more in the long run.

I’d support maybe a 95% recall. Save Britain and perhaps France, most of Europe has foregone maintaining an effective military force short of being capable maintaining internal order. Why we keep 100,000 troops in Western Europe is beyond me. The fact of the matter is if Putin is determined to embark on a Russian reconquista, then our allies need to man up on the swords rather than the plowshares. Frankly, I’d just as soon see the US withdraw from NATO entirely as I have no desire to see US troops fighting for Lativia, Georgia or France for that matter, particularly as those nations don’t see fit to support a military that would probably find their match in the NYPD.

I also think South Korea and Japan can do without a significant US military presence which seems to draw more ire than gratitude from the people we’re supposedly there to protect. The ROK army is more than capable of defending the South and if not, then perhaps it’s readiness should be remedied by the ROK government rather than relying on US forces to act as a speed bump if Kim Jong Ill decides it’s time to raid the South Korean grocery stores. Same goes for Japan. If Taiwan doesn’t need 20,000 US troops to protect it, neither does Japan.

As for the Middle East, I don’t think we can get out of there fast enough for reasons that could fill tomes. Maybe a chaotic Middle East would inspire a resurgent Turkey who could set things to right again over there.

Yes I am somewhat of an isolationist although the difference between 1941 and 2008 is that we still maintain the capability of reaching out and touching someone from a silo in Nebraska or a Seawolf in the Pacific or Atlantic. We have a lot of fabulous toys that can act as a better deterrent than 50,000 troops in a country that doesn’t want us there. It only takes the political will to ensure that those that wish us harm know we’re serious.

Bart DePalma said...
This comment has been removed by the author.
Bart DePalma said...

This is a backdoor method to get the taxpayers to subsidize the cadillac pension and medical plans for retired auto workers whose costs are driving the auto makers into bankruptcy.

There is a perfect precedent for handling this problem that does not involve a single dollar from the tax payers - the airline industry bankruptcies and restructuring.

As the airline industries before them, the auto companies need to tell their unions to renegotiate the labor agreements to something affordable or enter bankruptcy and have the courts order the termination of these agreements as part of the restructuring.

Of course, the unions and their Dem auxiliaries have no desire to curb their appetites and are instead about to loot our treasury to the tune of $50 billion. What makes this worse is that the Dems may be able to do this without a vote by using the $700 billion bank rescue slush fund to pay off the unions.

Yet more change tax payers can believe in.

LarsPorsena said...

"Did I miss the call back of Pelosi and Reid for a special session? They want Bush to just do it so that they have cover. If it works they'll claim credit if it fails "well we told you the economy has been broken" (of course that has been the message for the last 7 years."

Yep!! Even with an overwhelming majority they want "bipartisan" cover.
Just like how the Republicans 'stopped' the bailout.
Pelosi et al... bunch of invertebrates.

Freeman Hunt said...

There is no point in discussing economic policy with people so ignorant they'll justify denying aid to GM and Ford while supporting hundreds of billions in Crony Capitalist bailouts to AIG and Goldman Sachs.

I was entirely against the financial bailouts, though I don't concede that everyone who did support them and now does not support the automaker bailout is ignorant.

No, it is not acceptable to take money from me in the form of taxes to prop up some union worker's contract. I didn't make that contract; it was a private contract, and I shouldn't be put on the hook for it.

Note the requirements that Congress has talked about requiring for the automaker bailout: increased work on hybrids and fuel efficient cars. What?! How about we let the market dictate that? If you tamper with a company's ability to compete in the market by forcing it to produce more of certain things by fiat rather than demand, you will harm that company's ability to turn a profit. Hence yet another bailout down the road.

Freeman Hunt said...

Requiring requirements...

Sheesh. That's what happens when you try to type while talking to a toddler.

John Lynch said...

The graveyards are full of irreplaceable men, and the courts are full of the bankruptcy papers of companies too big to fail.

blake said...

How the government reacts to the gross underfunding of defined-benefit pension promises given to unionized private and public sector workers is going to be an explosive issue in the next four years.

That really is the next big shoe to drop. Well, one of them. Sorry for the mixed metaphor.


Anyone else suddenly nostalgic for the days of explosive shoes?

Hoosier Daddy said...

Requiring requirements...

Sheesh. That's what happens when you try to type while talking to a toddler.


Don't worry Freeman, it's not much different than when trying to discuss certain topics with some of the usual suspects here.

Methadras said...

As long as the UAW is willing to slit it's own throat despite it's head in working with the big 3, then the big 3 will die and the UAW will go with them. The time for the UAW has come and gone. The dinosaur construct of unions is and should have been long past and it's especially so in this case. Nothing will happen as long as unions like the UAW are allowed to dominate and control the agenda. If you want these corporate institutions to remain solvent, productive, and competitive they will have to become de-unionized.

Frankly, bust all non-essential national economic sector unions. Teachers unions are non-essential, nurses unions, non essential, janitors unions, non-essential. Machinists unions are economic strategic sector jobs. Leave them alone. Teamsters, same thing. UAW is not, in my opinion, not strategic economic sector safe. Get rid of them and watch the prosperity rise in this market segment.

Nichevo said...

I've got a hint for you:

AUTO + GREEN + NATIONAL SECURITY > AUTO