The GOP Bungles the Auto Bailout
By Bonnie Erbe, Thomas Jefferson Street blog
The GOP clearly isn't happy with its popularity ratings in the tank. They threaten to send the Grand Old Party spiraling down into political Middle Earth. At least that's the impression Senate leaders are making by killing the Big Three auto bailout.
It's quite understandable to want to spare taxpayers the financial burden of the bailout. But wait until GOP leaders feel the sting of killing up to 2 million jobs, hearing from constituents who can no longer find parts for their Chevys or Cadillacs, and worst yet, the prospect that the United States may no longer have a domestic auto industry.
Democrats played this one perfectly. They scaled down the size of the bailout from its original request of $35 billion to a much more manageable $14 billion. But Republicans hung up negotiations over pay for factory workers:
The collapse came after bipartisan talks on the auto rescue broke down over GOP demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers.
Clearly there was room for compromise in there somewhere. But grandstanding Republicans chose politics over practicality. This despite the fact they received an overwhelming message from voters last month telling this is not how they want Congress to act.
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Tags: General Motors | Republicans | Senate | Chrysler | car manufacturers | Ford
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Reader Comments
What Rubbish
So if all Republicans do not back whatever Pelosi and Reid want they're "grandstandning?" Yes, how dare they ask the UAW to make real concessions that would preserve their own jobs.
But important though this is, the bigger picture is how far these bailouts will go. Who's next? Will the quid pro quo be more government control, and thus a more statist economy? It looks that way.
Either way, pundits like Erbe would better serve their readers if they would lay off the snarkyness and make their poiints with facts and logic.
a solution
If conress or Bush won't send the domestic auto to the bancruptcy solution, then the customers will have. There are a lot of past customers out there that have had enough and will not purchase another Detroit auto. It's sad, because Detroit could be saved with the bankruptcy if they pursue it now. If they go ahead with loans and the companies will not make sufficent progress and the taxpayer will further abandon the U.S. Manufacturers and of course then it is to late. There is such a glut of unsold vehicles already by all manufacurers that if GM and Chrysler shut down for a short time it is not going to be significantly differen than what has to be done no matter what happens with their requests. The politicians will destroy the companies they are trying to help. I can see where people will avoid GM & Chrysler to get the problem overwith if congress cannot make sensible decisions.
Just Used a Quote!
I don't endorse everything in G-L-B by any means. I also think that we failed to make a good legal structure and basis for new financial instruments and transactions that many people did not understand. That is by no means an excuse to go overboard in regulation and intervention - they have to find a good balance - and if you read any non-academic work by Paul Krugman, there is no balance! You can go way to extreme in not regulating, but you can also over-regulate. I just used the term "mental recession" (not an endorsement of Gramm's exact use of the phrase) because that is exactly how I feel every time I hear Paulson, Pelosi, and the rest of them speak! We need leaders that instill some confidence and optimism -- Obama may be the man and having Volcker and Orszag nearby is helpful... Because after we get through the recession, we will need to address our long run budget problems as well as any inflation that ultimately gets caused by pumping so much money into the economy through these less-than-well-thought-out policies.
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