Auto Industry Bailout Battle Brewing on Hill

If the republicans cause the demise of our car industry they could insure the demise of the economy of this counry as well as the demise of their political party. Three million direct jobs are in the balence. Thats not to mention the three million foreclosures that could follow putting further stress on our banks and markets. A lot of dominos could fall.

This is not the time to play selfish politics. Save our auto industry.

You can not blame just the Republicans and to single them out is more
of the same old BS-why not blame the people who should be held
responsible for this.
Maybe it’s time the auto industry learned a lesson and file chapter
11. They did it to themselves and feeding the greed is not a lesson
learned.

I am opposed the auto industry bailout. The auto companies have been poorly run and the top executives responsible should be fired. These companies should not be given more taxpayer money to squander on their inefficiently run auto companies.

The auto industry was given 25 billion dollars in low cost loans less than two months ago. Now we are asked to throw more money at an industry that shows no inclination to change their wasteful way of doing business.

Instead of a bailout that the government can't afford, the auto companies can file for chapter 11 bankruptcy which permits reorganization under the bankruptcy laws of the United States. The 700 billion dollar financial industry bailout was poorly written and executed by the government. The same can be expected of this proposed bailout of the auto industry.

http://en.wikipedia.org/wiki/Chapter_11,_Title_11,_United_States_Code

Fed Up and Ruby. I agree with your points but not with your conclusion. The U. S. auto industry is pathetic. I have bought my mother two U.S. cars in the last ten years. On one of them, the paint started peeling. The clear coat was coming off in patches and the car looked like it had a disease.

I bought her another one. Struts, transmission, cooling system, you name it, it always had something wrong with it. Next car for her was a Toyata. she loves it.

Now, your arguement is let them sink for their stupidity and low value product. OK by me, but what of the 3 million direct employees. What of the indirect employees. What of the 3 million mortgages they may have. What of the pressure on the economy. Look folks, this crisis may be worse than you think.
To many dominos have fallen. We have to stop the dominos before we go into free fall.

I would hate to hear historians fifty years from now say, "When the U.S. Auto Industry collapsed the entire world economy fell."

Yes I do agree the car industry is important to jobs around America and keeping people employed, but the greed is what got them there. No good car loans and over priced investments. The bail outs should be focused on Homeowners and that dingdong Polson just wants to give out more loans. Isn't that what got us in this position anyway? Too many loans and extending credit? That was a very Republician thing to do. He did nothing for the people who really needs the help.
The auto industry will have to lower their prices so people can afford to buy a car. What happen to making a profit on volume. The more you sale the more money made. A car husstler will only count on one good sale to make his mark. The higher the price the higher the commision. Get your head out of the clouds and put the money wheree you really need it. Saving homes.

I don't see how giving the auto industry billions of dollars will help. People have had it with poor quality gas guzzlers. For years the UAW have demanded outrageous wages and benefits while continuing to turn out low quality, overpriced products. It's already impossible for people to get auto loans, how will giving the Big 3 billions of dollars get customers into the showrooms to buy new cars? How will rewarding poor management and poor workmanship help anything? The people have spoken. They stopped buying Big 3 products.

The Republicans will go along with this auto bailout because they do not want to cause over 5 million jobs to be lost on top of the high unemployment that we already have. The Republicans are only using this as a talking point and trying to stir up their base by trying to lay excessive spending on the lap of democrats. Well it will not work this time because Americans are smarter nowdays than they used to be and we have information more available. So Republicans do not sit on your butts and let the auto industry fail why you try and act like the democrats want to just give out money to any firms asking for it. If you Republicans had been up to par, you would have headed these problems off before things got this bad in the first place.

The Republicans are trying to use this as a talking point to encourage their base of support that they are conservative when it comes to spending money!! Well it will not work this time because we the public have a plenty of information and we know that there was a surplus of money in the federal budget when Bush and the Republicans took over 8 years ago and we know that they have put us in deep debt now. Save the auto industry and stop this country from going into a depression if you have any economical sense at all. That is the least that the Republican party can do for this country!!!!

Steve Seivers12:36PMNov 17th 2008
"...Now, your arguement is let them sink for their stupidity and low value product. OK by me, but what of the 3 million direct employees. What of the indirect employees. What of the 3 million mortgages they may have. What of the pressure on the economy. Look folks, this crisis may be worse than you think.
To many dominos have fallen. We have to stop the dominos before we go into free fall.

I would hate to hear historians fifty years from now say, "When the U.S. Auto Industry collapsed the entire world economy fell.""
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Is the bailout going to keep them going, or is it just delaying the inevitable collapse 6 months or 2 years or 5 years down the road? Let's let them go now, quick, like pulling off a bandaid. Otherwise, who's next in the Great American Handout? I'd rather my tax dollars went to re-training workers and longer unemployement benefits than to reward the stupidity and greed and short-sightedness of the Big 3.

Maybe letting them go would allow something greater to arise from the ashes.

bettye, I just read your post twice trying to figure out whay you're trying to say, other than the fact that you are blaming Republicans for everything that has ever gone wrong in the world. First you seem to say that if Republicans vote to bail out the auto industry it will only be because we want to "lay excessive spending on the lap of democrats." Then you say, "So Republicans do not sit on your butts and let the auto industry fail why you try and act like the democrats want to just give out money to any firms asking for it." Brilliant! Just plain brilliant!

I can't wait for Obama to be president and take on these problems that are looming over his head. I did not vote for the man, and hope that he has surrounded himself with the right folks to see us through. I am not a Bush basher, and I for one am grateful that he kept us safe by keeping the battle elsewhere and not here. People are beginning to realize the democrats had a large part in the economic crisis we are in now, since Clinton administration is responsible for the start of the Fannie and Freddie mess. Bush warned of the growing problem and so did McCain, but with a dominate democratic congress these last 2 years, the warning was ignored. Republicans are an minority now, so the show belongs to the democrats, lets see what they and Obama can accomplish.......let them fix what was started on their watch. Meanwhile, the republicans need to take this time to soul search and come out strong in 2010. Let the games begin....

There are some excellent points being made here today. If the Feds give the Big 3 a bailout, who's next in line for a piece of the bailout pie? But here lies the problem; if we let the auto makers go belly-up and let all those autoworkers join the ranks of the many unemployed, they will not be alone for long. Where do the automakers get their materials to make the autos? What about all those manufacturing jobs? People on unemployment aren't really big on spending simply because they don't have the money. They don't go to malls, they don't go out to dinner, they don't take vacations--you see where this is going, right? Is the management of the Big 3 in dire need of a shake-up--without question, yes. And that should definitely be one of the conditions, along with restructuring the types of autos they make (fuel efficient/alternative fuel vs. gas guzzling, polluting SUVs). After all, American taxpayers don't get loans without collateral, and neither should any company/institution asking for Federal bailouts. Ruby is right on point when she says the federal bailout for the financial institutions was poorly written and poorly executed--Congress should take the necessary steps to insure that any future bailouts are done in a way that corrects the conditions that created the need for the bailout in the first place.

I am the wife of a Chrysler employee that works at the Chrysler plant in Newark, Delaware. The plant will be closing it's doors December 19, 2008. The employee's have given up so much in the past 12 to 15 years, pay cuts and also health benefits are almost null and void.I was hoping that maybe one of the other plants could furnish him with a job. He has three more years before he can retire. And without the help of the goverment the auto industry will crumble. There will be many men and women trying to survive. Many of them without college educations, and with small children to feed,clothe,and supply health benefits for.Where will they find work. My husband is almost 56 who will hire him with benefits. Do the math. The economy will crumble, along with the down fall of peoples jobs that work for the companies that supply the auto dealers.

diane McGinnes2:44PMNov 17th 2008
I am the wife of a Chrysler employee that works at the Chrysler plant in Newark, Delaware. The plant will be closing it's doors December 19, 2008. The employee's have given up so much in the past 12 to 15 years, pay cuts and also health benefits are almost null and void.I was hoping that maybe one of the other plants could furnish him with a job. He has three more years before he can retire. And without the help of the goverment the auto industry will crumble. There will be many men and women trying to survive. Many of them without college educations, and with small children to feed,clothe,and supply health benefits for.Where will they find work. My husband is almost 56 who will hire him with benefits. Do the math. The economy will crumble, along with the down fall of peoples jobs that work for the companies that supply the auto dealers.
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So those of you who want to let the Big 3 go down in flames--now do you understand which fellow Americans you are really throwing under the bus?
Diane, I'm pulling for you, your family, and the thousands of families that will be effected by ignoring the immediate needs of the auto industry.

I feel for everyone who is hurting, but this bailout does not guarantee that the industry will not still fail. PCL said,"Congress should take the necessary steps to insure that any future bailouts are done in a way that corrects the conditions that created the need for the bailout in the first place." I agree, but good luck with THAT! Like it or not, I'm afraid that this country is in for a world of hurt. There is going to be a lot of pain, I hope we're strong enough to get through it.

Democrats, thats democrats Steve, have another vexing problem on their hands as the auto industry/UAW looks for their slice of the bailout pie.

The "imports" have moved into the US and build cars with non-union labor at $48 per hour and no legacy pension costs far cheaper than Detroit can.

Every domestic car built has about $1,500 in legacy pension costs and a union labor rate of $78 per hour.
Our domestic auto makers build big gas guzzlers because there is enough profit margin in these big cars to absorb $78 union labor and $1,500 in legacy pension costs and STILL make a profit.

Our domestic auto makers CAN NOT build competative
small fuel efficent vehicles with these labor/pension costs with out cutting costs on quality, thats why the 'paint peels, struts, transmission, cooling systems you name it' is not as good as the imports.

Democrats, thats Democrats Steve, know our domestic auto makers are being bled dry by the unions and any bailout money given to the auto industry is throwing money down the drain.
The vexing problem for Democrats, thats Democrats Steve, is the unions are a traditional Democrat source of voting/political support. Democrats have to walk a fine line between appeasing the unions while avoiding the inevitable backlash from taxpayers when the auto industry, bled dry by the UAW, keeps coming back to the bailout trough for more "save jobs" money.

In the words of Joe "Mark my words" Biden Democrats, thats Democrats Steve, will appease the auto industry/UAW until taxpayer backlash forces them to with hold more bailout money. The auto industry will have to go into chapter 11 to get out from under those union contracts and by then we will not be talking about 3 million jobs any longer.

Then, and only then, will a new day dawn for our domestic auto industry. When our domestic auto industry can compete with the "imports" built down south with the same $48 per hour non-union labor and no $1,500 per car legacy pension costs I believe our domestic auto makers will clean their clocks, the "imports" better WATCH OUT.

Respectfully,
Pete

PCL, Steve Seivers, Bas and others -

Most of the posts here seem to believe that if we let the auto industry fail all these people will lose their jobs. Not true. Businesses enter Chapter 11 all the time. They keep right on operating and paying their people while they restructure their debts and obligations.

As soon as the Big Three file for protection so will those companies that supply them with anything from parts to ass wipe and they will continue to operate while they pay their employees and restructure their debts and obligations.

To blame the auto industry without blaming the UAW is wrong. Even when labor costs are normal, labor is the biggest line in any businesses budget. UAW workers make twice as much as workers at non-union auto companies not including benefits. Collective bargaining by the UAW has taken competition out of the auto labor market, given us job banks where people are paid for doing nothing, a benefits package that rivals that of congress, pensions for current and retired employees that are beyond the auto industry's ability to pay. All of this is added to the price of vehicles, which, Steve Seivers, is why you get shit for a product; to be competitive the margin has to be made up somewhere.

Bankruptcy will get the auto industry out from under the boot heel of the UAW. True the UAW members will have to work for what a Toyota or Honda worker makes (about $42/hr), but if they did not see this coming, then they are as poor planners as the big three.

They better start working on their Plan B. Accepting a $42/hr job would be a good start. Where else are they going to get a job like that? If some of them get in trouble with their mortgage, Paulson is obviously in their corner with the first $850B that they stole, um ... I mean shared without our permission, um ... I mean are loaning from the gracious pool of the taxpayer dollars.

After the dust settles and it all shakes out, maybe UAW members will see that, instead of having their pay cut, they had it better than they should have for longer than they deserved (that whole glass half full thing you always talk about, PCL). Maybe they will see that they got no better value from their UAW dues than Steve Seiver's mom got from the two cars they built for her.

Maybe UAW members will drop the union and the UAW will be looking for a government bailout for the massive loss of dues. Oh wait, that is what this $25B really is meant to do, right?

diane McGinnes2:44PMNov 17th 2008

I am the wife of a Chrysler employee that works at the Chrysler plant in Newark, Delaware. The plant will be closing it's doors December 19, 2008. The employee's have given up so much in the past 12 to 15 years, pay cuts and also health benefits are almost null and void.
_________________________________

I am sorry for your son's situation. I have been there myself. However, all those concessions your son and his coworkers still made an average of $78/hr, not including benefits.

This escalation of wages could not go on forever and it wasn't just wages. Collective bargaining agreements contain so much more than just what your son was making. At some point it was all bound to come crumbling down.

And so, reality has pushed the reset button. I'm sorry your son was caught up in it all. I really am.

Splash8:40PMNov 17th 2008
PCL, Steve Seivers, Bas and others -

Most of the posts here seem to believe that if we let the auto industry fail all these people will lose their jobs. Not true. Businesses enter Chapter 11 all the time. They keep right on operating and paying their people while they restructure their debts and obligations.

As soon as the Big Three file for protection so will those companies that supply them with anything from parts to ass wipe and they will continue to operate while they pay their employees and restructure their debts and obligations.

To blame the auto industry without blaming the UAW is wrong. Even when labor costs are normal, labor is the biggest line in any businesses budget. UAW workers make twice as much as workers at non-union auto companies not including benefits. Collective bargaining by the UAW has taken competition out of the auto labor market, given us job banks where people are paid for doing nothing, a benefits package that rivals that of congress, pensions for current and retired employees that are beyond the auto industry's ability to pay. All of this is added to the price of vehicles, which, Steve Seivers, is why you get shit for a product; to be competitive the margin has to be made up somewhere.

Bankruptcy will get the auto industry out from under the boot heel of the UAW. True the UAW members will have to work for what a Toyota or Honda worker makes (about $42/hr), but if they did not see this coming, then they are as poor planners as the big three.

They better start working on their Plan B. Accepting a $42/hr job would be a good start. Where else are they going to get a job like that? If some of them get in trouble with their mortgage, Paulson is obviously in their corner with the first $850B that they stole, um ... I mean shared without our permission, um ... I mean are loaning from the gracious pool of the taxpayer dollars.

After the dust settles and it all shakes out, maybe UAW members will see that, instead of having their pay cut, they had it better than they should have for longer than they deserved (that whole glass half full thing you always talk about, PCL). Maybe they will see that they got no better value from their UAW dues than Steve Seiver's mom got from the two cars they built for her.

Maybe UAW members will drop the union and the UAW will be looking for a government bailout for the massive loss of dues. Oh wait, that is what this $25B really is meant to do, right?
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Having never had to file for any type of bankruptcy in our family's business of 40+ years and showing those autoworkers who WILL be laid off while the Big 3 restructure, compassion, should never be mistaken for ignorance of what Chapter 11 means. Furthermore, I have an uncle who was a union steward for a union (the Baker's Union) and he used to say the same things you do about some of the workers and the unions themselves. He absolutely hated defending lazy workers who were overpaid and bitched and moaned about putting in an honest day's work for honest day's dollar. I totally agree with you that the UAW is a major part of the problem in the auto industry. And the crack about my optimistic philosophy? You know the nice thing about being optimistic? We take chances with just about everything in life, because we have that little voice in our heads saying 'what if'? I don't want to end up some grouchy old woman who forever wonders what if I didn't take a chance here or there? And I'm the same way about people, I like to see the good in them and if you knew my life story, you would wonder how in the hell I could think like that. And the same applies to what Obama will and won't do--nobody knows yet. Well, except you, of course. Now if that glass of mine is half full all the time, it's because I choose it to be.

This is not such a bad idea; however, I'm sure you cynics will find something wrong with it. Enjoy.


OP-ED CONTRIBUTORS
How High Gas Prices Can Save the Car Industry

By DANIEL SPERLING and DEBORAH GORDON
FOR the American automobile industry, the years since the glory days of the 1950s and ’60s have been a period of decline. Ever since the oil crises and the Japanese import invasion of the 1970s, the automakers have repeatedly flirted with financial ruin.

They stayed afloat, at times quite profitably, by shifting their focus to sport utility vehicles and big pickup trucks, which indulged the desires of consumers for larger and more powerful vehicles. They deluded themselves into thinking they had created a successful strategy, when what they had really created was a protected and precarious perch.

Bankruptcy, then, might be well deserved, were it not for the risk of the complete collapse of the companies. The industry must be bailed out by the federal government. There are hundreds of thousands of jobs at stake, and a strong domestic manufacturing sector is important for security reasons.

Scarce American dollars, however, must be invested in the larger public interest. The best bailout is one that weans us off oil and sets us on a path to reduced carbon emissions. Congress and President-elect Barack Obama are not qualified to protect shareholders’ interests, nor can they build a better car. But they can ensure that society benefits from our investment in the automobile industry.

One way to do that would be to establish a price floor of $3.50 per gallon on gasoline. If the price drops below that, as it recently has, the federal government would impose a variable tax to bring the price up to $3.50. If the price goes above $3.50, then the tax disappears. The money raised by the variable tax would be used, at least in the short term, to provide loan guarantees to the auto companies. (To ease the burden of higher gasoline prices on low-income taxpayers, some of the revenue would be provided to them as tax credits or vouchers.)

A price floor for gasoline would ease the bailout’s burden on taxpayers. At current prices, a floor of $3.50 per gallon would generate more than $17 billion in one month — a big chunk of a $25 billion bailout. If, without the floor, gasoline averaged $2.50 per gallon over the next year, revenues would amount to $140 billion. That money could pay for a sound transportation policy agenda beyond the bailout.

To receive some of the money raised by this tax, the car makers would be required to produce large numbers of affordable, durable, safe, fuel-efficient, low-carbon vehicles within the next five years. They would also have to relinquish their fight against California’s clean car standards and accept national greenhouse gas standards for vehicles. The companies should also be required to sell a certain number of near-zero emission cars — electric, plug-in hybrids and fuel-cell vehicles.

The $3.50 price floor for gasoline would help sell these fuel-efficient cars. The higher the price of gas, the greater the demand for Detroit’s new, improved fleet. The price floor could be indexed to inflation, so that it rises over time, and it could be applied to diesel fuel, to avoid a widespread substitution from gas to diesel. A comparable price floor for oil could be calculated, to reduce the risk of manipulation of crude pricing.

The declining fortunes of the domestic automakers have paralyzed energy and environmental debates and stymied oil and climate policy for more than a generation. We’ve been down this road before. In 1980, Chrysler was reported to be within hours of bankruptcy, and Congress bailed out the company with $1.5 billion in loan guarantees and a package of concessions — from lenders, unions and others — worth billions more.

This time, the government has to be smart, steering the country to a more sustainable future.

Daniel Sperling, the director of the Institute of Transportation Studies at the University of California, Davis, and Deborah Gordon, a transportation policy consultant, are the authors of the forthcoming “Two Billion Cars: Driving Toward Sustainability.”