Since Republican obstructionists in the Senate blocked a bridge loan to save the Big Three automakers, President Bush has stepped in to help:
President Bush on Friday announced $13.4 billion in emergency loans to prevent the collapse of General Motors and Chrysler, and another $4 billion available for the hobbled automakers in February with the entire bailout conditioned on the companies undertaking sweeping reorganizations to show that they can return to profitability.
The loans, as G.M. and Chrysler teeter on the brink of insolvency, essentially throw the companies a lifeline from the taxpayers that will keep them afloat until March 31. At that point, the Obama administration will determine if the automakers are meeting the conditions of the loans and will continue to receive government aid or must repay the loans and face bankruptcy.
But Bush’s loan proposal comes with a serious string attached — requirements that the Big Three’s workers take a pay cut:
The loan deal requires the companies to quickly reduce their debt by two-thirds, mostly through debt-for-equity swaps, and to reach an agreement with the United Auto Workers union to cut wages and benefits so they are competitive with those of employees of foreign-based automakers in the United States.
The debt reduction and the cuts in wages were central components of proposal by Senator Bob Corker, Republican of Tennessee, who tried to salvage the bailout legislation. Those talks had deadlocked on a demand by Republicans that the wage cuts take effect by a set date in 2009, while the union had pressed for a deadline in 2011.
This is dumb for two reasons. One is that, if part of the purpose of the bridge loan is to keep the economy from taking another big hit, forcing wage cuts on tens of thousands of working people — large numbers of whom live in states whose economies have already been battered — doesn’t make a whole lot of sense.
Beyond that, though, the proposed wage cuts make no sense because they are based on a fallacy. The workers need to take cuts, we are told, because they make more than seventy dollars an hour — far more than their unorganized counterparts at plants run by foreign automakers.
But as Keith Olbermann explained recently on MSNBC’s Countdown, that is simply not the case:
The $70+/hour figure includes all sorts of legacy costs (things like benefits to retirees, etc.) that have nothing to do with what a worker on the line today takes home. It’s misinformation, pure and simple.
(If you find yourself sitting next to family and friends over the holidays who don’t understand why, send them to http://DoBig3AutoWorkersMake73DollarsAnHour.com.)
The United Auto Workers are pledging to work with President-Elect Barack Obama when he takes office to remove Bush’s anti-worker provisions:
“While we appreciate that President Bush has taken the emergency action needed to help America’s auto companies weather the current financial crisis, we are disappointed that he has added unfair conditions singling out workers,” said [UAW President Ron] Gettelfinger. “These conditions were not included in the bipartisan legislation endorsed by the White House, which passed the House of Representatives and which won support from a majority of senators.
“We will work with the Obama administration and the new Congress to ensure that these unfair conditions are removed,” said Gettelfinger, “as we join in the coming months with all stakeholders to create a viable future for the U.S. auto industry.”
A viable future is a future that works for everybody — for management, customers, the environment, and, yes, for workers too. Such a future is possible, but only if all sides can put aside their political biases and conflicts of interest and work to make it a reality. It’s disappointing to see in this extremely serious moment that President Bush can’t bring himself to do that.
Comments (4)
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Thank you, Jason, for this informative piece about the real deal with auto companies and the workers who are at risk here getting a bad rap in the mainstream, TV press.
Detroit could have gone green well over a decade ago. They unfortunately acted out of ignorance and ignored the demand for gas-conserving and renewable energy-based cars. Management of the automobile companies held out and stalled on going green, probably because of their long history of entrenchment with the oil and gas industries. This bailout we now face is a form of corporate welfare that is wasteful and could have been prevented.
Instead of requiring workers to take wage cuts, the companies should be planning and working to develope new strategies for workers and car designs. The companies could employ workers to create and manufacture green, renewable automoblie models in coordination with public transit authorities and transportation compainies and urban design firms, to design and manufacture cars that fit into a larger public transportation plan. We need to demand this of our legislators.
In other words, it is time- way past due, to conceive and design cars as a part of a new paradigm, not only green but as a part of a larger plan for conservation and sustainabilty, where transportation is conceived of as an important aspect of a comprehensive community design. The focus of car designs should be on health and conservation of our resources.
These designs as well could be based upon efficiency and renewable energy instead of on profits for the few. These automobile companies have NOT been mismanged by the CEO's and management, rather, they have been deliberately stubborn and unfortunately, horribly ignorant about the absolute imperative to go green and sustainable, at the terrible expense of all of us other people in the country, including taxpayers, workers and the environment and atmosphere upon which our lives depend.
The car built from now and into the future should be based on renewable energy that get us away from burning fossil fuels, and also that fit into an urban, and community design plan that is comprehensive and not just about the car companies' bottom line. It is high time that workers and the unions that represent them pushed hard, real hard for viable automobiles based upon renewable energy systems and linked to public transit-ports and designed with the public interest in community sustainablitlity as the number one priority.
Elise Casby
Posted by elise casby on December 20, 2008 at 6:27 PM
Posted on December 20, 2008 at 6:27 PM
Thank you, Jason for this helpful information.
We need to see the automobile manufacturers in the U.S. as outdated bedfellows with the equally outdated gas and oil companies. Instead of cutting workers wages we need to remodel the entire paradigm of the car and transportation. The car should be based on renewable energy systems.
The workers could manufacture cars that should be conceived as a part, or one component of sustainable community and/or urban design with an emphasis on a comprehensive public transportation plan.
Furthermore, we must insist that the current managers and CEO's of the old-fashioned automobile industry retire, since they keep depending on these bailouts, which is a form of corporate welfare at the taxpayer's expense. They have already failed to lead the the way toward job developement and green industry.
Posted by Elise Casby on December 20, 2008 at 6:48 PM
Posted on December 20, 2008 at 6:48 PM
I agree Jason. Instead of cutting workers wages we need to remodel the entire paradigm of the car and transportation. The car should be based on renewable energy systems. Workers could manufacture cars that should be conceived as a part, or one component of sustainable community and/or urban design with an emphasis on a comprehensive public transportation plan.
Furthermore, the current managers and CEO's of the gas and oil-based automobile industry should be forced to retire, since they keep depending on these bailouts, which are a form of corporate welfare at the taxpayer's expense. They have already failed to lead the the way toward job developement and green industry.
Posted by Elise Casby on December 20, 2008 at 6:50 PM
Posted on December 20, 2008 at 6:50 PM
Insanity! As a member of the UTU and an employee for a Class I Railroad, I am shocked at the outcry by the unions on this one. As a railroad worker and union member we negotiate our contracts just the same as the UAW does. Our wages are nowhere near $70/hr., almost half of that actually, we have incredible benefits, incredible retirement, and the railroads are nowhere near the trouble that the automakers are in. In fact, we are increasing jobs and reporting record profits. While the demands of the UAW has forced a record increase in production costs for the auto makers, and an inflation of price to the consumer. It's no wonder they are selling fewer cars. It's not just the petroleum companies. The greed of the UAW is just as much to blame as the automakers and the petroleum companies. Twice the rate of pay is always equal to half the number of jobs. Want to save auto workers jobs? Negotiate a rate of pay that not only helps the employee, but also helps your employer, and youpr fellow employees. Look next to you, the person standing there might not be there next year because you want to be greedy in your contract negotiations. It's a recession, you can't have record contracts and well-above national average pay and expect that jobs aren't going to be cut. Whether you like the facts or not, your employers are in trouble and if you're not willing to help them, why should they be willing to spare your jobs?
Posted by Ryan Maddox on December 21, 2008 at 6:06 PM
Posted on December 21, 2008 at 6:06 PM