Republicans Bankrupt GM, Chrysler.
I am pretty shocked that the Republicans would take such an overt role in derailing the bailout. I thought they would be more, I don’t know the word, disguised in their actions. Like attaching poison pill amendments or hiding behing procedure.
Now, don’t get me wrong, I understand opposition to the proposed bailout. Such opposition is both reasonable and principled. Failed companies should fail. That is the free market. That is capitalism. The only reason this bailout got any traction at all is the workers GM and Chrysler employ and the disasterous affect of letting GM and Chrysler fail will have. Over 2 million workers across the United States will lose their jobs in a weeks’ time. Whole towns where the local GM or Chrysler plant is the main driving force of the local economy will be destroyed. Businesses that make parts and supplies for GM and Chyrsler will go under in a month or two. The untold number of people who work for those companies will be unemployed.
By the end of January or February, unemployment in this country will be in the double digits, perhaps in the mid teens. There can be no doubt now, we are in a Great Depression.
And I am just a little shocked that the Republicans would take such a public role in making it happen. Perhaps, since the GOP is on the hook for the entire economy anyway, they decided to push the Interstellar Fail button like Blago did this week. “If we are going to be blamed anyway, lets make the failure really spectactular!”
GM and Chrysler bankrupted GM and Chrysler.
True, but not in the realm of public perception. The headline across the media today is “GOP kills Auto Bailout.”
DD, their dislike of unions and a chance to destroy the UAW seems too easy to pass up and they are party firsters anyway.
gee, how is it Castle was able to vote yes, say he wasn’t happy with it and it not get approved.
GEEEEEE, I wonder if good ol Castle was allowed to vote yes b/c his state has UAW members…..
what a joke
I’m not surprised. it is all a zero sum game for the Rpeublicans. One team wins, one team loses and they are always playing for a talking point for the next election with no regard to the fact that thier politcal games have serious downstream implications.
Bottom Line: Republicans put the GOP Elephant above the American Eagle whenever it can give them some short term gain.
More Concise Bottom Line: Republicans Suck
If UAW goes down I say it should all go down… liquidate the Big Three and pass that money plus the bailout money onto the next generation of automakers.
If we are to have a union-free auto industry – the current crop of auto execs and investors must be completely cut out of the loop and not permitted to benefit from their union-busting.
They didn’t only kill GM and Chrysler. They’ve hurt very badly other businesses. Part of the reasons we’re having layoffs at my work is because we’re suppliers of automotive companies. This bailout failure will have a huge ripple effect throughout the whole economy. I really have a hard time believing that Republicans are willing to risk that right now because they don’t like unions, but I guess ideology trumps all.
Yes, I do understand opposition to the bailout. The problems Republicans have is their reasoning for voting against the bill. Many (but not all) of them voted to give investment banks (white collar workers) a huge bailout with very little oversight and that money has been squandered. Now they want to micromanage everything with the automakers and they are standing in opposition to working people. Do Republicans put CEOs first?
Yes
UI, I agree that the GOP supported the investment bank bailout,but not out of sympathy for white collar workers (mostly non union). Love of the banking exec fatcats is more like it.
I am tremendously amused by the prospect of auto execs squabbling with bank execs over the remaining TARP funds. Pass the popcorn!
So here we go – if any the people who advocate for the repubs remaining a viable political party don’t get it now, they must seriously hate America and Americans.
This is an example of repub “bi-partisanship”. This is the repub party that ALWAYS puts party over country. This is the repub party that always puts moneyed interests over the interests of human health and welfare.
Folks, there is no such thing as a “good” republican. After today, be aware that anyone who chooses to have an “r” next to their name has voluntarily aligned themselves with a party that overtly and consistently acts against working Americans, the Constitution, justice, and the rule of law.
Repubs should not be welcome in polite company ever again.
From Eschton:
So sad… and the timing is lousy. Given the economy, is this really the time to make a stand on capitalist’s principles? Yeah, yeah, I understand the theory. But when you think about the reality…
World markets are reacting badly and the dollar is falling…
http://www.huffingtonpost.com/2008/12/12/auto-bailout-failure-plun_n_150471.html
Throwing new money at a failing Detroit is throwing money to the wind.
Washington should force the banks to lend to the Big 3. After all, the TARP was designed to inject capital into the banking system so they can start lending again. The banks have already received over $1T combined, and have the capital to do this.
Do this, and I bet the market rallies on new confidence that that end may be near. After all, that is what banks do – they lend.
personal fave Eschaton post this morning:
“I remember reading Galbraith’s The Crash of 1929 and starting to feel all cold because his discussion of the years preceding the crash sound like now.
What amazes me is that Galbraith did the analysis, and few people paid attention–in fact, they actively ignored it–it was after all, only eleven years or so after the S&L debacle that the idiots proposed even more deregulation, even after seeing the results of their “self-regulating” market first-hand.
-Yeah, the parallels are worrisome. What happens in the next year depends a lot on whether or not Obama’s favored advisors give up their false gods.
If they don’t, and Obama doesn’t stop trusting their advice, it would be a good idea to get first dibs on the corner apple concession….montag
I’m pretty confused why Republicans want to own the downturn so much. I thought they were going to try to blame Obama for it.
I really have a hard time believing that Republicans are willing to risk that right now because they don’t like unions, but I guess ideology trumps all.
*
Keith Olbermann pointed out that the GOP leading the charge are from the southeastern auto-manufacturing states. That gives them the motive for protecting their own state’s position but the rest of the GOP piled on, country-economy-be-damned.
Jason O.,
You make a good point about forcing the banks to lend, but Bush & Paulson won’t do it. I don’t think the auto companies have that much time.
Where was Joe? Playing with his new puppy?
Delaware
Biden (D) Not Voting; Carper (D) Yes.
Biden and Obama have not voted for months. Essentially, they are only 98 senators. Kennedy was also absent due to his health issues, and Kerry was in Poland for a conference. Ron Wyden did not vote, but we do not know why. So now we are down to 95 Senators. 10 Republicans voted with the Democrats, but Blanche Lincoln, Max Baucus, and Jon Tester voted against cloture with the remaining Republicans. 52-35. Cloture fails.
Shoot. I think the days of Biden casting any vote are gone. I’m not trying to be an ass, either. It’s just how I see it with a transition taking place.
Let’s inject some common sense here. The US has a thriving automobile industry. It Big 3 refuse to be a part of it. They have a severely, if not fatally flawed business model.
Product duplication and inflated cost model hinder their ability to thrive and prosper.
The Big 3 have failed to have a business plan to restructure for decades. They lost their footing during the oil embargo of 1970s when they failed to see the light, and continue to build large gas-guzzling vehicles. Foreign comptetitors saw the door was open, and jumped right in.
GM and Ford have a very successful product line in Europe. They fail to bring that successful model to the US. It is a shame because they are very competitve against the same competition here in the US.
This has nothing to do with this unions. This has to do with not throwing good taxpayer money at a bad business model. The $15B bailout now will not last more than three months. We will have to do it again, and again, and again.
The Big 3 and the UAW must sit down and come up with a comprehensive business plan that forces all parties to restructure. It must have a plan for long-term vitality.
Until then, if the Big 3 need capital infusion, the banks should lend it to them. It should not come directly from the taxpayers.
Actually, Obama has resigned, so he couldn’t vote anyway. Biden is hanging on to the seat until January 20 for reasons passing understanding. The next special election won’t be until 2010 no matter what.
I have been wondering if the sorta-sudden surprise announcement from Minner about her Biden replacement pick (and short a Biden resignation) was due to undercurrents from intel in the Obama camp and those who knew what was coming down the Blago pike.
I’m not so much into labelling Ford as a bad player anymore, relative to GM and Chrysler. I’ve taken somewhat of an interest because I’d really like to see at least two of these companies NOT fail.
Is Ford in trouble? Certainly. GM and Chrysler? Duh. So, what’s the difference? Ford had already smacked their own face around in the recent past (before bailout became a sexy word to corporations) and started to “restructure” their product focus.
Unfortunately, they were still slow to divorce themselves from the gasoholic line, BUT of the Big 3, they started to conceptualize and manufacture more “eco-friendly” (I use quotes on purpose, but relative to GM/Chrysler, they certainly are in front) vehicle lines. Basically, they burned a ton of cash to adjust their focus, before the credit market seized up. It’s that last part that totally screwed them.
Never in my wildest dreams did I think I would say anything positive about any of the Big 3, but what Ford did before this debacle in an attempt to help themselves is kind of interesting, if you have any desire to check it out. It seriously appears that they finally got the clue of what the future held, before the credit market seizing up changed the entire landscape.
That said, if I were to need to pick one of the three to make it through, (gasp) make it Ford. From what they were nearly able to accomplish before the debacle of 08 hit, may very well have made acronyms, such as Found On Road Dead a thing of the past.
If anyone is to blame it’s the UAW and their unwillingness to bargain. But you guys and gals could never see that.
After I’ve thrown 700 billion-dollar bills into the wind, J.O., what possible difference do 14 more make?
Well observed, Smitty. Ford has definitely been much more serious in trying to adapt itself to the coming long-term global energy transformation away from fossil fuels, even if imperfect and arguably insufficient in such efforts.
Not that it’s saying much, but they are in better shape than the other two. If only one is left standing, Ford would be my bet. I agree the days of acronyms like “Fix Or Repair Daily” are long gone.
Of course, I should disclose that every car I own is a Ford, none newer than 8 years old and the oldest being 47 years old. Thst said, ya just gotta love a company whose flagship line is called Lincoln.
The South lost the war Japan and Germany lost the war now all three losers have teemed up to defeat the North are we now the victim of the new Axis of evil????
As I side note folks if any of the Auto companies go bankrupt all us folks that have cars with warranties are out of luck for they are now void. So if there’s a recall be prepared to pay out of pocket.
My concern is that by not bailing out we could turn this recession into a depression – if we haven’t already.
The loss of these jobs will effect everybody. The hit will be global.
Here’s my question: Which will cost more? Bailing them out, or paying for not bailing them out?
Put ideology aside and do the math. We need to figure that almost every business will take a big hit, the cost of government programs will rise to meet the demand of the newly poor, and crime will go up.
We shouldn’t be surprised, really:
“Grover Norquist, Republican head of Americans for Tax Reform, ‘My goal is to cut government in twenty-five years, to get it down to the size where we can drown it in the bathtub.'”
To destroy the American dream is their dream come true.
What is your definition of “the American Dream”?
Let’s start with “that government of the people, by the people, for the people, shall not perish from the earth.”
I don’t see how not bailing out the auto industries destroys the Gettysburg address.
When the airlines were failing, all the unions were required to make deep concessions. This included 50% paycuts for pilots. If the UAW wants the Big 3 to survive, they need to be willing to make the required cuts. Some pay is better than no pay.
And here’s another question: let’s suppose the CEOs of all 3 companies resign and get no more compensation. Is that going to save Ford, GM and Chrysler? And who is supposed to run the companies if there are no more CEOs.
Democrats are trying to make Bush and Republicans own this bailout, just as they’ve argued that the Wall Street bailout is all Republican. I keep thinking that Democrats are in charge of Congress and should be considered culpable for at least half of these decisions, but I don’t see that happening. So, forcing Barack to sign the bailout makes this a Democrat decision.
I know you guys eschew partisanship and really only ever want what’s good for the country.
And who is supposed to run the companies if there are no more CEOs?
CEOs who don’t suck.
And who is supposed to run the companies if there are no more CEOs?
I can run GM into the ground for HALF of what those guys are making. It would be a huge savings.
It seems they have done every damn thing to raise cash except lower prices enough sell off their backed-up inventory. They need to have a fire sale – that is what any other cash-starved business would do.
Hey, here is a modest proposal… if we are going to bail out the Big Three and force them to produce more efficient cars – let’s foreclose on their inventory and auction it off.
Susan: are you a union buster. Do you think that we all do better when our union workers are forced to take $7./hr jobs with no health care or pensions? The unions have already taken heavy hits. As we speak our tax dollars are subsizing 18 new foreign car plants all over the south (the former slave states).
Why are you not going after these greedy CEO’s making millions, flying around in corporate jets, refusing to retool for smaller cars. Union workers make the cars they have no influence in the type of cars they manufacture. The CEO”s have for years been taking workers jobs and installing robots to do the work. I simply cannot believe we have americans who are so anti american workers. Don’t you know if all the jobs go to $7.00 a hour…yours will too.
We know who Republicans blame for the problems we face: poor people buying houses, immigrants and unions.
Everyone else blames Republicans.
So, why is Joe Biden still in the Senate, anyway? Governess Minner has already appointed his replacement, so it’s not like the seat would go really vacant — even though it is de facto vacant.
Is it that our next vice president needs the money that much?
We know who Republicans blame for the problems we face: poor people buying houses, immigrants and unions.
Everyone else blames Republicans.
Nice one, UI!! pithy and true.
Great point, U.I.
I’d only point out that is isn’t just “poor people buying houses” but poor people in general. And now they have just made a whole lot more to blame!
“Republicans Bankrupt GM, Chrysler.”
I’m so sorry the Republican party made GM produce shitty shitty cars. Man, I remember that meeting were we decided that American Union auto workers should make far more money than their foreign competitors ultimately dooming them to an uncompetitive state. We tried to resist but that Union vote is just so strong in the Republican party.
“Over 2 million workers across the United States will lose their jobs in a weeks’ time. Whole towns where the local GM or Chrysler plant is the main driving force of the local economy will be destroyed. Businesses that make parts and supplies for GM and Chyrsler will go under in a month or two.”
This is highly unlikely. If you made brake pads for GM you can make break pads for the Germans. They’re not going to buy as many but they will buy. Workers will be laid off and hours will be scaled back but few companies will go under, few towns will be left totally without employment.
GM and Chrysler will almost certainly still make cars, they just won’t make as many and their workers will have to deal with earning wages comparable to what ever other car company pays their workers.
“They’ve hurt very badly other businesses. Part of the reasons we’re having layoffs at my work is because we’re suppliers of automotive companies.”
At the same time, we are in a recession – how many people do you that just bought a new car? Your company was going to hurt, a lot, with or without a Detroit bailout.
“UI, I agree that the GOP supported the investment bank bailout,but not out of sympathy for white collar workers (mostly non union). Love of the banking exec fatcats is more like it.”
Ladies and gentlemen, do not lie to yourselves. I know that in many ways it would make a lot of sense to believe that the Wall Street bailout was the product of the Republican party but the fact of the matter is that a majority of Republicans voted against it. That bill passed because of the Democratic majority that you brought in in 2006.
Check the vote
http://www.achicagoblog.com/politics/house-bailout-roll-call/
“Folks, there is no such thing as a “good” republican. After today, be aware that anyone who chooses to have an “r” next to their name has voluntarily aligned themselves with a party that overtly and consistently acts against working Americans, the Constitution, justice, and the rule of law.”
Take a deep breath and ask yourself if you really mean that. Hindsight will be 20-20 but you have got to admit that there is a strong case to be made for letting these companies fail.
“My concern is that by not bailing out we could turn this recession into a depression – if we haven’t already.”
This is not an unreasonable concern but in order to get the money to bailout Detroit we’d either have to take that money from other people/companies or just print new money while devaluing everyone elses. The economy is going to take a hit either way. Bailing out Detroit means we punish more productive sectors while propping up 3 terrible companies who will only either fail or move off-shore later on in life. It also sets a disastrous precedent for future bailouts.
“Do you think that we all do better when our union workers are forced to take $7./hr jobs with no health care or pensions?”
If their choice is between a non-union job and no job I suspect they will go with the non-union option.
“Why are you not going after these greedy CEO’s making millions, flying around in corporate jets,”
Because that accounts for approximately 0% of their company’s budget. Last figures I heard, labor was over 10% of the cost of every American car.
“refusing to retool for smaller cars.”
They don’t retool for small cars because the Japanese and the Germans would eat them alive in that market (with, among other things, their non-union labor).
Sorry for the epically long post.
How in the hell did I miss this crap?
Then again, not surprised considering the consistent bias.
Anonone, you and I will always disagree on that, but check the hate, ‘k? Don’t get me wrong, I do completely cringe over the controlling factions of the party, but as I said to you before, I’m not just going to tuck tail to run away. I will at first do what I can to try to return it to the roots of Lincoln and T Roosevelt (with modern vision, of course). If I find the resistance to that is too great, then yes, a change is in order.
I will at first do what I can to try to return it to the roots of Lincoln and T Roosevelt (with modern vision, of course). If I find the resistance to that is too great, then yes, a change is in order.
How is that working out for you so far? 66% of your party still think Bush is doing a good job.
Seriously, what else could it take for you personally to realize that “a change is in order”?
Fiscal irresponsibility? Check
Torture? Check
Failure to defend the country? Check
Going to war based on lies? Check
Imprisonment without charges? Check
Spying without warrants? Check
Stolen elections? Check
I mean, what more would it take?
I am not saying that you should “tuck tail to run away.” I am suggesting that you recognize what your party has become and IS GOING TO STAY, courageously hold your head up high, and walk away as an American.
Oh, it’s been incredibly perverted from a far bygone era, no doubt. I’m just not done trying to resuscitate that era.
RSmitty,
But, what more would it take?
What does “resuscitate that era” mean or look like to you? When do you expect to see this occur?
66% of your fellow repubs think Bush is doing a good job. Most repubs want Palin to run for President. How are you going to change their world views?
“Fiscal irresponsibility? Check
Torture? Check
Failure to defend the country? Check
Going to war based on lies? Check
Imprisonment without charges? Check
Spying without warrants? Check
Stolen elections? Check”
Now ask yourself, how much of that has changed since 2006?
“Most repubs want Palin to run for President.”
Do you have polling on that?
NBC/WSJ poll, 12/11/08:
“But among Republicans only, the most popular is Palin — with a whopping 73%-13% rating.”
Now ask yourself, how much of that has changed since 2006?
Uh, Tom S, who is still President? And which party and when holds the record for Senate filibusters?
Answer 1: Bush (r)
Answer 2: Repubs, 2006 – 2008
Domestic Auto Industry In the Balance
What to Do and Who Pays?
Possible solutions for the domestic auto industry run the gambit from bailout to bankruptcy to buzz off. These are tough times for workers who are waiting on the auto executives to make a good case to the Congress for government intervention. Unfortunately, the only people in America more out of touch with reality than the auto executives are the people who will make a decision- many members of the U S Congress. The question is what to do now? We must act smartly and quickly. I offer a unique perspective as member of a company who underwent bankruptcy because of poor corporate leadership, planning and strategy plus the final straw, the events of 9/11.
The similarities between the auto industry difficulties today and the airlines in recent times are eerie. We in the airlines used to get 80% of out profits from 20% of our travelers (business) and the auto companies used to make almost the same margin on SUV’s and trucks. Unfortunately, the bottom fell out on the airlines with many factors but especially 9/11. In the auto industry the fuel spikes of 2008 and the recent credit crash was almost as severe as the impact in the World Trade Center Buildings. The auto industry needs a fix, but what would work?
I think the best option is not bailout but a pre packaged bankruptcy with debtor in possession financing from the government. A bailout is simply prolonging the inevitable at taxpayer expense and will not bring about the needed structural changes which have been long delayed. The auto executives have asked for $34 billion which is more than was asked for only two weeks ago and in reality is maybe half of what they will ask from us. I can tell you from first hand experience that many of the inefficient things we were doing in the airlines like flying the B 777 to Atlanta to Orlando with hundreds of cheap internet fares instead of now flying the B 777 to international destinations would not have happened without bankruptcy.
Bankruptcy is indeed a harsh process but total failure is worse. So what are the questions?
Can America survive without the domestic auto industry? It doesn’t have to but yes, it can. The domestic market share in 1970 was almost 90% and is now about half that percentage.
Won’t we have massive unemployment? No, Bankruptcy is a restructuring of production, vendor contracts etc. and not a funeral. The number of 2.5 million job losses is an exaggeration. Plants, auto models and jobs will likely be reduced by a small percentage but as things are going entire companies will fail, bailout or not.
Won’t the crashing of auto industry send shockwaves through the economy? No, it will send the signal of adjustment and rationalization to all those connected to the auto industry. People will still buy cars but they will buy ones which match the needs of the populace in the numbers needed not the old Detroit way of trying to pump up production to 14-15 million cars with the wrong kind of cars.
Will the UAW accept any adjustments? Yes, of course they will. In my industry unionized pilots took 38% pay cuts and lost our pensions but we saved our company and we are clawing our way back.
Didn’t we bailout Wall Street? Yes, we did but access to credit and liquidity dwarfs the problems in the auto industry.
Isn’t Bankruptcy a dire step? Yes, but at one point 62% of the airline industry capacity was in bankruptcy and yet we safely flew every day and despite sky rocketing fuel prices survived last year. We adjusted, adapted and overcame.
I expect this proposal to generate thought and I am sure some sharp comments. In the end, I support collective bargaining, believe in capitalism and I am incredibly skeptical of anything the government does but the desire is not to walk away from workers but to walk away from what is not working. A prepackaged bankruptcy with debtor financing from the government gives access to capital within a restructuring plan and not a bailout of unknown amounts and terms.
A small addition. If the Auto makers had a decent plan they could get private financing, but they do not.
Remember, the owner of Chrysler is a private equity firm.
The title of this post is wrong. Republicans didn’t bankrupt GM. GM executives bankrupted GM with their piss poor self-centered decisions. A bailout will only give us more of the same. If these guys are tossed out without a cent and the company is forced into reorganization like some of the airlines and comes out a better company, maybe they’ll start making decent cars.