Should We Bail Out the Auto Industry?
Yet another too-big-to-fail corporate behemoth is begging for a handout. If a scruffy-looking person stands on a street corner with a “Will Work For Food” sign, lots of people think “why doesn’t that F$#%! &^%#!%#$ get a job?!?!”
But a lot of those same hardnosed free-enterprisers are moved to tears when a multi-millionaire goes “Waaaahhhhh!!!! I’m falling behind on my yacht payments and I might not be able to keep my weekend getaway in the Swiss Alps! Help meeee!!!!”
Is anybody else getting tired of this shit?
I don’t have much knowledge of economics or the far-reaching unintended consequences of certain government actions (then again, our “leaders” don’t either). What terrible things would happen if a banking conglomerate or a Detroit automaker went under? Tens of thousands of jobs (maybe a lot more) would be lost, right?
And yet this is happening anyway, even with the $700 billion the robber barons have already extorted from us. Maybe if we just hand over a few hundred more billion, everything will be all right. And if not, we’ll just keep handing another 12-figure check to every industry titan who holds out his tin cup. Eventually we’ll get our economy back. Right???
Maybe I’m just one of those well-intentioned-but-fuzzy-headed idealists, but it seems to me that for a tiny fraction of the money we’ve already given to Wall Street — and soon Detroit, the airline industry, the insurance industry — we could bail out the people who really need it.
What if we provided job training to employees who’ve been downsized, instead of lavishing billions on the CEOs whose greed and ineptitude caused these employees to lose their jobs in the first place. We could help strapped homeowners with their mortgage payments instead of showering money on the predatory lenders who got them into this jam.
Oh that’s right, it’s socialism if taxpayer money goes to a person who actually needs it.
We’ve spent 28 years (since Reagan’s inauguration in 1981) listening to one bullshit theory after another. Supply Side economics. The Laffer Curve. Trickledown…….Time’s up!
How about TrickleUp instead? Maybe it’s just a theory that won’t pan out, but there’s only one way to find out. For 28 years — with these past eight years being the Worst Ever — our government has taken a completely schizoid approach to helping the needy. If an individual gets laid off or goes bankrupt, it’s “Tough shit. Get a grip. Deal.” If a corporate Brontosaurus is about to collapse under its own weight, it’s “oooohhhh, nee nee the baby, here’s a big glob of money for you, now dry your eyes, there there.”
How’s this been working out for us?
There are millions of Americans who might actually go out and spend money and buy things (i.e. help the economy) if they weren’t forced to choose between the mortgage payment, food and medical expenses. TrickleUp, anyone?
Or we can keep on throwing bushels of tax money at irresponsible CEOs, so they can stash it in an offshore bank account and then beg for more.
Which approach is better?
cross-posted at Bring It On!
posted by Tom Harper @ 7:18 PM
37 Comments:
Well, look who else got a nice bailout. ;)
Virgomonkey: Interesting link. Condemning Obama for being a socialist while asking Republicans for a bailout -- Joe may not be much of a plumber but he sure has chutzpah.
But if we don't bail them out, then who will create jobs? The workers? CEOs take risks, blah blah -- okay, that's enough, my head hurts.
No bailout for CEOs, Auto Industries (who fucked themselves and their employees starting in the 70s by refusing to build gas efficient cars), Wall Street, and all those who will still have jobs and nice severance packages as they fly to their second home.
YES, to teaching skills for new employment to out on the street workers in Detroit and Flint who have been taking it on the chin for almost 40 years, plus a nice severance package, plus one of the homes owned by the CEOs. With gas prices staying where they are, they may have to use the house for firewood.
I'm sick of this crap.
And what are you going to do with the name of this blog from Jan.20th? Haha :)
Randal: That makes my head hurt too.
Enemy: Yes, I like your approach. People who have been "taking it on the chin for 40 years" deserve a little bit of that government largess that's been reserved for CEOs and VIPs.
Virgomonkey: I don't plan on any name changes. I'm happy about the election results, but our government -- our culture for that matter -- still needs a lot of work.
I hear that ! - enough already of this shit.
give it to us people out here, in a de fuckin presion - recession is just code for that -
more welfare - yes. MORE MAN POWER PROGRAMS like back in the day -
fix the tax code NOW - introduce a bill in the Senate THIS WEEK -
Help the municipalities FIRST - let the automakers re tool or else.
- expand mental health programs, food stamps, amend RENT CONTROL LAWS - and TENENTS RIGHTS -
bail out the people for fuck sake not the damn major corporations.
Make jobs in schools by giving money for new equipment to be manufactured HERE. Hire more Teachers.
AND PASS THE EMPLOYEE FREE CHOICE ACT - so everybody at walmart gets a living wage. Immediately increase the living wage.
I hardly blame the worker or the CEOs for the auto makers problems. They were only making cars Americans wanted to buy, and four years ago, those were big gas guzzling SUVs. It wasn't until recently, when oil prices went up, did some Americans choose to give up there gas hogs, and by then it was too late.
But the problem isn't only that consumers aren't buying these cars, it's that the market has changed. America has switched from a manufacturing economy, which paid well, to a service economy, which doesn't. People in the service economy can't make house and car payments, as well as credit card payments, insurance payments, or any of he plethora of other payments, or shop at Circuit City any more. The real criminal is out sourcing (which the auto industry has done to a certain extent) which has not only created a trade deficit, but a wealth deficit as well.
Proud Progressive: Yes, definitely more of those public works/manpower programs. We have a crumbling infrastructure and millions of people out of work (or threatened with job losses). Sounds like a match. And yes on the Employee Free Choice Act. Unions have been fading, and we need them now more than at any time since the 1930s.
Lew: I certainly don't blame auto workers for any of this. But the CEOs -- I have to disagree. They're at least partially responsible for this, because of the hundreds of millions they've spent over the years, fighting every change: smaller cars, better gas mileage, safety improvements. It's true that millions of people wanted gas-guzzlers, but this is partly because of relentless ad campaigns telling people to buy that big macho SUV so they can look tougher than they are.
I think we need to do everything possible to help the workers, but I can't muster up much sympathy for their bosses. And yes, outsourcing is the root of a lot of these problems. Some of it is inevitable because of globalization, but too many companies pulled every sleazy trick they could think of to get rid of their workers and set up operations in third world countries. And they even got tax breaks for doing this, if I'm not mistaken.
I see helping the automakers retool for fuel efficient production as a national security issue. And I also haven't forgotten that the Government (and taxpayers) ultimately benefited from the Chrysler bailout.
I'm with Emanuel on this one. Better GM than AIG.
JR: With so many Democrats pushing for this bailout, it's probably a done deal. I just hope we can minimize the bonus packages and golden parachutes and maximize the help for workers and the retooling of the industry.
It isn't trickle down theory anymore. We've moved on to the updated version called "flood up".
The automakers brought this on years ago. They've been laying off auto workers for 40 years. Sorry to repeat my comment, but auto workers will be fucked either way--these CEOs will cut their grandmothers' throats to maintain their bonuses while workers lose their homes and can't compete in the job market. Fuck the CEOS! No bailout! They don't deserve it. I would only agree IF they had to swear in blood and give up their kidneys so that they PROMISE NOT TO TAKE MORE JOBS OUT OF MICHIGAN! That state is one big disaster and it was once one of the greatest places in the world--city and country. The CEOs and their stupid decisions killed the auto workers. Unless they guarentee jobs to our people, then they can go jump into the bottomless pit where they belong.
I've seen too many unemployed autoworkers and steelworkers screwed over. No more.
Karlo: "Flood up" -- good description.
Enemy: If we bail out the auto makers, we need to have a lot more strings attached than we had with the Wall Street bailout. There'll have to be ironclad conditions, with prison sentences for any violation. And the same goes for any future corporate bailouts.
Lew Scannon has it exactly right. People didn't buy all those F100 and bigger pickups and all those jumbo Escapades because fuel economy was a top priority. I saw it in the '70s, the '80s and '90s, too. Gas prices ease off for awhile and people go for bigger vehicles. Come the inevitable gougefest and there's all this outrage about big gas hogs.
Even by importing all sorts of components from cheap-labor foreign producers, U.S. automakers have a hard time competing because labor and infrastructure prices are higher here, and our industries don't get government subsidies of various kinds as foreign producers do.
Just think, in most every foreign car- and truck-manufacturing country I can think of, workers benefit from either universal health care insurance or out and out socialized medicine. Here, it's an expense to employers and workers alike. That's just one big factor. There are plenty of others.
The U.S. needs to put universal health care in place. We need to reindustrialize, with emphasis on producing things people here and in other countries want, need and can afford.
Furthermore, we need to tell China, Japan and other countries this is our new trade policy:
Either you make your markets as open to our goods as our markets are open to your goods or we will do one of two things: 1, cease trading with your country completely; or 2, we will make our markets as closed to your exports as your markets are closed to our exports. Which we choose to do will be based on what's best for U.S. interests. Have a nice day.
I am more concerned about the so called bailout money that will be given to those Wall Street folks as bonuses at the end of the year.
If we can throw the tax dollars away by issuing more and more to AIG to do as they please, then by all means give the $25 billion or so to the Auto Industry.
This all seems like a nightmare, just what does this say about our President and Paulson or Americans for that matter.
We have millions of Americans with homes being lost and millions without jobs, and so many in need of health care, when will this government start using billions to take care of them as well?
If you give tax dollars away to financial institutions, with the lobbyist circling to get what they can from the deal, then find a way to help the average American.
HOW WE GOT HERE
The value of my house is down,
My job has gone away--
Remember when it was well-known
What caused our mess today?
George Herbert Walker Bush, recall
Went out to buy some socks
To "stimulate," afraid befall
Political hard knox.
Beneath his stewardship, alas
Th´ economy did tank--
Remember this, it did not pass,
Recall his little prank?
Till Clinton came to town, to fix
The economic mess
George Herbert failed, through all his tricks
To solve, or sort, no less.
(Even his son, while praising God-O,
Adhered to Daddy´s mission,
As "Silverado Desperado,"
Savings & Loan magician!)
Given the old man´s precedent--
George Bush was 41--
The family´s universal bent
To theft by stealth or gun,
How did the public vote to shore
Old Prescott´s dynasty
And prima facie facts ignore?
Whence such an idiocy?
The public has its just deserts,
An economic slump--
Plundered ideals so much it hurts,
Truth´s shards left in the dump!
.
SW: I don't disagree with anything you've said. But we need to make sure any future bailouts have strings attached, with everything clearly written out, to ensure that this money goes where it's needed, to help real people and not just fatten up a few executives' bank accounts. So far we have nothing to show for the hundreds of billions we've showered on Wall Street. Bush even had to give a speech a few days ago, "reminding" banks to start lending money already, since that was supposedly the purpose of the bailout.
It sucks that so many countries are closed off to American products, but American companies have to share some of the blame. Remember during Bush 41's tenure when we were sending American cars to Japan with the steering wheel on the "wrong" side -- some Detroit bigwig couldn't even bother to find out which side of the street the Japanese drive on. Most American companies probably aren't that blatant, but too often they seem to be just making their products and expecting everyone to buy them. McDonald's is an example of what American companies need to do (I'm not endorsing their shitty food). They have zillions of restaurants all over the world, including Japan and other countries that are usually closed to American products. The reason is, they do their homework and find out to the nth degree exactly what the host country wants, all of their laws and customs and tastes, and then they give them exactly what they want. No groveling, no "pleeeease buy my products." If more American companies followed their example, our trade balance would be much better.
Let's Talk: We really need to make sure this bailout money goes to the people who need it. Apparently there was nothing spelled out, no strings attached, with this bailout. The only thing definite is that we've poured $700 billion down the drain. I just read that Paulson is changing his mind again about their bailout plans. They aren't going to buy the assets of failing banks like they were originally planning to. I don't claim any expertise on how to use this bailout money, but they've already changed their minds more times than they changed our reasons for invading Iraq. We're gonna help struggling homeowners to keep their homes; no we're not. We're gonna buy the assets of failed banks and become stakeholders; no we're not. Banks will use this bailout money to start lending again; they promised. Oh, they haven't.
For any future bailouts, it needs to be clearly spelled out who gets this money and what the result will be.
Hey, look at it this way...first the financial sector...then the auto industry...sooner or later, they're gonna get to you and me.
Paul: Unfortunately, you have to be in that "too big to fail" category if you want any government handouts. Otherwise it's socialism :)
It seems kind of odd to be bailing out the auto industry when so many million Americans still won't be able to afford the product.
However, since it is such a big part of the economy I suppose it had better get some help, if the help is needed. Give them some money to retool but don't just give them money "because".
I sure agree with Proud Progressive. With as many problems as our nation's infrastructure has, why not get some work programs going? It will be a way to solve unemployment and to fix a lot of schools, roads, bridges, buildings, hospitals, etc. that need fixing. Let's bail out our infrastructure!
Is there a way to get our corporations to be all headquartered in the U.S., and to get them to pay their taxes? Is there a way to get rid of all those bonuses for the CEOs?
"Ironclad" is right Tom, and prison sentences indeed. And I want more FBI agents made available to investigate the causes of all this crap. Bush has not been giving the FBI the manpower it needs to investigate. I'm not necessarily saying we need to increase the number of spook types out there, but good grief... Bush obviously doesn't want his buddies to get in trouble. Hell, I say get them in as much trouble as possible if it's warranted.
Tom, Yes, I hear you, darlin' - I'm sick of this shit too. Part of me says the Big 3 probably do need to be bailed out - the other part says that we could give a hell of a lot of people help starting a whole new auto industry which is dedicated to building and developing truly green vehicles. How many students could be sent to college to be trained as engineers with this kind of money? I'm just about over the bailouts myself.
Twas nice to see you over at my site, too!
Late last year I picked up "The Reckoning" by the late David Halberstam. He writes about the decline of Detroit and the rise of japan in the 70's.
Looks like nobody learned from the lesson.
Even the last auto issue from Consumer Reports asks "how American is your American car" showing how much labor has been transferred to Canada and Mexico, how many vendors and suppliers are foreign and not to mention the complicated merging deals they have with the Japanese companies.
I hear the automakers fire the firing the opening salvo and blame the great worker pension plan for over 700,000 workers - a great pension they signed off instead of raising salaries - only the CEO's and Congress have a better pension plan.
I expect that to go on the table and it will be the first of many "blame the worker" campaigns along with the reason why the quality is so lousy (those lazy Americans). Yes the Union can be conservative but not as half as the management that are even more settled in their ways.
Then the companies will say "we have to save the workers" because people feel more for a couple hundred thousand workers then a couple hundred managers.
Just please put some strings on this loan...
yeah right
Erik
Snave: True, any company that we bail out should be required to pay the taxes they owe -- no more "headquarters" (a post office box) in the Cayman Islands. That's the very least we should demand. I hope Obama will hire enough FBI agents to investigate the causes of this mess. Partly out of simple vengeance and partly so we can find out what happened and do what we have to do to prevent it from happening again.
Bee: Any bailout should be centered around jobs for the autoworkers. Those jobs could be either in a retooled auto industry, or public works projects. That's what helped us out of the 1930s depression, and since we're almost to that point again...
Erik: The writing has been on the wall since at least the 1970s. But these companies would rather just cut corners wherever possible and blame the consequences on too much government regulation, lazy workers, environmental wackos and foreign countries that won't import their products. They keep pointing the finger at everybody except themselves.
Tom, all, I agree wholeheartedly about carefully structuring any bailout so Big 3 CEOs and managers are forced to use the money responsibly and (gasp) in the public interest.
If that should happen, expect to hear shouts of bitter outrage from the right about socialism and a "centrally planned economy," etc.
Just be aware, what we're seeing now from the automakers could very well be a setup. The real objective is more likely to be freeing themselves from the UAW and other unions, along with all existing contracts. The real goal might be a restructuring that brings taxpayer money in, sticks it to workers and retirees, downsizes the companies and pares industry hourly pay for production workers to near Third World levels. And benefits? What benefits?
The template is what occurred years ago in the aluminum and steel industries, among others.
That's a tough one. I think Chrysler should just roll over and die. They already had their handout.
The US auto industry ignored all the signs they should shift to more fuel efficient cars - now they're paying for it. I'm not too concerned with their tears, yet the jobs that would be lost if they went under might be worse.
Maybe we bail 'em out and insist on a few things: Pay back the debt with a shitload of interest; and make green cars, and cars that get a zillion MPG.
Shit, I don't know...just a thought. I'm glad there's someone smart in the WH now.
SW: That sounds like a very real scenario you're describing. Sounds like exactly what they've got up their sleeves. In other words, keep watching every move those bastards make. Never let your guard down.
Carlos: Yup, the auto industry has seen the writing on the wall for years and they chose to ignore it. Any bailout needs to ensure that they money goes to providing jobs and retooling the industry.
LITANY IN TIME OF BAY-LOUTS
Adieu, farewell Democracy,
The world is all a crock you see--
I am sick, I must die.
So Richard Fuld gets half a mil,
But Lehman Brothers takes a spill--
Why one is saved and one let go?
The reasons we will never know:
Administrative politics
For A.I.G. has put the fix,
But Bear Stearns, uh-oh it is well
To let the people go to hell.
It works in a mysterious way,
The Ministry of Fear today--
O, it´s a "global meltdown," see
As license given you and me
To grab and cheat and swipe and rob
Because there ain´t no other job:
The upper-crust leaves its example
Of how the common good to trample!
Adieu, Farewell Democracy,
The world is all a crock you see.
.
Tom WTF are you talking about??? Republicans? This shizz has Pelosi and the bleeding heart corporate Dems all over it. Bush wants NOTHING to do with it. It;s Obama;s ball now. Frank, Obama, Reid,Dodd,Pelosi....
Both Dems and Pubs are doing the same corrupt thing.. just working the angles. They are both sticking it to the working man/woman who are every race of people in this great country. And they are tanking the value of the dollar.
The Dems are responsible for this atrocious and destructive behavior through bailouts.. hey they own the senate/house. Plus Dems wrote the legislation (and bartered Pubs votes) to required fannie mae and freddie mac take on huge and ridiculous risk and back it with none other than the lowly little tax payer. Welfare at it's greatest low.
The Pubs are equally in on this little sham to rob American's blind, but War (On Terror, in Iraq, In Afganistan and right her at home on our constitutional rights) and gutting our balance of powers system, creating martial law and secret spying and prisons where detainees are not given the rights of the American courts or even of the Geneva convention.
Both sides are rather terrible if you ask me.
Of course it was going to be a Dem this time. Everybody knew, the news was in full swing. The right/left thing is a pendulum to divide people and each time it swings it never seems to address the truly impactful issues with sustainable solutions. It is a mock war of politics to distract the people and always have the other side to point the finger at.
Who pays for a 70 billion dollar bailout? Why everyone's dollar will be worth a lot less and the poor will feel it most when it affects the price of necessities in life (shelter, food, pans to cook food in, ect). Who will pay for a potential auto bailout? Why the same people who have just lost their jobs.. now their unemployment checks won't cover the basics.
In my humble and length opinion, (and I don't like to generalize, so use your own opinion) most all the politicians in DC are crooks, particularly though that advocate hardest in the two party format.
Like the unions I believe the Dems and Pubs are utterly corrupt and answer to the same Master.
Thanks for reading. Let us all look through the veil of political illusion and see that both teams would happily pull the wool over our eyes. Let's lookly sharply and deeply and work together to make politicians accountable.
True, Republicans are against this particular bailout. But you've gotta admit, Republicans have been pretty 2-faced when it comes to bankruptcy, bailouts, and that whole concept of "personal responsibility." Maybe you're not personally in that category since you're more libertarian (or claim to be), but the Republican Party in general needs to get focused on whether they want people bailed out of their own self-created problems, or not. The public doesn't like double standards, and that's what the Republicans have deteriorated into lately.
MESSAGE TO I.M.Small:
I love your poems, they are fantastic! Very on topic and amazingly concise. Bravo!
Thanks for sharing,
Sam
Hey, what we need is industry and jobs in the US, but not at the expense of the hardworking people (poor always feel it the worst). These bailouts, no matter their strings (like the 70 billion or the more that it will end up costing, or this new automaker proposal) the Fed Reserve will simply print more money, there by deflating the value of the dollar further. The cost of goods both foreign produced and domestic will rise likely rise due to massive inflation.. there by every pocket will be "taxed" with higher cost for food, toliet paper, a pot to boil your ramen in, your bus fare, and the roof above your head.
No one should get bailed out. The system is flawed, we need to stem the massive economic leak, not just dump more money to be washed out to sea.
Sadly, jobs will be lost whether the value of the dollar is completely gutted by these bailouts or not. But let's not further destroy our economy. It's gonna suck. To me, this is why Bill Clintons Globalist agenda and G. Bush II's wars are stupid, because they are destroying America.
I don't like Washington DC in my wallet, handing out my money, only to tell me when I need to eat that what I've got is worthless.
I think the auto makers Execs should be sued for bankrupting the company. The same to the Finance and Insurance decision makers who corrupted the system and took their cushy perks and stole from their companies value. And if (like in the Financial sector) it turns out government legislation played a hand in the dsstruction of the industry (legally forcing the companies to take on high risk), then let those policy makers be sued for fraud and corruption too. What do we do with all these criminals.. they can never pay back what they have robbed from America but need to try.
Best to you,
Sam
tom, but don't throw the baby out with the bathwater. I'm not saying Repubs are any less corrupt the Democrs, but instead of being fooled that American politics is a football game. Let's take the Repubs message and stick it to the Democrs. Likewise, hold the Repubs feet to the fire when the Democrs raise corruption (i.e. G.W. Bush declaring Marshal Law.. in effect right now.. check youtube for more info), regardless of the partisan crap. We need advocates for the American people.. too often people stand there critizing the critiquers, instead of moving forward on the points raised. Het to break it to you but neither party is innocent of corruption towards the American people. So let's use the useful and not let it all just became a wash of disaster and finger pointing. Follow up and keep all those politicians clean.
Thanks for the last few comments. It's a tangled subject. I don't have any surefire answer, which is why I ended the post title with a question mark. Hopefully we'll all arrive at a workable solution.
what do you do for a living? do you know anything about how the fucking world works? do you realize how many jobs are affected by the auto industry going down? approx 3 million. do the math. how many other people are affected when those 3 million stop buying shit? the auto industry has been the backbone of our country forever. yes i agree that the ceo are payed waaaaaay too much. lets invest some money and put stipulations on them. lets make them do this right. what do we have when they go? fucking starbucks and coal mining. what a joke. what would you rather spend your money on. polo shirts and a golf bag. get real.
What do I do for a living? OK, full disclosure. I'm one of those famous talking heads on Fox News. I write this blog under a fictitious name; it's my imitation of a socialist whiny liberal. Had you going, huh?
This post was intended as a discussion of this issue; you'll notice the title was worded as a question. So your shrill tone doesn't serve any purpose.
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