Friday, December 12, 2008

Republicans cut off our nose to spite unions and clean air

In case you didn’t notice, the loan package that GM and Chrysler requested from the Government collapsed in negotiations last night. The reason: Republicans in the Senate objected to Union workers not immediately taking pay cuts more than they wanted to (ahead of contract negotiations) and because there were requirements to clean up tailpipe emissions. Even the current President was in favor of this loan package.

And no, I won’t call it a “bailout package.” This was a loan package. What the financial sector got was a bailout package—money without strings attached or a need to repay any of it. I am against a bailout of the auto companies. I am not against a loan to them. There is a big difference.

As a devotee of Paul Krugman (economics editorial columnist at The New York Times,) when he mentioned an article at The New Republic titled “Panic in Detroit,” I went over there and read it. Here is (to me) the most important section of that article:

One reason for the casual support for letting GM fail is the assumption that bankruptcy would be no big deal: As USA Today editorialized recently, "Bankruptcy need not mean that the company disappears." But, while it's worked out that way for the airlines, among others, it's unlikely a GM business failure would play out in the same fashion. In order to seek so-called Chapter 11 status, a distressed company must find some way to operate while the bankruptcy court keeps creditors at bay. But GM can't build cars without parts, and it can't get parts without credit. Chapter 11 companies typically get that sort of credit from something called Debtor-in-Possession (DIP) loans. But the same Wall Street meltdown that has dragged down the economy and GM sales has also dried up the DIP money GM would need to operate.

That's why many analysts and scholars believe GM would likely end up in Chapter 7 bankruptcy, which would entail total liquidation. The company would close its doors, immediately throwing more than 100,000 people out of work. And, according to experts, the damage would spread quickly. Automobile parts suppliers in the United States rely disproportionately on GM's business to stay afloat. If GM shut down, many if not all of the suppliers would soon follow. Without parts, Chrysler, Ford, and eventually foreign-owned factories in the United States would have to cease operations. From Toledo to Tuscaloosa, the nation's assembly lines could go silent, sending a chill through their local economies as the idled workers stopped spending money.

Now do you understand why it is such a bad idea to let GM and Chrysler go bankrupt? Local economies would also feel the pinch of this kind of bankruptcy as auto dealerships immediately went out of business. Other, related industries would also feel the pinch, as local auto parts stores become unable to replenish their stores of parts, restaurants and entertainment venues start seeing fewer customers, stores and shopping malls make fewer sales, and all of them start going bankrupt. Some estimates for unemployment go as high as 5 million people just for the big three going out of business.

Why? Because Republicans want to crush the Unions, and you bloody well don’t have the right to breathe clean air, dammit! Nothing personal, it’s just business if you can’t work or breathe.

The Republicans keep saying that it’s to get the pay of the Union Auto Workers at domestic manufacturers here in the U.S. down to the same level that they are being paid at foreign owned plants in the U.S., but they aren’t mentioning the massive subsidies that they gave those foreign companies to locate those plants here.

Now that I’ve made all of that clear, do you feel any better about Republicans? I sure don’t. All they’re doing is making sure I never vote for a Republican again. It’s clear that you can’t trust them to make the right decision—even if the right choice is very clear.

And last night, was a very clear night.


“Panic in Detroit”, by Jonathan Cohn, published by The New Republic, 11-14-2008.

“$14B auto bailout dies in Senate”, by Julie Hirschfeld Davis and Ken Thomas, published by Associated Press, 12-12-2008.


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