I’ve been thinking a lot about the auto bailout lately (read my post on the House passage over at PR Watch), and the GOP in particular has me confused. Senate Republicans have made incredible tactical and strategic errors in killing the proposed auto bailout. This is why:
The proposal called for the government to provide $14 billion in emergency “bridge” loans, meant to carry them (notably GM and Chrysler, though Ford was lobbying for the money in the hopes of preventing cascading industry failures) through the winter and alleviate a cash shortage. The money for the loans, as proposed, would have come from a $25 billion fund approved by Congress and and President Bush earlier this year. That fund was already set to be loaned to the domestic carmakers, to help them retool and produce more fuel-effecient vehicles.
Senate Republicans did what they know best: try to screw folk over. They called for autoworkers at the Big Three (mostly union members) to take a huge pay and benefit cut. They called on the carmakers to restructure their operations as a condition of the loans. They called on the firms to also reduce their debt burden by allowing bond holders to take equity in the companies receiving the loans.
And everybody said, “great, fine, just give us the money.” The United Auto Workers wanted to phase the paycuts in over 18-months, rather than the six months required by GOP senators, but otherwise, the Republicans managed to squeeze a huge number of concessions from the autoworkers and the domestic carmakers.
But, because the union guys weren’t ready to throw away their wages and benefits right when the recession is getting really bad, GOP senators balked at the bailout. They killed it, killed it dead. And that’s what I don’t understand.
The carmakers are going to get their money one way or another – either President Bush (struggling to do something, anything, to savlage his reputation) will tap the $700 billion TARP, or a President Obama and a Democratic Congress with larger majorities in the House and Senate will approve a deal. And you know what? The UAW and the carmakers won’t have to make anything near the same kind of concessions.
Now, I don’t know whether the automakers deserve a bailout, nor do I know whether the UAW workers should have the pay and benefits they have now (I’d refer you to this chart though). I don’t understand what the Republicans in the Senate hoped to accomplish by killing the deal. They have nothing to show for the obstructionism: no concessions from the car makers, no concessions from the UAW, and Democrats will either get a legislative win in 2009 or they’ll get what they wanted all along: President Bush using the Wall Street money to save the Big Three.
Even worse, Republicans have also written off the Rustbelt states for good – they’ll be persona non grata for years come election season. To top it all off, the $25 billion is still there, waiting to be spent on bringing the car makers into the 21st century.