Chain Reactions

Brother, Can You Spare A Few Billion?

It would be comical in its utter predictability if it wasn't for the fact that thousands upon thousands of hard-working employees blue- and white-collar alike are in for a pretty rough holiday season. Here are a few statements that have crossed my electronic mailbox today, from a wide array of groups and people who share one basic sentiment: the U.S. Senate (more specifically, Republicans in the U.S. Senate) have doomed the Detroit Three to utter, abject failure. Take a look at a few examples, and see if you can identify what's NOT being mentioned at all in these statements:

J. Scot Sharland, executive director, Automotive Industry Action Group:
"As you are most likely aware, the U.S. Senate failed to pass the bailout bill. There is only one option left. The Bush Administration can release money from the $700 billion bail-out package given to Wall Street. After the vote in the Senate failed last night, the Administration indicated it is weighing its options. It is crucial that President Bush hear from us now. On behalf of the Automotive Industry Action Group, I urge you to send a message to the white house asking President Bush to take action to aid the manufacturing industry and the countless American workers who will be impacted if no action is taken."

Kevin L. Kearns, president, U.S. Business and Industry Council:
"It is completely irresponsible of Senate Republicans to balk at taking what is admittedly the first step in the domestic auto industry's restructuring. The likely results are the failure of at least two of the Big Three domestic vehicle makers, the demise of countless suppliers, and the shutdown of even more manufacturing companies in other industries dependent on these suppliers that is, unless they try to save themselves by moving abroad for their parts and supplies. Many of these same Senate Republicans have repeatedly supported trade deals that have encouraged the massive offshoring of American factories and jobs. And although the country desperately needs to produce and manufacture its way out of the economic crisis, Americans will see the same de-industrializing results from this decision."

John Engler, president and CEO, National Association of Manufacturers (NAM):
"Manufacturers are greatly disappointed by the Senate's failure last night to approve funding for the domestic automakers that has already been approved by the House. The nation is in recession. Our economy is in dire condition and vulnerable to more dramatic shocks if we allow one or more of the Detroit-based auto companies to fail. In fact, according to some estimates, the collapse of just one of the domestic automakers could lead to a rise in unemployment by 3.0 to 8.9 percent in the nine hardest hit states. Every state would be affected and the supply chain that serves all automakers domestic and foreign-based would be damaged. Increased government payments and tax losses could exceed $150 billion in the first three years. We simply cannot permit this to happen."

* * *


Did you see any mention that some Senate Democrats also voted against the bailout? No? Hmmm, neither did I, but four of them did (although one of the four was mostly a procedural vote on the part of Sen. Reid). Did you see any mention that the REASON the bailout failed was because of a refusal on the part of the United Auto Workers to budge on some concessions that might (we may never know) have resulted in a leaner and more viable Detroit Three? Did you see any citation of national opinion polls that indicate that U.S. voters are very much OPPOSED to the bailout 61% of Americans oppose the auto bailout, according to CNN? Another head-scratcher there... I wonder why none of that was mentioned.

This whole scenario not the bailout per se, but the reaction to its failure has a funny smell to it. For one thing, there's no way the auto industry isn't going to get its hand-out. It might have to wait until Obama's inaugural and the new Congress convenes, but it'll happen. For another, how did it all of a sudden happen that the Detroit Three (well, Two; Ford's house seems to be built on rockier ground than the sand GM and Chrysler are built on) were going to run out of money right at the end of the political year, when any bailout backlash could be blamed on the previous administration and Congress? Why are the Republicans taking the hit on this one when in fact this is more of a cultural North vs South thing than a party-line? Why was the government so quick to rush through a bailout of the financial institutions (and apparently almost all of that money has already been spent does anybody think we've gotten our $700 billion worth out of that deal) and spared their execs the tough questions, but the Detroit Three execs get grilled because they flew to Washington in private jets? Why do all of the provisions of the auto bailout seem to include additional regulatory requirements without addressing whether or not the regulations the car companies are already under might be partly to blame for their dire situation? Lots of questions there, not many answers.
TAGS: Supply Chain
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