…they’d pass funding for a Big Three bailout.
For those of you who know me, this may seem like a HUGE reversal of my basic principles. I think companies should stand and fall based on the market. Even though I feel that the federal government is to blame for a vast majority of the problems that the Big Three encounters, my inclination is that government should get out of manipulating the private sector. A bailout of companies like GM and Chrysler only injects more government intervention into the marketplace.
However, I think now is the time for Republicans to agree to the passage of a bailout for the US automakers, and quickly.
Because a bailout is coming whether it happens now or later. How can I be sure of this?
Come January 21st, 2009 Democrats will control the executive and legislative branches of the federal government. If anyone thinks that they’ll throw the United Auto Workers (UAW) – a LONG time supporter and front-line warrior for the Democrat party – over the side of the USS Democrat Control, they’re high. There is NO FRICKIN’ WAY Democrats will let their friends in the labor unions take the hit so as to pacify citizen discontent with the US automakers (much of which is based on bogus propaganda). It isn’t going to happen. If it did, I’d almost be forced to vote Democrat (or wear women’s frilly underwear…take your pick).
Furthermore, there’s virtually no way that, given the apathy most Americans have towards labor unions (due to the bad name some of their constituents have given organizations like the UAW and Teamsters), a bailout of unions and union pensions isn’t going to happen either. The union pension liability runs into the hundreds of billions of dollars. Additionally, if these car companies go under, so do the good-paying jobs of thousands of union members. Finally – and this is probably the most important part – the foreign automakers in this country generally do not use unionized labor. So if the Big Three go under, all those union jobs go buh-bye…forever.
Sure, Congress can try and “force” foreign automakers to use unions in their plants. In retaliation, those foreign automakers can pull their plants out of the US, and place them in countries like Mexico and Venezuela. So, this gambit ain’t gonna see the light of day.
The only “safe” solution for a Democrat-led government is to subsidize the Big Three, which is subsidizing the labor unions by proxy. Something that guys like Sen. Richard Shelby are adamantly against in the first place.
So, basically, all the Big Three need to do is wait things out for another month or two, and they’ll get their bailout. Please, don’t think that the CEOs of companies like GM and Ford aren’t counting on this. So this begs the question: if they know they’re going to get a bailout package, why are executives of the Big Three pressing Congress now?
The answer is real simple, and it has to do – again – with the labor unions. If a Democrat Congress and President come through with the Big Three, that places the UAW in the driver’s seat, when it comes to negotiating power, for at least a decade. This will be because the main source of that bailout money will have come via the CLEAR connections unions have to a dominant Democrat party. And for the next four to eight years, they’ll have access to the levers of power in the government should the Big Three decide to resist their demands.
Bailing them out now weakens the union hand for the future. It also gives the automakers time and leverage to wait things out until conditions change on a federal level (if that is possible in the next two years). Letting this sit until next year gives the UAW a very big gun when it comes to union contracts.
Anyone who thinks that the UAW really cares about the health of the Big Three is sniffing glue. They only thing the UAW cares about is the well-being of its membership…period.
Political realities changed after November 4th. Guys like Richard Shelby – if they actually care about the stability of the domestic automakers – had better change in response. They can either minimize the damage, or let this all explode in a rather spectacular way.