Senate rejects bailout: bitter reaction, grim predictions

Auto workers looking at bleak future.
REUTERS/Jessica Rinaldi
Auto workers looking at bleak future.

A plan to bail out Detroit’s automakers broke down in the Senate last night over when wages of union workers would be cut to the same level as those paid to nonunion workers at U.S. plants of foreign automakers such as Toyota and Honda. The Senate’s rejection of the bailout is prompting bitter reactions and dire predictions.

Here’s a sampling:

Michigan Gov. Jennifer Granholm: “Their no vote is an astounding blow. They have chosen to ignore the livelihood of 3 million Americans, 3 million families, and in the process have chosen to drive the American manufacturing industry — and perhaps the American economy — into the ground.”

Senate majority leader Harry Reid of Nevada: “It’s over with,” Reid said Thursday night. “I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight. This is going to be a very, very bad Christmas for a lot of people as a result of what takes place here tonight.”

Senate Republican leader Mitch McConnell
of Kentucky:
“We have had before us this whole question of the viability of the American automobile manufacturers. None of us want to see them go down, but very few of us had anything to do with the dilemma that they have created for themselves.

“The administration negotiated in good faith with the Democratic majority a proposal that was simply unacceptable to the vast majority of our side because we thought it frankly wouldn’t work.”

The Financial Times of London:
“The growing crisis for America’s carmakers has pushed some European governments into emergency arrangements for their affiliates on the continent. ‘The only government not helping right now is the US,’ said Nelson Silveira, a spokesman for GM Europe in Zurich.”

Columnist David Howes writing in the Detroit News:
“Now a federal bailout for Detroit’s automakers appears close to dead, delivering a crushing blow to a Michigan economy reeling from high unemployment, skyrocketing home foreclosures and sagging tax revenue. The obstructionists: southern Republicans determined to use a financial crisis to rework corporate balance sheets and rewrite collective bargaining agreements on their terms and timetables.

“Paybacks can be hell when business meets politics, as union leaders, their members and tens of thousands of folks associated with the Detroit-based auto industry are seeing clearly in the wrangling to craft an emergency bill to throw lifelines to beleaguered General Motors Corp. and Chrysler LLC.

“Stripped bare and put in the regional context of union vs. nonunion and domestic vs. foreign, the toughened conditions pushed by Sen. Bob Corker, R-Tenn., are legislative cruise missiles aimed directly at Detroit’s business model, the UAW’s Solidarity House and 70 years of Big Three bargaining tradition.

“How could they be anything else? Immediately match the pay and benefits of foreign-owned automakers operating in the South, his terms say. Reduce your expectations for Big Three contributions to the barely funded retiree health care fund and take some in stock. Eliminate the Jobs Bank and supplemental unemployment benefits.”

Naftali Bendavid writing in the Wall Street Journal:
“Sen. Richard Shelby, a jut-jawed lawmaker embodying the hostility many in Congress feel toward the Big Three auto makers, has emerged as the face of the opposition during the debate over aiding the industry.

“Mr. Shelby’s objections are rooted in the interplay of long-held principle and home-state interest. The Democrat-turned-Republican has always been opposed to bailouts and big government. At the same time, his state of Alabama is home to manufacturing outposts of several foreign auto makers — including Toyota Motor Corp., Honda Motor Co., Hyundai Motor Co. and Daimler AG’s Mercedes-Benz — that have competed successfully with U.S. auto companies.”

Columnist Tom Walsh writing in the Detroit Free Press: “None of the logical arguments made by, or on behalf of, Detroit’s auto industry seem to resonate with certain congressional critics.

“Not the fact that GM, Ford and Chrysler have slashed billions of dollars in costs. Not the fact that they have the nation’s top-selling pickups and minivans. Not the fact that they have lots of high-mileage vehicles and more on the way. Not the fact an auto company bankruptcy would have a horrible ripple effect, wiping out scores of suppliers and making hundreds of thousands more U.S. workers jobless.

“No, to the most adamant auto-rescue opponents in the Senate, Detroit doesn’t make cars people want. It’s a dinosaur not worth preserving.

“Could the opinions of these senators be colored by the fact that the foreign-owned plants of Toyota, Honda, Hyundai, Kia, BMW, Nissan and Volkswagen — which compete with the Detroit Three — are located in their states?

“Nah, let’s not even go there.

“Let’s just say that since logic hasn’t worked, we should fall back on a simple moral argument.

“If you see a fellow American is drowning, gasping for air, do you quiz him for a while about whether he’s drunk or why he never learned to swim better? Or do you throw him a life buoy and ask questions later?

“That, it seems to me, is where we are with America’s car companies.

“You have done nothing and failed them, senators.”

Editorial in Detroit Free Press:
“The final sticking point apparently was when — not whether — UAW workers would have the same wages for as the foreign automakers pay. That will seem like an incredibly minor dispute in the face of an industry collapse, and — in many people’s eyes — an anchor to hang around organized labor for the rest of recorded history.”

White House press secretary Dana Perino:
“Congress spoke last night. They don’t have the votes to do anything. They didn’t get it over goal line and so we have to consider what other options we would take.”

Jim Mitchell blogging in the Dallas Morning News:
“Has Bush, who just a week ago said some automakers might fail, changed his view at this late date? Or was the past week of mostly Republican opposition to the bailout more political theater while the economy burns?

“In other words, did Bush give Republicans lawmakers, who will eventually have to stand for re-election, the political cover to reflect public opinon and rail against the bailout in the full knowledge that Congress wouldn’t act and that this would leave Democrats out on a limb?”

Mayor Virg Bernero of Lansing, Mich.:
“For God sakes, I hope the president acts.”

Roger Buoen is a MinnPost managing editor. He can be reached at rbuoen [at] minnpost [dot] com.

Comments (6)

  1. Submitted by Kathy Kleckner on 12/12/2008 - 11:42 am.

    Yay! This is good news. The bailout is a quickie patch job on a big problem and will waste our money. We need a plan that is the result of a clear, honest analysis of the economy and well-planned vision of the future. How about re-tooling Detroit to build mass transit in this country!?
    Also, screwing the union workers is reprehensible, ESPECIALLY when they never wanted to hack down Wall Street salaries!

  2. Submitted by donald maxwell on 12/12/2008 - 12:58 pm.

    The Wall Street Journal writer pointed out that the southern senators so righteously opposed to the bailout have big ties to the foreign automakers who roosted in their states for the sake of the low wages there. But what the writer skipped is the hundreds of millions of public money those states provided to get the foreign automakers there in the first place.

    There may be those who can oppose the bailout in good conscience, but not those southern senators. Does the Republican party want to be known as the party that works hard to reduce American workers’ wages?

    The country needs a properly designed bailout, and a proper focus for government relief might well be to assume the “legacy” costs of generous retirement benefits, benefits negotiated and then not funded by long-past company managements.

  3. Submitted by Thomas Swift on 12/12/2008 - 02:47 pm.

    Oddly enough, the stock market greeted this news with a collective “meh”.

    I will never understand the mentality of a union worker that would rather trade a reasonable salary and benefit package for the soup kitchen.

    I remember discussing this phenomenon with a friend of mine that used to work for NWA. He was making $22 an hour gathering up unused spare parts in the maintenance department and returning them to the stockroom. NWA offered to keep his salary the same, but retirement benefits and work rules had to be drasticaly overhauled.

    Well, we all know where that went….my friend now makes $14 an hour as an apartment building maintenance man; no medical and no retirement.

    Guess that sounds like a good deal to the UAW.

  4. Submitted by Bernice Vetsch on 12/12/2008 - 04:16 pm.

    Yes, Donald Maxwell. The Republican Party DOES want to be known as “the party that works hard to reduce American workers’ wages.”

    An entire anti-union/anti-worker industry has grown up around that goal. Consultants earn fortunes each year helping companies kill their unions or prevent unions from organizing their workers. Some of them have helped companies right here.

    The goal? A reincarnation of the McKinley Era — NO social safety net, NO protections for workers (read “The Jungle”), starvation wages with NO hope for a better life, NO regulation of business or banking. A population sorted according to Social Darwinism into the “worthy” rich and the lazy, immoral poor.

    The party that can help recreate this “golden” time in our history will, in its own eyes, be fulfilling the Ayn Rand/market fundamentalist dream.

  5. Submitted by Pat Igo on 12/12/2008 - 11:47 pm.

    I feel a litter better tonight. There are still a few real Republicans left in Congress. I’m proud of them. They are standing up for what’s right. Republicans may be the under dogs at this point in history, however, time will be good to us. Let’s show the Democrats and our country that we too are against “corporate welfare”
    UAW and the Detroit auto industry have lost it.
    I wonder why Toyota and Saturn succed and show profits annually? Somethings working. It’s called “The American Way” working smarter and selling automobiles.
    Detroit auto industry and Chicago politics, still around, but not for long. Get with it!

  6. Submitted by Bernice Vetsch on 12/13/2008 - 01:09 pm.

    Thank you, Pat Igo. I happened to think later that not all Republicans are McKinley-era fans who hate organized labor. Many more closely fit the mold of Dwight Eisenhower and are therefore people I could vote for myself. Many have served Minnesota and our entire country with distinction. Perhaps someone will start a “Let’s take back our party” movement among Republicans who, like you, do not fit the current mold.

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