RAW NOTES: The Real Story Behind the Big Three Bailout

December 5th, 2008 at 3:50pm

Do you see what’s really going on in the bailout fight for the Big Three? It’s not about the money, it’s about where the money will come from. Actually, it’s all about politics.

President Bush, in one of his last actions as the leader of his party, is trying to force a schism in the Democratic Party. He’s setting the environmental wing against the labor union wing, with the goal of derailing Barack Obama’s Grand Coalition.

Democrats want the Bush Administration to give Detroit’s automakers some of the $700 billion set aside for bailing out the financial industry. Bush says, “No way.” Instead, Bush says the Democrats ought to tap into the $25 billion set aside to help the Big Three to re-tool their plants. House Speaker Nancy Pelosi says, “No way.”

Environmentalists have warned Pelosi not to spend that $25 billion on anything other than re-tooling factories to make green cars. They don’t want a penny of it going to a bridge loan.

President Bush says if Congress modifies the authorization that set aside the $700 billion for the financial industry and puts in the proper wording to give some to the automakers, he’ll sign it. But he knows the votes are not there to do it. Michigan Senators Carl Levin and Debbie Stabenow, both Democrats, are actually writing the legislation to add that wording but they’re not getting much support.

Others say that kind of authorization is not needed, that all Treasury Secretary Henry Paulson has to do is give the OK. But he won’t give it.

This is where the plot takes an unexpected twist. I’m told that Paulson is a closet environmentalist who has bequeathed most of his riches to radical environmental causes in his will. He doesn’t like the auto industry and has no interest in helping it.

So it’s back in the lap of House Speaker Nancy Pelosi, herself an environmentalist, and Harry Reid, a Senator from Nevada who’s constituency does not include industrial unions.

Meanwhile, the UAW is desperate to see GM and Chrysler get the money they need and get it immediately. It knows if one of them goes bankrupt, the union is going to see tens of thousands of its members permanently out of work. And when they lose their jobs, they stop paying union dues. The UAW doesn’t care where the money comes from, as long as the Big Three get it.

And so, we’re headed for a showdown. On the surface it will look like a traditional Republican vs. Democrat fight. But the real battle that’s going to emerge is between the environmental and the labor union wings of the Democratic Party.

10 Comments to “RAW NOTES: The Real Story Behind the Big Three Bailout”

  1. John Says:

    Senator Reid is from Nevada.

    Reid Headlines A Clean Energy Roundtable
    December 2, 2008 – This week Nevada Senator Harry Reid headlined a roundtable entitled “The New Revolution: America’s Clean Energy Future”

    http://reid.senate.gov/

  2. Tom Martin Says:

    Very perceptive. Thanks.

    Still, I believe that the UAW is key. Many don’t want to give a bailout or loan to the auto industry if they continue to overpay their workers. They will need to get salaries and benefits similar to the transplants.

    Now, what I don’t understand, is why Congress doesn’t appear to be as concerned with the financial industry. So far they have received about $1,500 Billion! Why hasn’t the President of Citicorp and others testified and presented their plans? And these aren’t loans. They’re handouts!

  3. Zieke Says:

    It’s real hard to understand why the Big 3 did’nt have all their plans in place when they went to Congress instead of a bunch of heresay,and we’ll do this and plan to do that. I don’t want them to fail, but they would’nt get a red cent until they’ve settled with the UAW, and that includes their huge retiree healthcare bill. As a taxpayer I absolutly refuse to be paying for a bunch of free healthcare for UAW retirees. Wages are also a huge issue and need to be inline with other semi and unskilled workers.

  4. John Says:

    1. The Bailout will only buy time.

    2. The time needed is a function of the overall rate of economic recovery of the U.S. Consumer, who is 70 percent of the U.S. Economy.

    3. The “New World Order” and the U.S. “Service Economy” has fundamental fatal flaws for the success of the “Legal” U.S. Middle Class and the U.S. Consumer.

    4. Wall Street and “K” Street lobbys in D.C. have a vested interest to gut the U.S. Middle Class so that they can profit from them.

    5. Wall Street and “K” Street are motivated by a short term profit reward for their selfish interests.

    6. Wall Street and “K” Street do not believe their “Global Economy” and U.S. “Service Economy” models are flawed or broken and they will fight any attempt to change them (which would affect their selfish profits).

    7. U.S. Consumers will not buy big ticket items when they believe their financial security is uncertain and at risk.

    8. So, all the “political” details are good reading, but, until the greedy ivy league morons on Wall Street and in Washington, D.C. admit that the Global Economy has killed the “Legal” U.S. Consumer’s ability to EARN a living with a decent JOB at a decent WAGE or SALARY, the politics is just a side show.

    9. The U.S. Consumer is 70 percent of the U.S. Economy. The U.S. Economy leads the world economy. The U.S. Consumer “boat” sinks lower as the global “boats” rise .

    10. The ivy league experts tell us from T.V. that all we have to do is go to community college and all will be fine. I think the ivy league experts are in a ivory tower with their heads in the clouds.

    11. Until the earning power is restored to the “LEGAL” U.S. Consumer with good paying jobs, no bailout will be big enough.

  5. TLC Says:

    Um, it’s not a bailout. It’s a loan. Sure, the Big 3 have squandered money and made bad decisions. But not nearly so much as the banking industry (not to mention those irresponsible citizens who got jumbo loans with nothing down). Why the uneven treatment by Congress? A handout with no questions vs. a loan with the Spanish Inquisition. I don’t get it. Everyone who hates the auto industry better also be realistic about its role in the development of a solid middle class. No Henry Ford (and others), no sustainable middle class. It’s that simple.

  6. Gary Paul Says:

    If the UAW is

    “desperate to see GM and Chrysler get the money they need and get it immediately,”

    as stated in the article, then why don’t they decide to immediately offer to take the exact salary and benefits and privileges, and vacation days, etc, offered at the Toyota transplants in this country? Perhaps the UAW is not desperate. Once the UAW finally actually is within a few pennies of the overall compensation offered to the Toyota workers, it could then go back to doing what it was really designed for —protecting against worker abuses by management. Both management and the UAW need to be shaken back to reality and leave Fantasy Planet where they have been living for the last 50-60 years.

  7. Steve Spatola Says:

    I am pleased that the bailout has “so far” failed. The Big 3 need the congressionally provided Chapter 11 bankruptcy provisions to shake off the strangle of the UAW. They and the burdens of CAFE mandates and wishful technologies not yet perfected yet marketed by hope rather than by proven reliance and consequenses. I mean by that the hybrid technolgy for batteries are not where they need to be. what about the disposal problems that is not addressed? who is responsible, Congress? I doubt it. A smaller American Auto business with a lack of overlapping products and legacy costs can make Detroit competitive again. I believe in their products, I will never buy an import even if it is built here in the US because the profits leave our economy. Detroit’s quality and market mix is far better than the left wingers give them credit for. I can’t imagine some import with the appeal my 64 Chevelle, 65 Chevy Pickup or 68 Cougar XR7 have. Even my 78 Olds Cutlass Salon Brougham is a beauty. The 06 HHR is a top notch American vehicle that does everything a car should with style, comfort and power to match the implied economy desired. I am mostly a GM guy and will remain loyal to American Steel. My 2003 and Trailblazer and 2000 Silverado are what American power and trucks stand for, reliabilty, function and good looks. I hope GM gets a good business plan to meet their existance needs and do it ASAP and without owing a thing to the democrats that hate them and amer5ican ingenuity.

    Congress is not helping the CEO’s as much as they are giving a quid pro quid to the UAW. That thinking will doom the bailouts, (er loans) in anybody’s Economics 101 analysis.

  8. JIm Cole Says:

    So we are at a point in history where we welcome other country’s companies to set up their manufacturing facilities on our soil. Then we tell our native industry to lower their wages to match the transplants. Why don’t we start importing our members of the senate and congress from our competitors for less money and fewer benefits? Then, as senator Corker said we can “get competitive”.

  9. Jim Lubinski Says:

    I fully agree with the comment by Jim Cole. We are allowing the transplants to take advantage of the labor pool in the states that do not protect the average worker. We have Congressional representatives talking about how the pay and benefits are too extreme for auto workers, while they get a FULL pension for every yars they serve! As has been stated in previous comments, where is the policing on the financial sector? What are the wages and benefits of the top executives? What is the golden parachute for poor performance at the executive level at most industries? If anything, the transplants should have to match the wage and benefit packages that have been earned by the American auto industry to level the playing field.

  10. Jim Lubinski Says:

    Amendment to my previous comment: What I was attempting to say, was that the Congressional representatives get full pensions for every term (4 years) they serve, so a representative who serves 4 terms gets 4 full pensions, and yet these are the people who say that middle class retirees should give up some or all of their health benefits. I could never go into politics. I wouldn’t be able to live with myself.