They’re Stickin’ With the Unionby
Vin Suprynowicz Once begun, it was clear the “bailout train” would keep running through Washington, with one industry after another demanding, “You helped the banks, now it’s OUR turn.” Thursday Nov. 6 it was Detroit’s automakers, battered by the economic crisis and appealing to congressional leaders for an additional $25 billion in federal loans to make required payments to employee health care trust funds incurred as part of a 2007 labor deal. The car makers also want lawmakers’ help in winning access to the $700 billion financial bailout being run by the Treasury Department and to low-rate emergency borrowing from the Federal Reserve’s discount window, normally available only to banks. (If the automakers default they could end up being owned, in effect, by a weird partnership of The Big Unions and our quasi-governmental money-issuing bank. Or maybe that’s not so weird. We could just start calling the Fed chairman “Il Duce.”) Talks with House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., came as General Motors Corp. and Ford Motor Co. were poised to announce billions more in losses and further job cuts Friday, and as GM’s president for North America said the next 100 days would be critical for his company and the industry. GM said the additional federal support would allow “a competitive” auto industry “to contribute to our nation’s economic revival.” But that’s like taking your ailing daughter to Count Dracula and asking if there’s a way he can “get her back on her feet.” Once the fiend has sunk in his fangs and your loved one has joined the legions of the walking dead, she may continue to LOOK young and healthy, but she’ll never again be free of the ghastly form of “life support” to which you’ve condemned her, sucking the lifeblood from others. “Let’s not kid ourselves that a taxpayer rescue would be anything but a down payment on a never-ending bailout,” warned business columnist Holman Jenkins, Jr. in the Nov. 5 Wall Street Journal. Congress already approved $25 billion in low-interest loans for domestic automakers and suppliers to retool plants to build fuel-efficient vehicles, just a month ago. Now they want more. President-elect Obama expressed support for an additional $25 billion in loans … providing the money would go toward helping the industry build “fuel-efficient” cars, only. But that’s just more of the government meddling that caused this whole problem, in the first place. Detroit’s job is to sell cars, creating profits for stockholders and jobs for everyday Americans – not to serve as a Petri dish in which the federal government can try its hand at manipulating Americans’ taste in modes of transportation. A better solution would be to ask Detroit if they could stand on their own two feet if Congress simply got out of their way, allowing them to build and sell only the types of cars American consumers want to buy. The automakers could probably make good profits without taxpayer help if they were allowed to de-unionize, hiring competent labor at going rates on the free market – even if they had to offer existing union employees handsome buyouts. But that’s made nearly impossible by federal labor laws that perpetuate the wealthy and powerful unions – something unlikely to change with union-financed Democrats in charge of both Congress and the White House. Alternatively, Detroit could probably turn good profits without a taxpayer bailout if they no longer had to meet the arbitrary “CAFE” fleet fuel economy standards set by Congress, which require them to manufacture a certain number of tiny, “fuel-efficient” cars consumers don’t want, sapping the profits from their popular lines of muscle cars, trucks, minivans, and Jeeps. In fact, as Mr. Jenkins of the Journal noted Wednesday Nov. 5, Detroit might even make a go of it without a bailout of Congress were merely to repeal the current, nonsensical “two fleet” rule, which requires automakers to meet the mileage standards separately with their “domestically” and “nondomestically” produced fleets – a transparent sop to the unions, designed to keep the firms from making more auto components offshore. “For 30 years, to make and sell the large vehicles that earn their profits, the Detroit Three have been effectively required to build small cars in high-wage UAW factories, though it means losing money on every car,” Mr. Jenkins reports.
Why not correct the market interventions that make American auto manufacturing unprofitable in the first place – something that can be done at zero cost to overstressed taxpayers? The Democrats promised “change.” Here’s a chance to show they’re willing to think “outside the box.” Or, alternatively, will they kowtow to the special interests that bankrolled their campaigns, even if it drives taxpayers – along with GM and Ford – to the poorhouse? November 13, 2008 Vin Suprynowicz [send him mail] is assistant editorial page editor of the daily Las Vegas Review-Journal and author of The Black Arrow. Copyright © 2008 Vin Suprynowicz
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