Does The GOP Have the Guts To Stop The Bailout Insanity?
Senator Mitch McConnell’s statement on the Senate floor this morning (emphasis added):
The auto industry is vitally important to our nation’s economy and it is vitally important to my home state of Kentucky. This is not in dispute. The question before us is how to reverse the decline of some of these auto manufacturers after decades of complicity between management and labor.
I understand congressional Democrats sent a revised proposal to the White House late last night. We will reserve our judgment until we see the latest text. But the proposal we saw yesterday afternoon fails to achieve our goal of securing the long-term viability of ailing auto companies.
I want to support a bill that revives this industry. But I will not support a bill that revives the patient with taxpayer dollars yet doesn’t secure a commitment that the patient will change its ways so future help isn’t needed.
To do so would be a betrayal of the millions of hardworking taxpayers who are not at fault for the troubles in the auto industry. And it would be unfair to the millions of Americans who depend on these companies.
On the management side, the draft plan released yesterday fails to require the kind of serious reform that will ensure long-term viability for struggling auto companies. By giving the government the option of cancelling government assistance in the event that reforms are not being achieved – rather than requiring it – we open the door to unlimited federal subsidies in the future.
Instead, we should demand that management make the tough choices that are required for long-term viability. This is the only fair approach from the standpoint of the taxpayer, who’s footing the bill.
On the labor side, this bill proposal fails to require any serious reform of legacy costs. Indeed, it states explicitly that one of its purposes is to preserve the same retirement and health care benefits that have made these companies so uncompetitive. It’s delusional to expect a company that spends $71 per labor hour to compete with a company in a neighboring state that spends $49 per labor hour.
In short, this proposal is deeply flawed because it fails to assure taxpayers – who rightly expect us to be good stewards of their hard-earned money – that they will not be asked to shell out billions more a few years or even a few months from now.
There are times when help is needed. But one thing most people expect when they’re asked for help is that the one asking makes a commitment to change. This proposal does not go nearly far enough. It holds neither management nor labor truly accountable. And in areas where one side is held accountable, the other side isn’t. One example is a provision that requires automakers to drop all legal challenges to state fuel economy standards that are inconsistent with the federal standard.
Where is the offer from our friends on the other side to call on environmental groups to drop their lawsuits? Democrats say they want to solve this problem as much as we do. Yet they seem all too eager to tip the scales to the detriment of the manufacturers. There is plenty of blame to go around for the problems that ail the auto industry. But fixing half of a problem is not a real solution.
Any successful proposal would force companies to reform, either inside of bankruptcy or outside of bankruptcy. Without that mandate, there can be no real expectation of reform.
A good proposal would force automakers to get control of their benefit costs.
A good proposal would make wages at struggling companies competitive with other automakers – not tomorrow, but today.
A good proposal would end the practice of paying workers who don’t work.
And a good proposal would rationalize dealer networks. Just as struggling airlines adjust their capacity to respond to market conditions, automakers must respond to market demands as well.
I regret to conclude that this proposal Republicans saw yesterday afternoon does not do enough to fix the whole problem. It subsidizes it. A real solution must protect the taxpayers by forcing the changes needed to put these companies on a path to long term success.
Some of these highlighted points should be the groundwork for how the Republicans should must oppose the $15 billion automaker bailout. The “car czar” will be in charge of providing the oversight that politicians have been crying about recently. But the legislation gives the authority for the czar to cancel what obligations are outstanding, if they feel the automakers are not playing by the rules. What the rules are, we don’t know. Is there a benchmark for profitability? The authority is there, but the czar is not required to use it, which is where McConnell makes his point. The door is wide open for more money to be flowing before this is all said and done.
The key to this mess is here:
Where is the offer from our friends on the other side to call on environmental groups to drop their lawsuits? Democrats say they want to solve this problem as much as we do. Yet they seem all too eager to tip the scales to the detriment of the manufacturers.
The biggest “detriment” comes down to the stifling effect that the UAW has on the industry, by artificially inflating costs of operations and making the automakers inefficient and uncompetitive with lower cost manufacturers:
Even as the UAW appears ready to make concessions as part of the bailout package, they are adamant that they stick aroundand make life even more miserable for the automakers and the workers. The burdensome regulations and never-ending threat of environmental lawsuits add even more pressure to the industry. Make no mistake, management is a big problem as we’ve noted. But the unions, environmentalists, protectionists, etc., have dragged the auto industry down this road. And the caretaker of these special interests is the Democrat Party.
The Democrats are forging aheadwith their plans to force yet another taxpayer-funded, government mandated bailout down the throats of the American taxpayer. This is a political football for Democrats. Their hubris will most definitely get in the way of fiscal and economic sanity. For Democrats, it usually does. As recent polls show most voters are growing weary of government bailouts, Democrats are growing more cautious. In the next few days, Pelosi and Reid will start their fear-mongering again, inciting class-warfare against the Republicans; they don’t want to jump off this cliff alone. It’s a replay of the financial bailout fight in September. The difference here: in about six weeks, this mess belongs entirely to the Democrats in the White House and on Capitol Hill. Nothing will hurt voterstaxpayers more than hundreds of thousands of newly unemployed auto and auto-related workers, which is what the chicken-littles are saying will happen. But then again, we were warned of impending financial disaster if we didn’t pass the financial bailout; the bailout passed and the economy appears to get worse. Go figure.
If the Democrats want to run with this, which they will, then fine. If they want to believe that $15 billion for three months will even begin to correct a bloated and inefficient auto industry, let them believe as much. If they feel that more government bureaucracy, more bureaucrats in the form of a “car czar” overseeing the auto industry is the answer, let them think so. The Democrats need to pander to the UAW and environmentalists, not Republicans.
The GOP needs to take a big stand here and stop this bailout madness, this idiotic notion that government has the solutions to the self-made inefficiencies and ineptidude of private industry. These bailouts represent everything that the GOP is supposed to be against: government intervention in the private sector, more useless bureaucracy and waste and inflating budget deficits.
A filibuster sounds greatright about now, but we’ve seen this group of Republicans fold before. Hell, if they had any sort of spine before, last month’s election results might have turned out differently. We probably wouldn’t have a $700 billion monstrosity on our hands. The current batch of Republican whiners and RINOs needs to be weeded out in order to rebuild the party. But it is encouraging to see a filibuster threat, maybe it’s just bailout fatigue. And another encouraging sign: John Ensign is looking to join Richard Shelby and his filibuster plans.
The Nevada Republican said the assistance to the automakers amounts to “the government picking the winners and losers instead of the market.”
“We’re just going down further and further and further towards socializing our economy,” he said.
That’s exactly what this is. Strong words to be sure. Given that Republicans are talking the talk, let’s hope they can get it together and stand up to this nonsense now. With one filibuster, the Republicans can kill several birds: begin rebuilding the GOP, watch the Democrats squirm come January and most importantly, save the country from the bailout insanity.
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(UPDATE)
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