Planet Gore

When $25 Billion Isn’t Enough

Detroit — The federal government’s $25 billion auto-loan program, appropriated to help automakers retool plants to make the more fuel efficient cars mandated by Congress, has not yet been distributed. But that didn’t stop Barack Obama Friday from announcing a further $25 billion to help automakers survive long enough to be able to make cars at all — much less green ones.

Having saddled the industry with expensive fuel economy regulations and stood shoulder-to-shoulder with the United Auto Workers union as it resisted changes in plush wage and benefit packages that were 25 percent higher than their domestic Japanese competitors — the Democratic Left is coming to the Big Three’s rescue.
But how to rescue a patient if you don’t know the source of his illness?
In supporting a federal bailout of the domestic automakers, Obama’s mouthpiece, The New York Times editorial page, weighed in with a clueless editorial Friday:

In 2010, (the Big Three) are expected to offload responsibility for their retirees’ health care onto a new fund. They have negotiated new contracts with the auto workers’ union that eliminate retiree health care and allow for lower wages for new hires. They are slashing the production of gas-guzzlers. Some analysts believe they finally have a promising lineup of fuel-efficient cars.

But the Times ignores the fact that Obama himself — the candidate of Change! — opposed this historic contract that has given U.S. automakers some sliver of hope. “I stand with the 73,000 United Automobile Workers who are striking General Motors,” Sen. Obama thundered when the UAW struck to protest the agreement in 2007. “The demands the union is fighting for — job security, the health benefits they were promised — are things that all workers should expect and that UAW members deserve.”

Yet, it is only as the result of this labor agreement that automakers can “finally have a promising lineup of fuel-efficient cars.”
Prior to the contract, the Big Three only made money on light trucks, meaning — logically — they concentrated on producing larger vehicles. Obama has lauded Japanese automakers’ investment in smaller cars, but that investment was prudent because — sporting non-union labor — they made $1,500 per vehicle on compact cars, or $1,500 more than UAW-saddled Detroit automakers could make.
GM secured the first $25 billion in the auto loan program by convincing Congress that it needed to chip in to help pay for the cost of its green mandates. Pressure for the second $25 billion is coming from the UAW, which warns a GM bankruptcy could jeopardize company payments to their new health care fund. And when unions talk, Obama listens. The Times concurs, but can’t help but waggle a finger at its Detroit patient:

But if the government is going to hand out billions to Detroit’s Sorry Three, there need to be serious conditions. The money should. . . come with limits on executive pay and golden parachutes. The top executives of the car companies should be required to step down; taxpayer money should not be used to underwrite proven managerial incompetence.

I have a better idea. How about taxpayers demand Washington Democrats explain to us how their onerous fuel-economy laws forced automakers to make cars their customers didn’t want; then show us how much money they received from the UAW to thwart industry wage and benefit reforms?

After all, before we cough up more money, Washington should be held accountable for its proven political incompetence.

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