Bailing Out The Auto Bailout And The Path To Socialism

Why did the Republicans stand against the auto bailout?  Well, one reason might be that being thrust into the minority made them rethink a few things, and come to the reason that they lost power because they stopped acting like Republicans.  And this time they have most of the country – which opposes the auto bailout – is with them.

More specifically, the Democrats are protecting the UAW and Republicans are trying to get the necessary concessions up front because they know that when the Democrats are in complete control after inauguration day, the unions will be protected at the detriment of a viable American auto industry and the economy.  When the massive gold-plated union benefits are figured in, UAW workers make $73 and hour, compared to only $48 an hour for comparable workers in foreign car factories located in America.  GM pays more for health care than it does for steel.  Worker compensation packages result in American automakers being in the hole for up to $1800 per car.  That discrepancy leaves the US automakers unable to compete, even if they do everything else right.  And Republicans know that if these necessary UAW concessions aren’t made prior to a bailout, and prior to Democratic control, they will never be made at all.  And one bailout will be followed by another.  And then another.

Charles Krauthammer made this prediction Thursday during the discussion on Fox News Special Report, prior to the failure of the Congressional bailout bill:

KONDRACKE: What the Democrats are hoping is that the Bush administration caves in the end, that they are so terrified of these jobless numbers that — I’m telling you, this is what they’re hoping for, is that Hank Paulson will be driven to use some — [of the TARP money].

KRAUTHAMMER: I think [the UAW] will hold out, and the administration under Bush will rescue the companies and not allow it to go under under his watch. That’s my prediction.

KRAUTHAMMER: He won’t want to leave a dead industry at the foot of Obama on Inauguration Day.

And it looks like both Kondracke and Krauthammer are right.  President Bush is now signaling that he will do precisely that – even though he has steadfastly opposed that measure up to this point.  The UAW played a game of chicken with the auto industry – and didn’t budge – because they knew that someone would ultimately blink.  In this case, the “chicken” is President Bush.

What burns me is that Barack Obama has already repeatedly slapped the “kick me” sign on President Bush in every way possible.  He’s already blamed the bailout-laden federal deficit – which HE HIMSELF SUPPORTED AND VOTED FOR – as being all on President Bush.  And now President Bush is going to undermine the Republican efforts to get this bailout right and keep the automakers and the UAW from doing what is necessary until Obama can come in and impose a socialist pro-union, pro-green, and ultimately anti-competitive agenda on the American carmakers which will insure they are NEVER profitable.

A CNN/Money article titled “Behind Ford’s Scary $12.7 Billion Loss” written nearly two years ago lays much of the currentAmerican automaker crisis on organized labor:

Structural inequities between the U.S. and Japan – notably in labor costs and currency – account for a big chunk of Detroit’s problems.


A big reason is the cost of labor. As analyzed by Harbour-Felax, labor costs the Detroit Three substantially more per vehicle than it does the Japanese.

Health care is the biggest chunk. GM (Charts), for instance spends $1,635 per vehicle on health care for active and retired workers in the U.S. Toyota (Charts) pays nothing for retired workers – it has very few – and only $215 for active ones.

Other labor costs add to the bill. Contract issues like work rules, line relief and holiday pay amount to $630 per vehicle – costs that the Japanese don’t have. And paying UAW members for not working when plants are shut costs another $350 per vehicle.

Here’s one example of how knotty Detroit’s labor problem can be:

If an assembly plant with 3,000 workers has no dealer orders, it has two options. One is to close the plant for a week and not build any cars. Then the company still has to give the idled workers 95 percent of their take-home pay plus all benefits for not working. So a one-week shutdown costs $7.7 million or $1,545 for each vehicle it didn’t make.

But the UAW refused to agree to bring their benefits packages in line with Japanese carmakers:

Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit’s beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.

If President Bush blinks – and the exhausted and defeated President very likely WILL blink – the Obama administration and the Democratic controlled-Congress will make sure that unions continue to receive complete protection as a profit-killing “green” agenda is imposed on the automakers.

Democrats will ensure that the American taxpayers – as well as their grandchildren-  continue to pay the UAW’s shockingly-out-of-line wages as part of their left-wing agenda.

The auto bailout signals something even more frightening: while the financial bailouts were deemed necessary because EVERY aspect of the economy required financing, bailing out businesses simply because they are “too big to fail” marks a new policy that will require far more bailouts.  One industry after another will now be coming forward shouting that THEY employ thousands of workers as well, and that they need money too.  Will the most liberal President and the most liberal Congress in American history use this opportunity to truly socialize the US economy?

Hope you like that idea: because you voted for it.

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