to punish them for their past transgressions, they do not want to punish the auto workers. This creates a dilemma.
U.S. auto companies employ nearly a quarter-million workers, and more than 730,000 other people have jobs producing the materials and parts that go into cars. About 1 million on top of that work in dealerships nationwide. If just one of the auto giants were to go belly up, some estimates put U.S. job losses next year as high as 2.5 million. (AP)
The L.A. Times recently gave the example of how suppliers would be affected. The Ford F-150 pick-up, the top selling vehicle in America has 4,350 parts from 270 suppliers, and 75% of them are made in 26 U.S. states.
What happens if GM and/or Chrysler file for bankruptcy? The prognosis is not very good. In the past, when a company filed for Chapter 11 they would trim down their work force and suppliers, and usually manage to restructure. However, with the credit crisis companies filing for bankruptcy are shutting down because they cannot obtain enough financing to reorganize.
On the other hand would a bailout simply be a short- term fix, leading to eventual demise?
What will it be, bankruptcy or a bailout?
It appears that for now a decision is in limbo. Senate Majority Leader Harry Reid, D-Nev., scrapped plans Wednesday for a vote on a bill to carve $25 billion in new auto industry loans out of the $700 billion Wall Street rescue fund. It's really up to Bush's team to act, he said.
But Bush refused to take action. As White House press secretary and wind-up Barbie doll Dana Perino said, there was “no appetite” in the administration for using the financial industry bailout money to help auto companies.
"I don't believe we need the legislation," Reid said. Treasury Secretary Henry Paulson can tap the financial industry bailout money to help auto companies, Reid said, but "he just doesn't want to do it." (AP)
Where exactly is Henry Paulson during all this heated discussion? Walking away. Now that he has helped out his buddies on Wall Street with about half of the $700 billion rescue fund, he said he has no plans to spend the rest. Not on mortgage foreclosures or the auto industry. He said he plans to leave the remaining funds for the next administration.
Talk about a bailout.
So where does all this political maneuvering leave Detroit’s Big Three automakers on Wednesday? Pretty much up a creek without a paddle.
Which is appropriate since Wednesday was World Toilet Day.
Cheri Cabot
Cheri’s column, “Personal About Politics,” published every week on Gather.com, will reflect on how the life of a 59 year-old, middle class woman is affected by politics, policy and the current state of the nation - a look at the personal aspects of politics.
Cheri is a freelance writer, living in Southern California. She has two grown children, one in Iowa and one at Columbia University, and is the proud grandmother of two. Cheri is also a purveyor of fine coffee, warm chatter and dry wit.
