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December 3, 2008 at 18:41:21
Promoted to Headline (H2) on 12/3/08: by Cameron Salisbury Page 1 of 2 page(s) |
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The difference between a diffident Congress respectfully requesting a teensy bit more information before handing Henry The-Sky –Is-Falling Paulson a $700 billion authorization, in record time and with no strings attached, stands in stark contrast to the hostility and derision directed at Detroit’s auto executives, who are responsible for actually making something useful and who are requesting a $34 billion guaranteed loan to help get them through the harshest economy in memory. An economy in freefall, by the way, that is the direct and immediate consequence of Wall Street and its Washington, D.C., enablers. Until recently, auto manufacturers were selling their big, profitable SUVs, making money for shareholders and being applauded by investors. Suddenly, Wall Street speculators hijacked the oil industry, transportation and food prices skyrocketed, the economic core of the country, the homeowner, went into Wall Street-induced foreclosure, and before Detroit could turn its massive ship around and concentrate more of its attention on hybrids, SUVs were collecting dust on new car lots. A lack of foresight? Yes. Just like millions of homeowners who tried to get ahead of the curve. Just like the Congress that had deregulated so many markets that corrosion had seeped into the financial base forming the substructure of impending economic doom. The auto executives were told that they couldn’t get a government loan without a specific plan detailing how they would use the funding. With a brand new set of standards that had been notably lacking when Paulson’s railroad came through, Senator Pelosi made clear: “No plan, no money.” Despite the negligence and incompetence of banks, Wall Street, and the U.S. Congress which have caused an international crisis that will certainly bring U.S. hegemony to an end, Paulson was never asked for a reasoned, intellectually honest plan for his bail out billions, which, as events quickly showed, he couldn’t have provided anyway. 
Senators, deep in the depths of hypocrisy, castigated the auto executives for flying to Washington on private jets.
They suggested that the auto honchos step down from their jobs so that new management could be put in place.
The auto executives were even asked if they would forego their salaries for the requested loan.
None of these subjects was broached with Wall Street surrogate and ex-Goldman Sachs CEO Paulson.
The sight of U.S. Senators conducting a withering assault on representatives of the manufacturing sector was a sad spectacle made surreal by the participants themselves. The U.S. Congress and its approval of one free trade agreement after another has made virtually all American industry, with its environmental safeguards and middle class wages, noncompetitive in the global market. The entire industrial sector is well on its way to having a Southeast Asia or Mexico zip code. Legislators talk as though the U.S. manufacturing sector is a dispensable nuisance instead of a sign of strength, and when South Carolina’s republican governor Mark Sanford says the American auto industry is unnecessary (PBS, 12/3/2008), we have to wonder if this was their intent all along.
Richard Shelby, R-Ala, has been the most derisive of the industry’s critics. However, as USAToday noted on December 2, his state is home to Honda, Toyota and Hyundai plants, and has given $650 million in tax incentives to foreign manufacturers. The South in total has handed them $3.2 billion.
Critics say that auto workers are paid too much. If we’re talking about the CEOs there is no argument, although they are scarcely in the same league as Merrill Lynch CEO John Thain, who made $83 million in 2007, or Goldman Sachs’ Lloyd Blankfein at $54 million.
The workers themselves make about the same as employees at Toyota and Honda, about $26 an hour. The real difference lies in the legacy costs of the Big Three. Although nonexistent at the foreign automakers with their new manufacturing operations, Ford, Chrysler and G.M. have decades of history including retired employees, pension and health benefits obligations. Added together and divided by the current workforce, their hourly employee cost of operation, they say, is $70. Politicians want Detroit to do away with its high legacy costs by ‘restructuring’ or declaring bankruptcy and letting a judge do it for them.
It’s no exaggeration to say that Detroit’s auto industry is largely responsible for creating America’s middle class. Kicking and screaming, the auto companies in the 1940s and 1950s worked with their unions to provide decent pay and benefits. Then – voila! -their employees could not only buy the cars they made but also housing, appliances, and clothing, too. Because of the health care and pension benefits eventually built into their contracts, auto workers became some of the most economically secure citizens in the world.
All workers wanted what Detroit had made possible. Before 1960, the pay and benefits in the industrial sector had become the gold standard for every employee across the country. The quality of life of the U.S. middle class had become the envy of the world.
About 30 years ago, automakers began to take seriously the inroads being made by foreign manufacturers and, in the interest of remaining competitive, began serious efforts to ‘restructure’, that is, reduce the number of employees, pay and benefits. Free trade agreements beginning in the 1990s made circumstances nearly untenable for employer and employee. Detroit went into a downward spiral.
Now, with Washington politicians demanding that auto makers jettison their legacy obligations and cut wages, many in the ‘elite’ classes gleefully anticipate the complete annihilation of the remnants of the hard-won, historically unprecedented, social contract between employer and employee. With an estimated 3 million jobs at stake, this could mean the extinction of the remaining middle class wage earner and pensioner.
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| 12 comments |
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Focus on the practical, measurable results
The class war has long been over, only illusions to the contrary persist. The rich won. by Michael McCoy (7 articles, 1 quicklinks, 2 diaries, 488 comments [28 recommended, 0 rejected]) on Wednesday, Dec 3, 2008 at 8:03:19 PM  (0+)
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Lets rename the financial sector
Lets rename the financial sector of our economy. Since it really has subsumed the last remnants our government as well lets call it; THE MINISTRY OF CONTRIVED SCARCITY by Bucky the Commoner (0 articles, 0 quicklinks, 0 diaries, 62 comments [2 recommended, 0 rejected]) on Wednesday, Dec 3, 2008 at 8:09:10 PM (0+)
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Now Congress Wants to Act Tough
Our Congressmen who buckled under after being threatened with martial law and economic armagenden, now want to show the voters they are concerned about our tax money? They should have stood up to Paulson and told him, that they represent their constituients and not the bankers. OK let the auto companies fail; that will just bring on the coming depression and revolution that much faster. by ronheri (0 articles, 0 quicklinks, 0 diaries, 257 comments [47 recommended, 0 rejected]) on Wednesday, Dec 3, 2008 at 8:28:32 PM (0+)
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Why be surprised?
Why be surprised? “How the world really works” by A B Jones sets out the aim of the ‘Banking Elite’ to destroy the middle class. “The Creature from Jekyll Island” by G Edward Griffin describes the establishment of the Federal Reserve and the ‘rules’ of the banking ‘game’. Be prepared for worse to come!! by Sean Clinton (0 articles, 0 quicklinks, 0 diaries, 1 comments) on Wednesday, Dec 3, 2008 at 9:07:01 PM (0+)
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Here's the plan...
In order to become competitive with foreign manufacturers, the American auto industry has to shed it's legacy costs. Why don't we just design butt- ugly, inefficient cars, that don't sell, cry to the government, get a bailout, declare bankruptcy, screw all of our retirees out of their early retirement incentives and healthcare, and then be competitive. by Matthew Peters (0 articles, 0 quicklinks, 2 diaries, 171 comments [4 recommended, 0 rejected]) on Wednesday, Dec 3, 2008 at 9:13:08 PM (0+)
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don't bail out the big three..
instead send each american a check for $100,000. Damn, would that stimulate the economy or what? by jersey girl (0 articles, 0 quicklinks, 0 diaries, 1201 comments [734 recommended, 12 rejected]) on Thursday, Dec 4, 2008 at 5:09:14 AM (0+)
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Reply: LORDY, YES!
Yup, $100,000 right now would get ME out of my financial woes instantly, with plenty left over to invest in starting new jobs for myself and others! I'll write my Congresscritters immediately! But back to the article and grim reality...isn't Congress's reluctance at the moment merely due to the flack it's taken from caving in to the bankers so quickly? (Do we really doubt that Congress will cave in on this one, too?) Isn't it fairly obvious that "bailout" automatically equates with handing CEOs golden parachutes and screwing the workers? In demanding detailed plans for use of the cash, isn't it possible that Pelosi actually did something right, for a change? by Jill Herendeen (0 articles, 0 quicklinks, 0 diaries, 213 comments [13 recommended, 0 rejected]) on Thursday, Dec 4, 2008 at 8:19:40 AM (0+)
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Reply: Throw Me a Crumb & I'm Supposed to Be Satisfied?!
"Isn't it fairly obvious that "bailout" automatically equates with handing CEOs golden parachutes and screwing the workers?" Bail Out is synonymous with Hand Out -- as in directing Other People's Money (OPM), i.e. Taxpayers Hard-Earned dollars to institutions, businesses and individuals the Glad-Hander decides upon. A Taxpayer must ask him/herself about the Hand Outs and No Bid contracts which disappeared in Iraq, post-Katrina ?rebuilding?, government programs and myriad other BlackHoles -- the profligate waste and robbery is so enormous as to not be comprehensible. Do we Kudos to someone like Pelosi for anything? NO! She has stood in the breach stopping the working out of the Rule of Law and the Will of the People with regards to the remedy of Impeachment. She is an Impediment to Transparency and Accountability. Just because a political figure is forced to finally make a move that should have been there from the inception, and written into the contract -- gives me no warm-fuzzy. You go ahead and Trust gatekeepers who are corrupt to their core. Patriots demand Full Accountability, Investigation of events, and Justice. Getting thrown a crumb at this late stage of the Divestment of Americans is Too Flipping Late! by boomerang (0 articles, 7 quicklinks, 0 diaries, 557 comments [215 recommended, 1 rejected]) on Thursday, Dec 4, 2008 at 10:19:42 AM (0+)
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booting up the economy
Your article is full of facts that congress and some people want to ignore. I feel that bailing out American auto makers is more important than bailing out wall street. The best way to bail out the big three is for the government to give a subsidy to individuals who buy a new big three automobile. The vehicles need to be sold in order for the recovery to work. As far as the middle class being defeated in a class war it looks bad. Once the middle class is toast and some wealthy moron proclaims MISSION ACCOMPLISHED The war will escalate with the the wealthy taking a severe beating. Its hard to make a profit with no consumers. by Gary Denson (2 articles, 0 quicklinks, 1 diaries, 283 comments) on Thursday, Dec 4, 2008 at 5:40:43 PM (0+)
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The class war could be won at once
The banking elite performs no essential function. The US Treasury can print up all the debt free money it likes and spend it and lend it into circulation. 'Banking' is inherently a government function. The only reason the government borrows debt money from the banksters is because of their devious machinations. Web of Debt I would like to see Michigan issue its own currency and loan some of it to the American car companies. Raftshol for Governor 2010 by wraft (0 articles, 0 quicklinks, 0 diaries, 54 comments) on Thursday, Dec 4, 2008 at 5:46:54 PM (0+)
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Stop the Outrage! This is class warfare!
Who are we kidding? We let the rich win everytime this happens. We have a unique oppertunity to change things...REALLY CHANGE THEM! This is the ONE issue our polerized Nation agrees on! If the GLBT can fight for marriage...we can fight for our economic future. in 45 Days...more money than I can comprehend will be spent...lets make sure it is spent wisley and towards ethical economic reform. StopTheOutrgae.org is our "Join the Impact" We have to connect somewhere...in mass. Only MILLIONS of Voices will bend Capitol Hill's ear! by evvie harmon (0 articles, 1 quicklinks, 0 diaries, 4 comments) on Thursday, Dec 4, 2008 at 11:51:19 PM (0+)
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The rich are losing the war
Yes, it's been class warfare ever since Reagan. "Trickle-down economics" was a declaration of war all by itself. But if the rich are on their knees begging for cash, it looks like they're not exactly winning the war they started. We're Celebrating Your Demise! by Perry Logan (0 articles, 0 quicklinks, 0 diaries, 560 comments [74 recommended, 3 rejected]) on Friday, Dec 5, 2008 at 5:19:03 AM (0+)
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