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OpEdNews Op Eds    H2'ed 12/16/08

The Auto Bailout Bill's Defeat and the Politics of Class Warfare

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The failed negotiations in the Senate over the Detroit bailout bill provide Americans with a preview of the political class warfare that will break out in the next Congress. The attempt by the Senate to pass a Bush White House-Democratic bill failed. It was scuttled by a group of conservative Republican Senators led by Tennessee's Bob Corker. They pushed to revise the bailout in a deal-breaking way that would allow them to blame unionized auto workers for its demise.

Corker's group framed the issue as one of protecting taxpayers from greedy, overpaid, unionized workers who had contributed to the American auto industry's demise. By so doing it sought to harness American outrage over bailouts to an anti-union political agenda. Both efforts were highly cynical and hypocritical examples of the politics of class warfare at its worst.

Corker entered the negotiations by demanding that the automakers reduce the wages and benefits of unionized workers to the level of Honda and Toyota's American factory workers. By imposing a demand on the union that was not required for any of the other parties--lenders, suppliers, dealers, or executives--Corker and his group were able to set up the auto workers union, the UAW, so that it would take the heat from the public if the bailout failed, or so that it would be weakened internally if it made the demanded wage concession.

When the union rejected the deal on grounds that it unfairly singled out workers, South Carolina's Senator Jim DeMint was able to declare: "It sounds like UAW blew up the deal."

The ostensible rationale for the Republican Senators' opposition group was provided by Minority Leader, Mitch McConnell of Kentucky who claimed that: "We simply cannot ask the American taxpayer to subsidize failure," and implicitly, high union wages.

Behind the conservative Republican Senators' opposition to the auto bailout was a not so subtle form of political class warfare. The Big Three are unionized and the Corkers, DeMints, and McConnells of the Senate want to further the de-unionization trend of the last 30 years by breaking one of the U.S.'s remaining powerful unions.

The issue was certainly not protecting American taxpayers. In Congressional hearings on the bailout, economist Mark Zandi testified that automaker bankruptcy would have "cataclysmic" impact on the economy. When all the costs of an auto industry failure were accounted for, Zandi observed, they would run the U.S. government many times more than what it would take to save Detroit.

Depressingly, few lawmakers or commentators bothered to point out Corker and Co.'s blatant hypocrisy. This can be clearly seen when the automakers' request for $34 billion is contrasted with the United States government's bailout of the financial sector. One insurance firm, AIG, has been given $150 billion in taxpayer funds, over four times what the automakers are asking.

One week after receiving its first infusion of federal aid, AIG hosted a meeting at the swank St. Regis Resort in California. There, with help of taxpayer dollars, the attendees ran up a bill that included $150,000 for food and $23,000 in spa charges. This was followed by a second U.S. government loan to AIG of $37.5 billion. A week after the company received these new taxpayer funds, four major AIG executives jetted to England for a partridge hunt; total bill--$86,000.

Why are the Corkers, DeMints, and McConnells up in arms over protecting the taxpayer from union workers who make less in a year than the cost of one AIG weekend at the spa or partridge hunt? Why didn't they demand that AIG's workers and executives have their expense accounts, wages and benefits cut to Tennessee or Kentucky averages in exchange for being bailed out?

The answer, of course, is that these senators are not really concerned about protecting the taxpayers or adjusting inequities in federal government rescues. Corker & Co. are out to attack unions and manipulate public anger over this bailout to that end.

The truly depressing thing about this current politics of class warfare is that one of the things that has gotten the U.S. into its current economic disaster is the failure of workers' wages to keep pace with productivity gains, profits, and executive compensation during the last decade. Further, the wage cuts and layoffs--both pushed by Corker and his allies--will only worsen the current and very severe recession by lessening consumer spending.

What the economy needs now is the reverse of what the Senate conservatives are demanding--more jobs and higher worker wages. And, what the country needs is less hypocrisy in politics and instead a serious effort to hold accountable executives of all firms receiving taxpayer funds.


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Dr. John Paul Rossi is a associate professor of American history at Penn State Erie, The Behrend College. He writes on business and economic history, and has co-authored ENTREPRENUERSHIP AND INNOVATION IN AUTOMOBILE INSURANCE: SAMUEL P. (more...)
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