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Auto Bailout Blues: Spin, Lies and Layoffs

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05/16/2009 @ 1:19pm  at The Nation

The madness of the approach adopted by the Johnson and Nixon administrations to war in Vietnam was summed up by the American major who said after the destruction of the Vietnamese village of Ben Tre: "It became necessary to destroy the village in order to save it."

The madness of the approach adopted by the Bush and Obama administrations to the renewal of the American auto industry has been summed up by the Treasury Department's latest statement on the "restructurings" of the Chrysler and General Motors automotive companies--which are shaping up as plans for factory closings, mass layoffs and the shuttering of hundreds of car dealerships in communities across the country: "The Administration's commitment to this industry has given both companies a new lease on life."

It may be true that the tens of billions in federal tax dollars that are being pumped into Chrysler and General Motors will save the names of these companies. But the auto-industry "restructuring" is not saving auto plants that have been targeted for closing, tens of thousands of auto workers who face layoffs, auto dealers who are being "consolidated" out of business and perhaps 100,000 service and repair employees who are soon to be jobless.

This "new lease on life" looks like the most wrongheaded expenditure of federal dollars since, well, the bank bailout of last fall--which was supposed to loosen up credit but instead allowed wealthy executives to paper over their personal losses with taxpayer dollars.

There is no doubt that the Obama administration should aid this essential industry. A federal government that can bail out Wall Street should be helping auto dealerships on Main Street make it through a dramatic downturn in he economy that is devasting the global auto industry--as well as just about every other industry.

But "help" that pays Chrysler to shutter factories in Ohio, Wisconsin, Missouri, and Michigan and move work to Mexico, that pays General Motors to shutter factories in locations across the country in order to move the work to China, that pays Chrysler and GM to drop roughly 1,900 dealerships, is not going to get the American middle class through this downturn.

The dealership closings, which were announced this week, will be especially tough on minority owners and, according to the dealer's association, could cost as many as 100,000 jobs nationwide.

The factory closings will displace tens of thousands of workers and rip primary employers out of communities across the Great Lakes states.

What is especially unsettling is the mounting evidence that the Obama administration and the car companies are peddling spin--and, critics argue, outright deception--in order to promote the fantasy that what's playing out will, as the Treasury Department suggests, be "a restructuring that results in stronger car companies--supported by efficient and effective dealer networks--(that) will not only provide more stability and certainty for current employees but the prospect for future employment growth."

In fact, the plant closings and dealership closings--coupled with the ramping up of Chrysler and GM production outside the U.S. and the radical consolidation of car sales and service--eliminates stability and certainty for tens of thousands of current employees and reduces the prospect for future employment growth in this country.

How is this process advancing? The Cleveland Plain Dealer's Stephen Koff has produced a detailed examination that suggests an unsettling answer.

Reviewing the communications with members of Congress that took place just before the announcement by Chrysler that it would close some of its most productive U.S. plants as part of the "restructuring," Koff writes:  Were Congress members duped? If so, by whom and why?

The short answers appear to be yes, by both Chrysler and the White House.

Koff's report and related accounts led the Plain Dealer to editorialize:

    No one in Northeast Ohio -- or anyplace else that once thrived along with the American auto industry -- is naive enough to think that the changes needed to save that industry won't hurt workers or communities. The truth is especially grim when it comes to Chrysler, always the weakest of Detroit's once-Big Three.

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John Nichols, a pioneering political blogger, has written the Online Beat since 1999. His posts have been circulated internationally, quoted in numerous books and mentioned in debates on the floor of Congress.

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