November 19, 2008
Expect an early Obama bailout of the Big ThreeBy C. Edmund Wright
The chances of any meaningful bailout of the Big Three U.S. auto makers are shrinking rapidly in this lame duck session of Congress. With George Bush in the White House and somewhat slimmer Democrat majorities on the Hill, the very fatty pound of flesh the unions want is not possible now. This week's Congressional shenanigans are just chumming the waters and to allow the networks to have all Thanksgiving and Christmas to run "woe is me" stories about the wonderful hard working union families facing economic extinction after the holidays.
That will set the stage for what is sure to be the first big battle of Obamunism. And it is a hugely important battle for the future of business in this country. Forget this little distraction about Hillary and the Secretary of State job. If the Obamunists (my name for the hard core leftists who support Obama and on certain days, Obama himself) can get everything they want regarding the auto industry and widespread forced unionization via the misnamed Employee Free Choice Act that would abolish the secret ballot in unionization elections, this country will be plunged into Euro-socialism faster than Hillary and Bill could have dreamed with their ill-fated "Hillary Care" in 1993.
It's the leftist tri-fecta. Nationalization of industry, explosive union membership growth and job-killing green initiatives in one fell swoop.
And this is what the Obamunists really want. Why else would Obama install Governor Jennifer Granholm and former congressman David Bonior, both of Michigan, on his economic team? These are two key architects of the worst economy in the nation, and they are now in positions of power and influence for Obamanomics. This is not what Mark Cuban had in mind when he issued his suggestions this week via the Huffington Post.
Michigan has been in recession for a number of years, and was running a 9% unemployment rate while the rest of the nation was around 5% or less. This is a state that has elected pro-green and pro-labor liberal upon liberal for years, and they can't seem to figure out "why George Bush has ruined their economy." It never dawns on them that gasoline costs run amok due to environmental laws, not to mention unsustainable union compensation, might have anything to do with it.
So while Obama went on 60 Minutes and spoke in moderate terms about the auto industry and mentioned the need for all the stake holders to answer the question "what does a sustainable U.S. auto industry look like," his team was not at all interested in going to South Carolina or Tennessee to find out.
Bonior tipped their hand this week. In a Monday interview on CNBC, he launched into the need for an auto industry bail out fueled by more of what has almost killed the industry in the first place. He rants about "reducing executive pay" and the need for re-tooling "for the new energy economy" and the need to save "millions of union jobs." When pushed by the interviewers on the need for addressing the union contracts, he avoids the question but launches into the need for EFCA.
So vital is this in Bonior's mind, that he came armed with a brochure on the legislation and waved it in front of the camera as CNBC tried to end the interview. Make no mistake, this is about the unions, the whole unions and nothing but the unions. It has nothing to do with what a sustainable U.S. auto industry looks like.
Meanwhile, Harry Reid was on the Hill crafting legislation doomed to failure. On Tuesday, details of his bill came out and there was not a single part of the legislation that addressed the unrealistic labor costs faced by the Big Three. Of course, it was laden with executive pay decrees and all kinds of green initiatives, but nothing to actually help the auto makers actually bring in more beans than they are spending.
It was nothing but a show to set up a battle royal in January when the Dems will have what might be a stranglehold on government. (Why do you think Lieberman was let back into good graces and senate race in Minnesota is sparking fundraisers by Soros?)
Because frankly, the answer to this problem is not that hard to figure out. These companies could easily survive under a properly structured re-organization plan. "We have a mechanism for this" said Arizona Senator Jon Kyl. "It is called Chapter 11."
The Wall Street Journal's Steve Moore, in an interview with Fox's Neil Cavuto added, "...the bankruptcy option is the best one for these companies. It would give them the ability to re-structure and to render null and void a lot of these contracts that they can't possibly pay. This is not to say that these companies would go away. "
Currently, according to Moore "there is no talk...of slashing the labor costs that make these companies hopelessly uncompetitive. They have to cut back on some of these super-sized benefits."
But there will not be talk about that from the Democrats or the UAW. Elections have consequences, and their team won this past election. The UAW had a lot to do with that win, and they expect quid pro quo. The plan is simple. Get in power in January and put the pedal to the metal on a huge auto bail out for the Big Three with no union give backs. And throw in the EFCA for good measure. This is their vision. This is Obamunism.
"It's the model that Europe used in the 80s and 90's" said Moore. "Anytime an industry would get in distress, they would throw money at it. They haven't created a single new job in two decades, whereas the dynamic U.S. economy with entrepreneurship but also creative destruction, has created 40 million jobs in the last 25 years."
The irony is, the best chance to save the dynamic entrepreneurial economy may be for the Obama Administration to over-reach on this issue. As strong as the union influence is among Democrats, many Americans who have seen their 401 K's and jobs go away might well balk at a "UAW" bail-out. Folks will lose patience with semi-skilled assembly line workers retiring in their 50's and living like royalty. For all of the union bluster, many people voted for Obama for his tax cuts, not his Obamunism.
In 1993, the Clintons over-reached on Hillary Care and it was one of the building blocks for the GOP take over of Congress in 1994. Perhaps the best we can hope for now is that the Big Three Auto Bail Out will do for Obama what Hillary Care did for Clinton.