TARP bailout money may be used to help automakers
After the breakdown of Congressional talks Thursday night, in an attempt to work out a compromise for the Detroit automakers, it looked as if the three companies might actually have to declare bankruptcy. All of this because the UAW is unwilling to make labor and benefit concessions some Senators wanted, before they agreed to give them $15 billion of our money to stay afloat. As I mentioned in my earlier article, I suspected all along that some sort of compromise would be reached. That compromise failed to come to fruition, but it looks like the Big Three are going to get what they wanted in the end. The Bush administration seems to be unwilling to risk the failure of the automakers, believing it would be a disaster to our economy to lose so many jobs. That being said, it appears they considering using $15 billion of the Troubled Assets Relief Program money (TARP), originally earmarked for Wall Street, to bailout General Motors and Chrysler and to give Ford Motor Company a line of credit. From FOX News:
A day after the sudden demise of rescue legislation in Congress, General Motors officials were talking with the administration and the Federal Reserve about how carmakers could still get the billions of dollars they say they need to survive. The talks included conditions that automakers would have to meet, said GM spokesman Greg Martin.The day after the sudden demise of emergency legislation in Congress, administration officials said no decisions had been made on the size or duration of the new rescue plan, or what type of concessions, if any, would be demanded from the struggling automakers, their workers, stockholders or others.
In a reversal, the most likely option under consideration involved billions of dollars originally ticketed for the bailout of the financial industry. President George W. Bush had long declared that money off-limits to the beleaguered automakers.
I honestly do not understand how far the Bush administration seems to be willing to go to bailout companies who are failing for two major reasons. First, they have not restructured themselves to be able to build the kind of automobiles the world needs in this day and age, using a failed business model that may have worked fine in earlier days, but not in the 21st century. Second, they have been and are still being held hostage by a labor union that has been able to negotiate labor contracts that put billions of dollars in benefits and unearned wages (read Jobs Bank) on their books, billions of dollars that they simply do not have the money to pay. Something has to change and I fail to understand how it is the responsibility of the American taxpayer to pay for those changes and the failure of the automakers, no more than I was able to understand the original $700 billion that has been given to Wall Street.
Explain to me please, how it is a good thing to require such high wages and benefits, such as the aforementioned Jobs Bank, that it bankrupts the company you are working for. That one doesn’t make sense to me. Wouldn’t it be better to have a lower paying job, rather than to eliminate the job altogether because you were unwilling to accept a lower salary or the elimination of a program that allows you to get paid, even if you are laid off? It sounds like just one more case of the UAW and it’s members cutting off their noses to spite their faces and it looks like you and I are going to pay the bill on this one as well.
That’s my take!
Larry
Yep. About eight years ago I was living in a fairly large town in Georgia, and just happened to be at a local auto dealer doing some looking around. I made the comment about how ridiculously priced American cars were, and the reply from the salesman was shocking to me. He said the guy just sweeping the floors was making about $28 an hour; that was over eight years ago. I can’t imagine what the same worker is getting paid now. I don’t even suppose that figure included all the benefits, either.
No wonder the auto industry is in such a shambles. Like you said, though, it’s the American taxpayers who will likely foot the bill to fix the situation.