Friday, December 12, 2008

Details about the Auto Bridge Loan Failure

Last night a cadre of Senators drove General Motors and Chrysler to the brink of bankruptcy by voting against a $14 billion program to provide bridge loans to the auto companies. The loans have already been agreed to by President Bush and the House of Representatives.

Sixty votes were required to end a filibuster of the bill before final passage, and the vote was 52-35. A batch of conservatives, led by Senator Bob Corker (R-TN), objected to it because they wanted to squeeze even more wage and benefit cuts from factory workers who belong to the United Auto Workers.

The $700 billion Emergency Economic Stabilization and Recovery Act — which created the TARP — passed in October, and included fewer strings and employee wage and benefit cuts than the auto loan package. Yet, there were 20 senators who voted in favor of rescuing the financial system, while voting against extending a $14 billion loan to the automakers. Ten others voted yes to the former and did not cast any vote last night.

These lawmakers were willing to write a huge blank check to Wall Street that gave AIG $123 billion, Citigroup $25 billion, and JP Morgan $25 billion, yet left America’s domestic auto industry out to dry. Had eight of these 20 voted for the White House proposal, the auto companies would avoid catastrophe this year:

Yes to TARP, No to auto
Sen. Max Baucus (D-MT)
Sen. Robert Bennett (R-UT)
Sen. Richard Burr (R-NC)
Sen. Saxby Chambliss (R-GA)
Sen. Tom Coburn (R-OK)
Sen. Norm Coleman (R-MN)
Sen. Bob Corker (R-TN)
Sen. John Ensign (R-NV)
Sen. Chuck Grassley (R-IA)
Sen. Judd Gregg (R-NH)
Sen. Orrin Hatch (R-UT)
Sen. Kay Hutchison (R-TX)
Sen. John Isakson (R-GA)
Sen. Jon Kyl (R-AZ)
Sen. Blanche Lincoln (D-AR)
Sen. Mel Martinez (R-FL)
Sen. John McCain (R-AZ)
Sen. Mitch McConnell (R-KY)
Sen. Lisa Murkowski (R-AK)
Sen. John Thune (R-SD)

Yes to TARP, Absent for auto
Sen. Lamar Alexander (R-TN)
Sen. Joe Biden (D-DE)
Sen. John Cornyn (R-TX)
Sen. Larry Craig (R-ID)
Sen. Lindsey Graham (R-SC)
Sen. Chuck Hagel (R-NE)
Sen. John Kerry (D-MA)
Sen. Gordon Smith (R-OR)
Sen.Ted Stevens (R-AK)
Sen. John Sununu (R-NH)

Some of the those who were absent for the vote had understandable reasons, of course. Kerry was in Poznan, Poland, representing the United States at United Nations climate change talks, while Biden was attending to transition duties and Alexander was home recovering from surgery.

In any case, hopefully President Bush will loan money from the Troubled Assets Relief Program to ensure that GM and Chrysler avoid bankruptcy for the next several months, thus enabling them to restructure, recover, and thrive by building the super fuel efficient cars of the future.

Also this statement from a press conference by the UAW this morning regarding the failure of the Senate vote last night, Gettelfinger provided details on the negotiations with Senator Robert Corker (R-TN):

"We reached a tentative agreement with Sen. Corker," Gettelfinger said, "with the understanding he could win approval from the Republican caucus in the Senate. Unfortunately, he was unable to do so."

The tentative agreement reached with Corker, Gettelfinger said, would have required bondholders, as well as the independent trust established to provide health care for UAW retirees -- the Voluntary Employee Beneficiary Association (VEBA) -- to exchange a large portion of their claims for stock in the companies.

"These agreed-to changes," Gettelfinger said, "would have made an enormous difference and a major contribution toward resolving the companies' financial problems."

The tentative agreement reached with Corker also called for the proposed auto czar to ensure that wages and benefits paid to active UAW employees at domestic automakers would be competitive with compensation paid to workers at foreign-owned transplant factories.

"It's unfortunate that Sen. Corker was unable to persuade his colleagues to accept the agreement we negotiated, which included substantial additional sacrifices by our members," said Gettelfinger.

The stumbling block was a demand by the GOP caucus that UAW workers and retirees had to be treated differently from all other stakeholders, instead of requiring all parties to come to the table.

"This demand is not only unfair, it is unworkable," said Gettelfinger. "Modifying wages and benefits alone cannot solve the structural and financial problems faced by the domestic auto industry."

Also at this presser Ron Gellelfinger was asked about the possibility of the Republicans wanting to "bust the unions" His reply was to read them an email he had been sent that had had the to and from area's redacted. It should also be noted that later in the day Sen. Corker was asked about this email by Norah O'Donnell from MSNBC. He did NOT deny the existence of it nor did he deny receiving it. He did say he did not attend the meeting as he was at another meeting in another room at the time. Here is a copy of that email.


Sent: Wednesday, December 10, 2008 9:12 AM


Subject: Action Alert -- Auto Bailout

Today at noon, Senators Ensign, Shelby, Coburn and DeMint will hold a press conference in the Senate Radio/TV Gallery. They would appreciate our support through messaging and attending the press conference, if possible. The message they want us to deliver is:

1. This is the democrats first opportunity to payoff organized labor after the election. This is a precursor to card check and other items. Republicans should stand firm and take their first shot against organized labor, instead of taking their first blow from it.

2. This rush to judgment is the same thing that happened with the TARP. Members did not have an opportunity to read or digest the legislation and therefore could not understand the consequences of it. We should not rush to pass this because Detroit says the sky is falling.

The sooner you can have press releases and documents like this in the hands of members and the press, the better. Please contact me if you need additional information. Again, the hardest thing for the democrats to do is get 60 votes. If we can hold the Republicans, we can beat this.

The Republican's came up with an alternative on Thursday, and presented it Friday morning at what is mostly known as the " 11th hour" which as we all know is way too late.

The “alternative” was all of two pages, one of which is spent criticizing the proposal passed by the House. With the remaining page, conservatives reveal that their plan for helping “the Big Three to become competitive again” amounts to busting their union. After stating that United Auto Workers hold “to concessions already made” conservatives demand that the union:

Concedes the elimination of Supplemental Unemployment Benefits; Concedes elimination of the Jobs Bank Program; Agrees to either reduce company retiree health care obligations or otherwise convert a portion of such obligations into equity; and Agrees to reduce wages and benefits to the levels paid by non-Big Three manufacturers.

Sen. Jim DeMint (R-SC) said yesterday on NPR that, in regards to an auto loan, “we’re not going to do it with the barnacles of unionism wrapped around their necks.”

First, it is worth pointing out that the UAW has already agreed to suspend the Jobs Bank, and delay automaker payments to a retiree health care fund. Furthermore, the union has implemented a plan to permanently shift retiree health costs into a UAW trust fund in 2010. Therefore, the second and third “concessions” that conservatives are demanding have, for all intents and purposes, already happened.

The other two “concessions,” however, are where the trouble really begins. The last one implies that Big Three workers are paid substantially more than their non-Big Three, non-unionized counterparts. However, as the New York Times and the New Republic pointed out, UAW workers don’t earn significantly more in hourly wages. The first, meanwhile, calls for cutting unemployment benefits at a time when economists and lawmakers are advocating extended benefits as an important response to the financial crisis.

Ultimately, these union-busting demands are counterproductive. As David Madland and Harley Shaiken note, “unions help foster a competitive high-wage, high-productivity economic strategy“:

Unionization and high worker productivity often go hand-in-hand. Fairness on the job and wages that reflect marketplace success contribute to more motivated workers. Given the pressures of globalization and competitiveness today, unions have been responsive to increasing productivity and embracing new innovations.

The UAW has already conceded to help the Big 3 manage their financial troubles. New innovations — not a lower-paid, uncared for workforce — will help Detroit get back on its feet.

Demint claimed there will be "riots" if the automaker rescue occurs:
We're going to have riots. There are already people rioting because they're losing their jobs when somebody else is being bailed out. The fairness of it becomes more and more evident as we go along.

To put to rest the case of the wage is constantly being stated the UAW workers are paid more than the foreign car makers. Here is what was found in a study done by After Market News:

In that instance, Toyota Motor Corp. gave workers at its largest U.S. plant bonuses of $6,000 to $8,000, boosting the average pay at the Georgetown, KY, plant to the equivalent of $30 an hour. That compares with a $27 hourly average for UAW workers, most of whom did not receive profit-sharing checks last year. Toyota would not provide a U.S. average, but said its 7,000-worker Georgetown plant is representative of its U.S. operations.

So, when Sen. Corker said he thought the UAW members should get the same pay as the Toyota plant workers does that mean that they should get a raise of about $3.00 an hour since they are getting paid less than those non-union workers in Georgetown, KY??

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