Thursday, February 19, 2009

1) Paul Ingrassia implictly  raises one of the essential questions in the GM and Chrysler bailouts, which is why should taxpayers fork over $30 billion so that UAW workers can continue to make $28 an hour as opposed to, say, $26 an hour or even $24 an hour , which would still be a reasonable wage these days? Or so that GM's bondholders don't have to take a bigger loss? It's not as if other workers--even at companies way more successful than GM broke --aren't taking big wage cuts. ...

2) Here's a suggestion that must have been made recently, though I'm stealing it from my old Washington Monthly boss Charles Peters: It's pretty clear that a bankruptcy judge could produce the necessary sacrifices (from both unions and creditors)much more efficiently than a political bailout process--where all the parties seem to be giving up just enough to talk the pols into giving them the next round of money , not enough to make their companies viable. Bankruptcy is what saved the steel industry , we're told, after years of bailouts didn't. 

The problem is that cars are not like steel, in that consumers buy cars. Once they think GM is bankrupt, its sales may (as the company's COO says) "fall off a cliff." Ingrassia thinks consumers have already grokked the depth of GM's troubles, so the sales-chart damage has been done, but I'm not so sure. There's a difference between being bailed out and being "bankrupt." At the same time, GM is clearly using this consumer fear of bankruptcy--along with its size--to in effect blackmail the government into giving it another $17B. So here's the idea: Set up a special institution, a court maybe, with all the powers of the bankruptcy court, but don't call it bankruptcy . Call it "Restructuring of Core Industries." Restrict it to those companies that are too big to fail. (The others, by definition, can be left to fail.) The current too-little-too-late tooth-pulling agony should then end, because the head of ROCI, or whatever its called, would terrorize unions and creditors into making quick, sufficient concessions--or else he'd have the power to order those concessions himself, just like a bankruptcy judge. At the same time, consumers would be less spooked. And the government could escape the current prospect of subsidies as far as the eye can see.

I would think the chance of GM being around to service your new TrailBlazer would be a lot greater under this procedure than under the current Let's-Lean-On-Obama ritual. ...

3) GOP point man Sen. Corker seems bizarrely soft on the bailout in this appearance with Larry Kudlow. ...

4) Revealing that E.J. Dionne refers to the "plan to salvage the unionized car companies." Does Dionne ask why it's only the unionized car companies that need salvaging? Or is he hinting at something else--after all, he talks about his new Malibu, which he says he'll drive with pride "as long as GM stays unionized." Is the idea that GM wouldn't be worth bailing out, in Dionne's eyes, if it weren't unionized? Are all his policy positions driven by vestigial pro-union sentimentality? [ His policy position here is that there are no "easy" answers--ed  Good point. Might as well give Steve Earle the column. At least you could dance to it.] ...

5) Why is GM's Henderson saying that $30B is all the company will need --really, he means it, though there are "no guarantees"? Could it have something to do with polls such as this one, showing 64/24 opposition to further bailout loans?  . I would think the process by which GM and the UAW adjust to the reality of voter sentiment has only begun. ...

6) "Nor can the UAW be blamed for Saturn ..." Oh, yeah? Ingrassia, no labor sentimentalist, may be a bit too quick to exonerate GM's union in the death of its once-promising Saturn division. After all, as Dionne accurately writes, the Saturn was

an excellent car made by members of the United Auto Workers under rules giving employees more responsibility. The approach was supposed to mark a new departure in the way General Motors made cars.

And why didn't it? Could it have been that Saturn's success--in a plant where workers traded inflexible work rules for responsibility and job satisfaction--threatened the hide-bound Wagner Act rulebooks of all of the UAW's other locals? So that the UAW pressured Saturn to build cars outside of its Spring Hill, Tennessee home--while it supported GM in systematically starving Saturn of new products? Just asking! ...   7:11 P.M.

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