Given the choice between being reckless ideologues or doing what's best for the country, the economy, and millions of American families whose income is connected to the auto industry, the Senate GOP decided to be reckless ideologues:
The prospects of a $14 billion government rescue of the American auto industry seemed to vaporize Thursday morning as the Senate Republican leader, Mitch McConnell of Kentucky, spoke out forcefully against the bill, effectively dooming its chances despite the urgings of the White House.
In a speech on the Senate floor, Mr. McConnell said he and other Republicans had drawn a clear distinction between the Treasury’s $700 billion economic stabilization, which they helped pass in October, and the proposal to aid the American automakers, which he said raised questions about which industries or individuals deserve help.
What, you may ask, is the supposed difference between $700 billion with few strings attached to the financial services industry, and a $14 billion plan with numerous strings attached and copious oversight? The difference is that the financial bailout didn't provide the Republicans an opportunity to try to destroy one of the country's most powerful labor unions:
Sen. Bob Corker (R-Tenn.) then outlined what he said was a simpler alternative to the White House-brokered bill, which he called "a very poor product." He proposed giving General Motors and Chrysler the loans they want in return for three covenants, the first of which would require the companies by March 15 to either reduce their debt by two-thirds or file for bankruptcy. The other two covenants would require concessions from the United Auto Workers union and the companies' bondholders.
[...]
"Instead of the car czar, this ought to be titled the president's puppet," complained Corker, echoing the concerns of many of his GOP colleagues. Corker yesterday unveiled an alternate proposal that would force bondholders in the car companies to accept equity as partial payment; force the UAW to immediately reduce worker pay packages to match Nissan, Toyota and Honda; and ban compensation to idled workers, among other provisions.
"If we don't have the forced restructuring plans in place, many of us don't believe that American car companies will come out of this in a competitive position and the taxpayers' money will be wasted," said Sen. John Ensign (R-Nev.).
Ensign added that he fears a car czar would not have the expertise to deal with the auto companies. "When GM, Ford, Chrysler, their management teams have not been able to run their companies, obviously, very well, how does anybody expect some car czar or some politician to be able to make the decisions that are right from a business standpoint?"
Democrats have resisted forced restructuring, arguing that, under the Bush administration it could amount to open season on the UAW. They also sympathize with the automakers' argument that bankruptcy proceedings would scare off potential buyers.
The job bank provision is a canard, because the UAW and the Big Three are already eliminating it. So what this really is about is playing chicken with the economy and the livelihoods of hundreds of thousands of workers. A majority of GOP senators are either stupid and convinced that the problem with the Big Three is labor costs. In fact, many of the problems facing the Big Three aren't specific to them. The worldwide auto industry is a mess, due to the freeze on credit; worldwide trade is expected to decline for the first time since 1982.
What makes the situation so dire for GM and Chrysler is that they're currently in the midst of major restructuring, and they are the only auto producers in the world that have massive built-in legacy costs. It's cheaper to produce cars in Canada, despite comparable labor costs and higher taxes, because the auto companies don't have to pay for health care for current and retired workers, both unionized and non-unionized. Take away the massive health care and pension costs borne by the Big Three—costs which foreign producers in the US don't have to the same degree, because they have almost no retirees—and the Big Three would be hurting like the rest of the global auto industry, but GM and Chrysler probably wouldn't be on the verge of a catastrophe.
So, it's possible that the GOP Senators like Corker and McConnell are stupid, and just don't understand some of the basics of the global auto industry. But we shouldn't dismiss the possibility that the ultras who've taken over the GOP, the people for whom ideology is more important than consequences and reality, would rather risk destroying one of our most important industries in an attempt to destroy a labor union.
Bush has backed the proposal that passed the House (supported mostly by Democrats), but he's the lamest of ducks, and the GOP doesn't listen to him anymore. This morning Obama has called for immediate action:
While the automakers have "failed to move quickly enough" to adopt new technologies and change their business models, he said, "at this moment of great challenge for our economy, we cannot simply stand by and watch this industry collapse. Doing so would lead to a devastating ripple effect throughout our economy."
Obama said the federal government "should provide short-term assistance to the auto industry to avoid a collapse, while holding the companies accountable and protecting taxpayer interests." He said legislation now before Congress "is an important step in that direction, and I'm hopeful that a final agreement can be reached this week."
Obama is correct. But doing what's right for the country often is a low priority for the GOP when they have the opportunity to instead be reckless ideologues.