Friday, December 19, 2008

President Bush: Bailout Accomplished

President Bush, dreading the thought of having his disastrous term end with the collapse of America's auto industry, bypassed Congress and took it upon himself to save the companies, in what I feel was probably a necessary evil. The AP has the details-
Citing imminent danger to the national economy, President Bush ordered an emergency bailout of the U.S. auto industry Friday, offering $17.4 billion in rescue loans and demanding tough concessions from the deeply troubled carmakers and their workers.

[Blueduck's note: So far, only the latter is happening. Natch.]

Detroit's Big Three cheered the action and vowed to rebuild their once-mighty industry, though they acknowledged the road would be anything but smooth as they fight their way back from the brink of bankruptcy.

The autoworkers union complained the deal was too harsh on its members, while Bush's fellow Republicans in Congress said it was bad business to bail out yet another big industry.


[President] Obama will be free to reopen the arrangement from the government's side if he chooses, and the head of the United Auto Workers said the union would be appealing to the new president and the strongly Democratic new Congress on that subject...

...Some $13.4 billion of the money will be available this month and next — $9.4 billion of it for General Motors Corp. and $4 billion for Chrysler LLC, two auto giants that have said they could be facing bankruptcy soon without government help. GM is slated to receive the remaining $4 billion in loans after more money is released from the financial rescue account. Ford Motor Co. says it doesn't need federal cash now but would be badly damaged if one or both of the other two went under.

Under terms of the loans, the government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry. Bush said the companies' workers should agree to wage and work rules that are competitive with foreign automakers by the end of next year.

And he called for elimination of a "jobs bank" program — negotiated by the United Auto Workers and the companies — under which laid-off workers can receive about 95 percent of their pay and benefits for years. Early this month, the UAW agreed to suspend the program.

Ahhh yes, once again the folks on the bottom-- who do all the hard work-- are asked/forced to make sacrifices and do more with less, while the folks at the top-- who made all of the major decisions and policies-- of the chain are handed golden parachutes to land gracefully onto piles of free money.

Or, as The Washington Note's Steve Clemons opines, this "doesn't mean that Chrysler will keep the switch turned on at 30 plants it is completely shutting down over the next 30 days. It doesn't mean that any of these firms will stop laying off American workers. And it doesn't mean that this loan money from the government will stop the offshoring of American jobs overseas." Ahhh, true, but it does kick the can down the road for someone else to clean up... and that is a George W. Bush specialty.

Finally, in news of that other bailout, Hank Paulson is asking Congress for the second half of the $700 billion Wall Street cash. He's apparently blown through the initial $350 billion already. On what? And to what greater benefit to American society at large? My guess is-- as with the billions of $$$ poured into the sands of Iraq-- we'll likely never fully find out. It's our fault; we should've asked for a receipt.

I think it's very sad that the end of the Bush administration is now just one month away.


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