Are Republicans digging a hole on the auto industry bailout?

The Ford assembly line in Wayne, Michigan

The Ford assembly line in Wayne, Michigan

It may be an  act of political suicide. A move by key Senate Republicans rejecting a $14 billion bailout for America’s Big Three automakers.

Let me quote this LA Times article and fill in a few blanks based on a few of my own opinions as a journalist who coincidentally, for better or worse was once a  UAW member.

Auto bailout’s death seen as a Republican blow at unions

By Jim Puzzanghera
8:21 PM PST, December 12, 2008

Reporting from Washington — The congressional drive to help U.S. automakers was generally cast in terms of protecting the reeling national economy from another body blow — the collapse of one or more of Detroit’s Big Three.

I oppose the idea of any bailout without specific conditions that attempt to guarantee repayment, fiscal accountability, improved oversight and efficiency.

Any bailout carries risk. In the case of U.S. automakers, I believe the risk is worth taking. The loss of the auto industry would also have a dramatic economic impact on residual jobs across the country.  Anmd even though collective bargaining isn’t perfect, it’s a far better alternative for American workers to have a unified, constructive voice in the American workplace. 

But beneath the surface, what led conservative Republicans to drive a stake through the heart of a stopgap rescue plan worked out by President Bush and congressional Democrats was the chance to strike a blow against an old enemy: organized labor.

Antipathy toward unions was an undercurrent throughout the weeks of wrangling that culminated in Thursday’s failed Senate vote. For Republicans — including many from right-to-work states across the South — undercutting the once-mighty United Auto Workers was seen as a way to undercut unions in general.

There may be a serious backlash here. And not all of it from UAW members. Consider that each union auto job in America create as many as 10 residual jobs in communities across the country.

Parts suppliers, restaurants, grocers, auto dealers, medical and financial services, educators like myself. Jobs like these and dozens more are supported by the earned wages of union auto workers. If autoworkers are left jobless, the trickle down impact could have devastating economic consequences for many Americans and political consequences for some senators in congress.

“If the UAW, which is perceived as one of the strongest unions in the country, can be put under control, that may send a message across the whole country,” said Michigan State University professor Richard Block, a labor relations expert.

Handing a defeat to labor and its Democratic allies in Congress was also seen as a preemptive strike in what is expected to be a major legislative battle when the new Congress convenes in January: the unions’ bid for a so-called “card check” law that would make it easier for them to organize workers, potentially reversing decades of declining power. The measure is strongly opposed by business groups.

Who do you think Main Street American voters will back:

  • highly paid Wall Street financiers who drove their companies into bankruptcy, lost stockholder investments, got a $700 billion federal bail-out and, in some cases, received retention bonuses
  • autoworkers who, through collective bargaining, have helped keep job standards and conditions high for themselves and other American workers, and spent the money they earned in the communities where they live with their families?  

“This is the Democrats’ first opportunity to pay off organized labor after the election. This is a precursor to card check and other items,” read an e-mail circulated among Senate Republicans on Wednesday. “Republicans should stand firm and take their first shot against organized labor, instead of taking their first blow from it.”

Some lawmakers argued that stopping the bailout would strike a blow at unions in general.

Yes it would, but it would also strike a deeper blow at non-union workers. Many of them earn a fair portion of their  income on the products and services purchased by union workers.

“Year after year, union bosses have put their interests ahead of the workers they claim to represent,” said Sen. Jim DeMint (R-S.C.) one of the leading opponents of the auto bailout. “Congress never should have given these unions this much power, and now is the time to fix it.”

Some labor bosses have put their interests ahead of the workers they represent. Most don’t. They realize their power and credibility come from the support of workers they represent.

Congressional members have a public approval rating in the 13 percent range. Should they be more worried about public perceptions that politicians put lobbyist interests before those of voters?

Labor politics played a role on the Democratic side too, of course. In fighting hard for the $14-billion bailout, they were fighting for one of their most loyal supporters. The UAW, which represents about 150,000 employees of the Big Three, delivered campaign contributions and foot soldiers that helped elect Barack Obama to the presidency, especially in crucial battleground states such as Michigan and Ohio.

No disagreement here. Historically, Republicans have backed business. Democrats back labor. What defeats this argument is that a fair number of Republicans, including President Bush, do favor some type of bail-out for America’s domestic automakers because they understadn how vital the auto industry is to merica’s economy.

What lent a bipartisan gloss to Senate Democrats’ effort, however, was the fact that party leaders had negotiated for days with the White House and made a string of concessions that toughened the bill and won active support from the Bush White House.

Sen. George V. Voinovich (R-Ohio), a strong auto industry supporter, acknowledged that some of his colleagues simply did not want to help the UAW.

“We have many senators from right-to-work states, and I quite frankly think they have no use for labor,” he said. “Labor usually supports very heavily Democrats and I think that some of the lack of enthusiasm for this [bailout] was that some of them didn’t want to do anything for the United Auto Workers.”

One major car dealer said conservatives let political ideology get in the way of protecting the country’s interests.

Political, economic and, let’s not forget, defense interests. These politicians are putting their personal interests ahead of their country.

“Being a Republican myself, I feel very betrayed by the Republican party right now,” said Beau Boeckmann, vice president of Galpin Motors Inc. in North Hills. Galpin has the nation’s largest Ford dealership as well as lots where it sells eight other foreign and domestic brands.

I think many pragmatic Republicans feel this way because they understand what a vital role the automobile industry plays in a healthy U.S. economy.

The anti-union undercurrent shot to the surface in the final desperate hours of negotiations. Republicans insisted that the UAW agree to cut its wages to be competitive with American workers at foreign companies such as Honda, Toyota and BMW, by a set date.

UAW officials and their Democratic allies balked at what they called a double standard. The auto workers were being asked to make sacrifices that had been demanded of no other industry receiving government bailouts, they argued.

“We could not accept the effort by the Senate GOP caucus to single out workers and retirees for different treatment and to make them shoulder the entire burden of any restructuring,” UAW President Ron Gettelfinger said, arguing the union had gone farther than any other stakeholder in making concessions to help the companies avoid bankruptcy.

I agree with the AFL-CIO’s stand on this one: The U.S. Treasury Department’s handout of taxpayer money to Bank of America, AIG, Wachovia and the likes is a sharp contrast to the way auto industry CEOs have been grilled. The Bush administration has a laundry list of requirements for the Big Three if they get a loan.

Meanwhile, the Wall Street bailoutees have not been told to stop using tax dollars to buy up smaller firms, lobby for better deals, free up credit—the supposed goal of the bailout—and not throw away hundreds of thousands of taxpayer dollars on executive retreats where AIG execs spent nearly $500,000 on manicures, facials, pedicures and massages one week after accepting an $85 billion bailout by U.S. taxpayers.

But DeMint argued that the unions were major contributors to Detroit’s plight.

“It is no coincidence that the healthy automakers in the United States are located in ‘right-to-work’ states and are not unionized by the UAW,” he said. “Right-to-work” states bar agreements between trade unions and employers making membership or payment of union dues or “fees” a condition of employment, either before or after hiring.

Senator DeMint. Where did your contributions come from this last election?

The bulk of Senator DeMint's campaign contributions came from companies and organizations who oppose labor.

The bulk of Senator DeMint's campaign contributions came from companies and organizations who oppose labor.

Rep. John D. Dingell (D-Mich.), a labor ally, said Friday that Republican senators who opposed the bailout might have “wanted to crush a longtime political rival — the United Auto Workers” without any concern for the economic consequences.

Democrats lauded the UAW as a hero in the bailout process for agreeing to new concessions on top of major ones given in 2005 and 2007, with House Speaker Nancy Pelosi (D-San Francisco) calling the union “courageous” just before the House approved the bailout Wednesday.

“Courageous?” “Hero?” Those are pretty frivolous overstatements. Perhaps “pragmatic,” “realistic,” “sobering?”  The threat of bankruptcy has brought the economic realities facing the Big Three into quick focus.  No one denies that concessions won’t be a part of the picture if the U.S. auto industry is to survive.

In this regard,  senate Democrats aren’t doing their jobs either. One of the early concession packages under consideration by the senate would have force the Big Three automakers to drop lawsuits against California and other states that wanted to enact tougher emission standards on new cars. The automakers said “no” to that. The Democrats said “okay.”

But some Republicans framed the UAW as the villain, criticizing what they called lavish wages and benefits that they said had driven General Motors, Chrysler, and to a lesser extent, Ford, to their knees.

Some poor management decisions by the Big Three have played a major role here. That’s a problem I believe can be fixed by fixing bailout loans to specific performance and accountability standards.

“I’m sure that I’m going to be asked, ‘Congressman, I work at Honda’ or ‘I work at Mercedes. I get $40 an hour,’ ” Rep. Spencer Bachus (R-Ala.), said last month. ” ‘Why are you going to take my tax dollars and pay it to a company that’s paying their employees $75 an hour?’ “

That wage figure was widely used by opponents of the auto industry bailout, although it is misleading. It is not the wage paid to current workers. It is an approximation of the costs of salaries and benefits for current and retired workers, extrapolated onto the existing union workforce.

So, who’s spinning who?

Q: Do auto workers really make more than $70 per hour?
A: No. That figure is derived from what the auto companies pay in wages, health, retirement and other benefits, and includes the cost of providing benefits to retirees.

After wage concessions in recent contracts, the UAW says its workers at GM, Ford and Chrysler plants range from $33 an hour for skilled trades to $14 an hour for new hires. Precise wages and extrapolated benefits costs for U.S. workers at non-unionized foreign companies, such as Honda and Toyota, are difficult to ascertain, but Block estimated salaries for current workers are approximately the same.

The Big Three automakers have higher labor costs primarily because they have operated factories in the U.S. much longer than their foreign counterparts, so have many more retirees receiving pension and health-care payments, Block said.

What are the pension and health-care costs of the average U.S. Congressional member?  Their salary of $170,000 a year puts them in the top three percent of all workers locally. Lawmakers automatically receive a cost-of- living-increase every year unless they specifically vote against it.

When it comes to health care, those serving in Washington are also different from you and me. Members contribute to their coverage, but they also have a special clinic at the Capitol, and they receive priority care at Walter Reed and Bethesda Naval Hospitals. And members are well cared for even after they leave office. Not only do members get a traditional pension with a defined benefit, they can participate in a 401k style plan with a very generous match of their salary.

Even if UAW workers at GM took a 20% pay cut, it would only save the company about $1.1 billion annually because the company’s unionized workforce in the United States has decreased dramatically in recent years to 55,000, he said.

Sen. Sherrod Brown (D-Ohio) characterized the GOP opposition as “class-warfare assault by the Republicans.”

“They never ask about banker salaries . . . they never asked they give money back,” he said.

When the new Congress convenes in January, the expanded Democratic majorities are expected to push for legislation known as the Employee Free Choice Act, also known as the “card check,” under which companies would recognize unions if a majority of workers signed cards saying they favored a union, replacing the traditional method of a secret ballot among workers.

Block and other analysts believe the looming fight added to the political maneuvering over the bailout.

This is where there could be a backlash that favors unions. That’s because they historically lobby to give members better working conditions and more workplace rights.

“The opposition might be as strong, but it might not be as urgent,” Block said. “If the public could be convinced the problem with the auto industry is the UAW . . . then it will be easier than otherwise to marshal public support against unions and their legislative agenda.”

About Bernard McCoy

My views are my own and not a reflection of my employer. I'm a professor of Journalism at the University of Nebraska-Lincoln. I've also been a working journalist for the past 29 years. I have covered news stories in war zones, reported on human and natural disasters, presidential conventions, a presidential inauguration and the September 11th, 2001 attack on the World Trade Center in New York City. My career experiences include work as an award-winning documentary producer, television news reporter, photographer, producer, and anchor. I worked at WIBW-TV, Topeka, KS., KCTV, Kansas City, MO, WKBD-TV, Detroit, MI., WILX-TV, Lansing, MI. and WBNS-TV, Columbus, OH. I have also worked as a contributing reporter for The Columbus Dispatch, Associated Press, CBS, CNN, the Ohio News Network and lecture at the Kosovo Institute of Journalism and Communications. I have a bachelor’s degree in journalism from the University of Kansas and a master’s degree in telecommunications management from Michigan State University.
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2 Responses to Are Republicans digging a hole on the auto industry bailout?

  1. Pingback: used auto parts ohio | Digg hot tags

  2. johnny says:

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