Thursday, November 20, 2008

How do we save the US Auto Industry?

Having decided to wean myself off of cable news, I turned tonight to CSpan and was immediately pulled in by the sight of politicians talking about what they tried to do today, even though they failed. Both Ohio's senators, Voinovich and Brown, joined Michigan's senators along with Arlen Specter and Bob Casey to come up with a plan to save the US Auto Industry. The image is inescapable: Pennsylvania, Ohio and Michigan linking arms along the Great Lakes coastline to make one final stand for the once great Midwest industrial base.

25 billion dollars to the US auto industry is what they want; and here, according to the Putnam County Sentinal, are the proposed details and strings:
November 20, 2008

· Creates new program administered by Secretary of Commerce that would provide bridge loans to auto industry, with oversight board from all relevant agencies (from EPA to Transportation to Labor to Treasury).

· Emergency bridge loans made to avoid a systemic adverse effect on the US economy or a major loss of US jobs.

· Funding for the program comes from the loans for retooling passed as part of the 2007 Energy bill. (i.e. no dollars come from new appropriations or from TARP.)

· Repaid loans, interest, and proceeds from sale of equity stakes in the companies go back into the retooling loan program.

· Before receiving these emergency loans, companies must show to the Secretary of Commerce that the funds will ensure their financial viability.

· Loan recipients must agree to strong taxpayer protections, including limits on executive compensation, bonuses, and golden parachutes, as well as prohibitions on using these dollars for lobbying.

· Emergency loans are available to auto manufacturers or component suppliers who have operated in the US for the last 20 years.

· Funds to successful applicants would be disbursed in a few weeks from enactment. Authority to make new loans under this program ends March 31, 2009.

· Interest rates would be 5 percent for the first five years, 9 percent thereafter.
These senators know the severe hardship the loss of automotive industry jobs will bring to their states. They've attempted to put a plan in place that puts restrictions and oversight in place. My big question is -- why do we want to continue funding an industry managed by greedy people who never gave a damn about global warming or who have ever recognized their part in creating a culture of reckless gas guzzling? So greedy they still don't get it:

The Big Three's executives testified on Capitol Hill this week about their dire economic situation, but undercut their argument by flying to Washington aboard corporate jets instead of taking cheaper transportation. Reuters
If the automotive industry is to continue, we need innovative engineers and scientific-minded researchers developing the types of automobiles that are sustainable and recyclable and that reduce green gas house emissions. And they also need to be affordable by all drivers, not just the upper debt-free professional classes.

Yes, the people in my state need good paying jobs, but they should not be jobs that are focused on making things that are bad for us. Ford, GM and Chrysler have nothing worth looking at on display in the auto industry shows. Green Car of the Year was awarded to Volkswagen Jetta TDI, a diesel burning vehicle. (Check out the controversy in the NYT article's comments section.)

Diesel, electric batteries, hydrogen fuel cells, solar panels on the roof? The auto industry needs to retool to make greener cars, but they don't even know which way to go yet. What would Henry Ford have done? Probably would have tried to bust the unions. And isn't it all the workers' fault anyway? If the automakers didn't have to pay for all that medical care and pensions, they could still be making profits on those big old gas guzzling cars.

However, along came the sub prime loan collapse and the credit freeze and we are all looking around wondering who made off with all those billions that now must be paid to failing institutions. Is there a list of names somewhere of the ones who sold those bundles of bogus loans? Do they have it all socked away in some off shore location? Are they living the high life while kids are dying from hunger in Haiti?

Meanwhile, what do we do with the US auto industry? Why not put them on the block and give the workers the first right of purchase? If we are going to go beyond partisan politics, how about going beyond hierarchical ways of of decision making? There are worker owned businesses in this country all ready. If the workers can come up with a better plan to make greener cars for America, then they should be given the opportunity to make it happen. Instead of making concessions all the time, how about giving the workers a real stake in their own futures?

It also seems pretty clear that a universal health plan is going to be an essential part of balancing out the cost of living from both the employers' and employees' perspectives. Gut the medical insurance industry and liberate those oppressed workers sitting in their cubicles denying medical claims.

Anyway, I highly recommend CSpan in this time of pundits panting after the Clintons rather than focusing on the nuts and bolts of governmental decision-making. Right now I'm watching an hour and a half rebroadcast of the Congressional Small Business Committee trying to figure out how to save small businesses in this continuing crisis. I don't have a clue at the moment, but it is somewhat encouraging to hear people struggling to figure it out.

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