Reports indicate that there is less confidence that the auto indusrty bailout will be passed. Many Republicans and some Democrats question whether the bailout bill will use taxpayer's dollars effectively. The Bloomberg article Democrats Back Off Prediction of Automaker Bailout Approval describes the latest version of the bill.
This, however, does not address the inherent problems with these businesses. Preventing the "paying dividends and owning or leasing corporate jets, and pay and bonuses" addresses none of the major problems with these companies. A limit on excesses misses the basic fact that these are failed companies, who can't garner loans from anyone other than Congress. The only check or change that this bill implements is 'a car czar'; the powers of which Chairman Barney Frank tried to explain...
So this 'car czar' a likely member of the Commerce Department will be apparently appointed by President Bush then replaced by the future President Obama, and he shall be granted 'head knocking abilities'.
Chairman Frank went on to state that the auto industry will likely need to be granted more money in the future, something Speaker Pelosi has also stated. This does not instill confidence that this bailout will be anything but a waste of money.
A few basic questions for lawmakers...
How will this money fix the failed business policies of the auto industry?
How many bailouts and/or how much money will be paid to the automakers total?
What's wrong with bankruptcy?
What are the requirements for being granted a government bailout?
This is still not an rational solution. Ask your representatives not to support this bailout bill, and make them at least answer the basic question, 'how will this money fix the problems that the auto industry faces?'
Contact Your Senator
Contact Your Congressman
Continued Problems with the Automaker Bailout
The Democratic proposal would let the president appoint a so-called car czar to oversee industry restructuring, and give taxpayers stock warrants equal to 20 percent of the loans. It would prohibit the automakers from paying dividends and owning or leasing corporate jets, and pay and bonuses would be limited.
This, however, does not address the inherent problems with these businesses. Preventing the "paying dividends and owning or leasing corporate jets, and pay and bonuses" addresses none of the major problems with these companies. A limit on excesses misses the basic fact that these are failed companies, who can't garner loans from anyone other than Congress. The only check or change that this bill implements is 'a car czar'; the powers of which Chairman Barney Frank tried to explain...
‘Head-Knocking’
Frank told reporters today the bill would give the car czar “a great deal of head-knocking ability” with “a lot of the powers that you would get in bankruptcy.”
The official would have the power to veto participating automakers’ plans to invest abroad, Frank said. Lawmakers want to ensure the companies don’t “take American taxpayer dollars and expand in other countries rather than here, or shut down a plant in America while expanding a plant elsewhere,” he said.
Because Bush and President-elect Barack Obama are unlikely to agree on a czar, Obama will likely replace Bush’s pick as soon as he takes office, Frank said. The Bush administration has said the official should come from the Commerce Department.
So this 'car czar' a likely member of the Commerce Department will be apparently appointed by President Bush then replaced by the future President Obama, and he shall be granted 'head knocking abilities'.
Chairman Frank went on to state that the auto industry will likely need to be granted more money in the future, something Speaker Pelosi has also stated. This does not instill confidence that this bailout will be anything but a waste of money.
A few basic questions for lawmakers...
How will this money fix the failed business policies of the auto industry?
How many bailouts and/or how much money will be paid to the automakers total?
What's wrong with bankruptcy?
What are the requirements for being granted a government bailout?
This is still not an rational solution. Ask your representatives not to support this bailout bill, and make them at least answer the basic question, 'how will this money fix the problems that the auto industry faces?'
Contact Your Senator
Contact Your Congressman
Continued Problems with the Automaker Bailout
2 comments:
KM, this is Joe from Boston.
-------
Worth the read
Let's start with the fact that it's not $70 per hour in wages. According to Kristin Dziczek of the Center for Automative Research--who was my primary source for the figures you are about to read--average wages for workers at Chrysler, Ford, and General Motors were just $28 per hour as of 2007. That works out to a little less than $60,000 a year in gross income--hardly outrageous, particularly when you consider the physical demands of automobile assembly work and the skills most workers must acquire over the course of their careers.
More important, and contrary to what you may have heard, the wages aren't that much bigger than what Honda, Toyota, and other foreign manufacturers pay employees in their U.S. factories. While we can't be sure precisely how much those workers make, because the companies don't make the information public, the best estimates suggests the corresponding 2007 figure for these "transplants"--as the foreign-owned factories are known--was somewhere between $20 and $26 per hour, and most likely around $24 or $25. That would put average worker's annual salary at $52,000 a year.
But then what's the source of that $70 hourly figure? It didn't come out of thin air. Analysts came up with it by including the cost of all employer-provided benefits--namely, health insurance and pensions--and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages--again, $28 per hour--and you get the $70 figure. Voila.
Except ... notice something weird about this calculation? It's not as if each active worker is getting health benefits and pensions worth $42 per hour. That would come to nearly twice his or her wages. (Talk about gold-plated coverage!) Instead, each active worker is getting benefits equal only to a fraction of that--probably around $10 per hour, according to estimates from the International Motor Vehicle Program. The number only gets to $70 an hour if you include the cost of benefits for retirees--in other words, the cost of benefits for other people. One of the few people to grasp this was Portfolio.com's Felix Salmon. As he noted yesterday, the claim that workers are getting $70 an hour in compensation is just "not true."
----------------
The GOP blocked this bill for one reason and one reason only… to bust the Unions.
Proof? Demanding that the UAW drop their pay to that of non-union workers is beyond stupid and is blatantly trying to bust the union. What would be the point of being in a union at that point if you say sure… pay me what non-union workers make.
If you read the article above, the difference in actual pay is only about $4 or $5 per hour. The GOP makes it sound like the UAW is getting $10+ more dollars per hour and it would be a huge savings. Not really so.
Why is $700 billion BAILOUT with NO conditions for the Financial industry accepted, but not a $14 billion loan for the auto companies? This wasn’t a bailout it was a lifeline with conditions.
Wait until one or more of the big 3 goes down and millions are out of work. You think the number of forclosures are high now? Wait until then. The financial companies will need another $700 billion.
So go on righties… rejoice that you blocked the Dems from doing this. Be glad that you are adding to the economic crisis.
Hi Joe,
My complaint is that no one is saying how this bailout will work. At its simplest these companies need to be taking in more than they are expending and clearly they aren't doing that right now. If the Dems don't want the unions touched then come up with plan that will show how to turn the companies around, and they yet to do that.
I'll have to give you a more detailed response later; we had a huge ice storm in NH and I'm running behind.
Post a Comment