The P-D’s Jake Wagman thinks it surprising that Kit Bond would go for the auto bailout. Wagman notes that Bond’s website states that “government doesn’t create jobs, businesses do.”
Well, that may be true that Bond makes that claim on his website, but Bond does love him some pork. Look at Bond’s earmarks for FY2008 Appropriations. He certainly doesn’t mind spending government money to stimulate job growth; it’s partly why he has such a high approval rating when Republicans overall are in such disfavor. And he voted for the $700 billion financial bailout – why would he have qualms about loaning a great deal less to auto companies when thousands of jobs are on the line in Missouri?
Two points to make here, one personal the other practical.
First, my ex-husband works for Chrysler in Fenton. This is where my child support and my children’s health insurance come from. The child support I might be able to make do without, the health insurance we are in trouble. One of them has diabetes. Need I say more?
The second point is practical. What I’m about to post next comes from another diarist on another site but is so important that it should be required reading.
This is a comment from LeftHandedMan over at DKos:
“there are a ton of flat-out lies and bullshit being passed around.
The GOP never dreamed it would get to kill a massive part of organized labor and have an entire region of the country completely collapse on the Democratic party’s watch to boot, but that is just the opportunity that has arisen for the Limbaugh/Coulter wing of the GOP.
A 25 billion dollar loan, with strings attached mandating the auto industry stay the fuck out of monkeying with healthcare reform and making them go green or else, could save hundreds of billions of dollars in social spending over the next 10 years alone.
10 to 12 million jobs lost, boom!, 200 billion to 1 trillion dollars in emergency social spending to deal with the collapse’s impact on the region, the UAW dead and Wal-Mart the biggest employer in the region, Michigan in full economic collapse and millions of voters ripe for being in play in the next round of the Culture War.
The GOP, and the media pundits who are all clamouring for Obama and the Congress to let the auto industry die will be damning us and running agianst the Democratic Party as the party that “Let Michigan die” or “Let Detroit Die” for a generation if the auto industry is allowed to die.
The auto industry is 4% of our GDP.
If it goes, thats several years added on to the economic crisis that we face.
And probably Bobby Jindal in 2012 running as Ronnie Reagan on a white horse to “save” America.
It sounds great to say they brought it on themselves. They weren’t innovative enough. The didn’t see this or that coming. They flew into DC on private luxury jets.
I understand that they don’t deserve it.
But neither do they workers.
The fact is that the Big 3 have made many of the changes necessary for the future. In this respect its the auto workers who have made many of the concessions. This $70/hour that you hear they make compared to Toyota workers who make $40/hr. is about wages and healthcare combined. But the auto workers will be taking cuts starting in 2010 that will bring their total earnings(wages+benefits) in line with the foreign auto workers.
So what about chapter 11 bankruptcy you say? More than likely that won’t work for them. The loans a company receives in Chapter 11 are called Debt in Progress loans. As you have heard banks are not even lending to sound companies with good credit now, and Chapter 11 will not force a bank to lend to the bankrupt auto makers. Also the companies that supply parts to the auto makers typically have insurance on their contracts. If XYZ brake manufacturer has a contract to supply GM with 100,000 sets of brakes, the insurance policy will pay them if GM goes under. This way the XYZ company is not left holding the bag. The problem is that the insurance companies who deal in these kinds of policies are no longer willing to issue them. It forces the parts suppliers to demand cash up front for the entire contract which in turn causes GM and the others to bleed cash. More than likely the only alternative is to go straight to Chapter 7 which is liquidation of assets.
Keep in mind one other thing. Many of the loudest voices in opposition are Senators from right to work states with foriegn auto manufacturers. Think Richard Shelby.
Who’s putting country first I might ask?
would support this since jobs are on the line and, frankly, in this economy it would be disaster to let the automakers go under.
What has never been explained to me in detail is the reason why chapter 11 is ‘impossible’ for them. Not that I don’t believe it, but it seems to me that the first line of inquiry should be WHY is it impossible. And if there is something the govt. can do (i.e. provide DIP financing) to make it possible, they should do it. Unlike banks, companies that MAKE something are perfect for Ch. 11, there is a bankruptcy judge to oversee Ch. 11 (as opposed to … congress?!!!) and it is a well tested process.
So the idea of just giving bailout money to them doesn’t appeal to me at all UNLESS there is no other way to help them to get them into Ch. 11. That part I think is not being explained to the American people very well.