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Filibuster the Auto Bailout?

***Bumped and Updated***

Just when I was beginning to resign myself to the fact that the auto industry would eventually get its bailout and its current failing business model would continue as usual, I am met with some great news. Thank goodness there's a Republican with a backbone. Senator Richard Shelby is threatening to filibuster any auto bailout bill.

Sen. Carl Levin (D-Mich.), a staunch ally of the U.S. carmakers, and Shelby, who has emerged as the leading opponent of any aid package for the Big Three, sparred over the whether the American government should rescue U.S. automakers during an appearance on "Fox News Sunday."

Levin said he was "confident" that Congress would consider a bailout bill for the auto industry, but stopped short of predicting whether it would pass. Democratic leaders in the House and Senate are considering a $15 billion "bridge loan" to help out the automakers.

"I think they're very close to a deal, I think there will be a deal and that will happen in 24 hours," Levin told host Chris Wallace. "Obviously, that's a much more complicated question of whether the votes are there. What I'm confident of is that a bill will be introduced."

But Shelby, who also voted against the $700 bailout bill for the financial industry, called it a "bridge loan to nowhere," and said General Motors, Ford and Chrysler have to undergo a fundamental restructuring of their operations rather than look for federal help.

He also predicted auto industry executives would soon come back to Washington looking for more money, beyond any assistance they are given now.

"This is a down payment on many billions to come," Shelby warned. "This is not something that happened overnight. This is 30 years in the making. These companies basically have failed or are failing. They probably need, according to some people, about 60 percent of the management to go, and about 40 percent downsize of the workers."

Shelby also threatened a filibuster of any auto aid agreement, but was unsure whether he had the votes to sustain it.

He may not have enough votes to sustain a filibuster right now, but that could easily change with the vast majority of Americans opposing any auto industry bailout. People don't want good money being thrown after bad, and the contracts that the US auto companies are strapped with right now are killing them. No amount of money from the US government can save them. They need to declare Chapter 11, get out of their contracts, and reorganize their companies.

Of course the CEO's don't want to do that because they'd lose their jobs. The UAW leadership don't want bankruptcy because they'd lose their jobs. Yes, some line workers would lose their jobs as well, but they've been living pretty high on the hog with high hourly wages and super expensive health care packages. It's time to come down to the reality the rest of us are living.

Update: Some commenters on this post are arguing that filing Chapter 11 would ruin the US auto industry, but this is totally wrong. Chapter 11 will benefit these companies in the long run. Besides, this is what Chapter 11 is for. Anyone who says Americans won't buy cars from these companies because the warranties won't be honored if they enter Chapter 11 don't know what they're talking about. If the Big 3 went into Chapter 11, all warranties would be priority claims and would be paid before almost anything else. The companies could run advertising campaigns to let their customers know that they can buy cars without any fear that their warranties wouldn't be honored. Many companies entered Chapter 11 over the years and have come out on the other side significantly stronger and better run companies. Owens Corning and K-Mart are two companies that are vastly improved since their Chapter 11 filings.

Besides, if these companies are in such bad shape that even Chapter 11 can't help them, then they should go the way of the buggy whip as far as I'm concerned. Under no circumstances should the American people be forced to support companies that have such awful business models that they can't sustain themselves. Since nature abhors a vacuum, I'm certain an enterprising and intelligent businessman will see the huge market available, take the risk, and start his own American car company, which means he will be required to hire American workers. The American auto industry can begin anew, free from the entanglements that are killing the American automakers now. Just imagine the kinds of exciting and cutting edge cars that could be produced with fresh thinking, an innovative business model, and the most productive work force in the world.


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Comments (21)

It must be nice to be in a ... (Below threshold)
jpm100:

It must be nice to be in a position to kill industry in another state in order to help their competitors in your own state.

Which happen in be in your state from billion dollar inducements you helped get them.

A state that consistently takes more Federal tax dollars than it pays freeing up money for those inducements.

And the state that your killing the industry in consistently pays more Federal taxes than they take.

Actually Kim about 2-4 mill... (Below threshold)
jmc:

Actually Kim about 2-4 million people would lose their jobs if we lose our auto industry.

Not to mention the people who stayed in a crap job for 30 years so they could get their pension. Instead of retirement they would get to return to their workforce in their 50s and 60s with their retirement gone, and an exciting career as wall mart greeters ahead of them. This would be a disaster for America.

Roll over for the $1 trilli... (Below threshold)
Brian:

Roll over for the $1 trillion giveaway (which Republicans supported once enough pork was added to satisfy them), but stand firm against the $15 billion loan. That's what passes for "backbone" these days amongst the right?

Nothing like a whore (Shelb... (Below threshold)
JFO:

Nothing like a whore (Shelby) for the Japanese and German auto industries suggesting a filibuster against American auto companies. You go Priestap.

Why do you hate American wo... (Below threshold)
AT:

Why do you hate American workers so much that you will help foreigners and become an American traitor?

Sheesh, no one is talking a... (Below threshold)
Rick Caird:

Sheesh, no one is talking about losing the auto industry. People are talking about chapter 11 vs $34 billion in loans. We will not be losing 2-4 million jobs. If the pensions are not sustainable, then they have to be modified. It is extremely doubtful they vanish unless GM does, in fact, close the doors, but chapter 11 does not close the doors.

Their are two problems with the loans. The first is there is little indication of a restructuring that will go along with the loans to bring costs in line with the rest of the industry. Secondly, Congress is taking this opportunity to tell the manufacturers what to build and sell. Congress cannot run their own business. What makes them think they are now automotive engineers and marketing executives?

Rick

Why do you hate Am... (Below threshold)
Why do you hate American workers so much that you will help foreigners and become an American traitor?

You're a fool, AT.

"Some commenters on this po... (Below threshold)
Jess:

"Some commenters on this post are arguing that filing Chapter 11 would ruin the US auto industry,.."

Nope. They're parroting a blurb that went out from a GM run PR firm that targeted a number of automotive sites & a few leftish (huffypost & MJ the more notable) sites.

This is nothing more than the UAW bailout bill. Period.

Jess

PS - how does one even get to the "2 million" figure? GM has approx 70K hourly empl. in the US. There are > 2K GM "solo" dealers in the US, so say 50 empl (wayyy too many), plus dedicated suppliers (less than 100), = nowhere near 2 mil, much less 1 mil... heck, less than 250K - and FMC will hire a few - it's adding a 3rd line for the F 150.

The $15 billion is like pla... (Below threshold)
hermie:

The $15 billion is like placing a band-aid on a severed artery, and administering blood transfusions. Instead of allowing the use of a tournaquet and then surgery to save the artery, the Dems and their Union boss supporters are claiming that it will cause the arm to be cut off.

Allowing the patient to bleed to death, while wasting blood needed by other patients, is poor medicine.

This is also an industry wh... (Below threshold)
hermie:

This is also an industry which has gotten fat and happy over its successes, and has failed to plan for adverse conditions. That's because they could always depend on their bought and paid for politicians to come to their rescue. (This means all the players: auto execs, union bosses, local pols, etc.)

This industry hasn't changed with conditions until it was too late, and somebody else started doing what needed to be done better and less expensively. The Japanese did their homework and built cars that were not only better made, but their were fuel efficient and were getting better year after year. At least three years ago they came out with more affordable elecric and hybrid vehicles; while Detroit is touting it's hybrids...for 2010.

The Hondas, Toyotas, Nissans, etc. also established a dealership system that actually provides excellent and timely service, which also provides an incentive to continue to purchase their cars.

The US vehicle industry must change attitudes from the execs to the union workers. It must change from antiquated management theory and worker rules, to ones more realistic and competitive. Congress cannot step in and let things change only superficially; and knowing how badly Congress made a mess of the financial system, it's better that they keep out of this and let the system get a chance to work the way it was designed to do.

Its like Kim was reading my... (Below threshold)

Its like Kim was reading my mind! I live in Detroit and am scared about the ramifications of one or more of the Big 3 going under, but I'm not willing ot sacrifice principles for short term comfort. Besides, in the long run the US auto industry will be much stronger for having gone through a painful bankruptcy/pruning period. This is something that should have been done in 1980 when Chrysler got their 1st bailout.

I have made, and will conti... (Below threshold)

I have made, and will continue to make, the argument that if the American people had wanted to give Detroit their money they would have done so by purchasing greater numbers of their cars and trucks. These companies are failing because they cannot compete in the marketplace. For congress to turn around and give them our money anyway in my view crosses the line of the "consent of the governed."

Two items:I worked... (Below threshold)
JAT:

Two items:

I worked for a large electric utility that filed Chapter 11 and have sense come out of bankruptcy in much better shape than before it when into bankruptcy. So Chapter 11 does work. In this case the company had to file an extensive plan on how it was to get out of trouble. Guess what - I still get my pension too!

Second thing is that I cannot help wonder that if we bailout any industry that does not ask for new contracts with its unions - are we not subsidizing those employees. After all if they still have their jobs, salaries, benefits, and pensions - didn't our bailout dollars go to ensuring that those employees feel nothing of the pain? Is that right?

I'm not impartial to the pl... (Below threshold)
Wes:

I'm not impartial to the plight of the big three auto companies and, especially, to that of the auto workers. But it seems to me that we are propping up yesterday's companies at the expense of tomorrow's. There are several great start-up car companies out there. I just read a great article about one of them:

The Aptera 2e Electrifies The Race For The Future Of The Car

Wouldn't bailing out the big three car companies be something like bailing out the telegraph companies being hurt by the telephone? I'd rather use the $25 billion to help a new, better, strong breed of car company develop.

Nothing like a whore (Sh... (Below threshold)
Clay:

Nothing like a whore (Shelby) for the Japanese and German auto industries

Following your logic makes you a whore for the UAW.

Hey. Here's what Ford would like to build in the US if they didn't have the UAW on their back. So, the unions help the worker? Maybe out of a job.

http://info.detnews.com/video/index.cfm?id=1189

ClayWhat have I sa... (Below threshold)
JFO:

Clay

What have I said about he UAW or the bailout of the Big 3? Nothing. But if I had to be a whore for the Japanese/German auto industry or our unions I'd proudly pick our unions. How uttelry un-American of Shelby don't you think?

Oh, I forgot rigites don't call people things like un-American do you?

What has Shelby said about ... (Below threshold)
Clay:

What has Shelby said about the Japanese/German auto industry?

People mention bankruptcy l... (Below threshold)
jpm100:

People mention bankruptcy like somehow the Government or taxpayer money won't be involved. They will be.

Delphi went into bankruptcy in 2005. They're still absorbing capital from GM, ironically, for that magical restructuring that is working out so well and ongoing 3 years later.

Please take a look at The D... (Below threshold)

Please take a look at The DiMora Initiative - An informed perspective on the proposed $34 billion bailout of General Motors, Ford, and Chrysler and a forward-looking initiative and call to action to envision the new American automotive industry for the 21st Century. DiMora Motorcar wants your opinion!

http://blog.dimoramotorcar.com/the-dimora-initiative/the-dimora-initiative/

What Sen. Shelby isn't tell... (Below threshold)
Ed:

What Sen. Shelby isn't telling us is that his state has given millions of state tax dollars to foreign auto manufatures in Alabama.With no U.S auto makers to compete with the Japanese auto makers could hire more Alabama workers at far less than UAW wages. And of course a hefty sum in his campaign war chest by those auto companies.

When are people going to fi... (Below threshold)
Jon:

When are people going to figure out the auto industry as we know is already dead?

Check you're history; they've been in trouble for the past 10 years.

Even if they are bailed out, the electric car will still kill the industry. No oil to change, no filters, no transmissions to repair. Anyone think about all the gas stations; even with hybrids imagine gas demand cut in half. What about all those jobs supporting such complexities? They're gone regardless if we bail them out or not.

Bailing them out just delays the inevitable. In 6 - 18 months they're going to scream about a new type of pain.

The worst part is they act as if they entitled. They saw this coming a long time ago.




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