Bush Bails out the UAW

uaw-gm-copy

I don’t doubt that the UAW bailout is good party politics; it forces then-President Obama (a Democrat) to decide between continuing yet another unpopular Bush policy or throwing yet more loyal supporters under the bus. It’s just bad for America.

Auto Makers to Get $17.4 Billion – WSJ.com
The White House announced a $17.4 billion rescue package for the troubled Detroit auto makers that allows them to avoid bankruptcy and leaves many of the big decisions for the incoming Obama administration.

In a statement, President George W. Bush said the administration decided against forcing a bankruptcy to compel cost-cutting, in order to avoid the risk that consumers would desert one or more of the companies and touch off an industry collapse, deepening the current economic downturn.

The economy is hurt, as unions and large companies learn if things get really bad, they can depend on the government (as long as they spend a fortune on lobbyists and unions: Enron, Arthur Anderson, Lehman Brothers, et al. were not so wise). Auto innovation is hurt, as dinosaurs continue to take funding and investment that could go to innovative start-ups instead. Our infrastructure is hurt, as we continue to pour money into the past. The American taxpayer is hurt, as some of this money will be turned around to lobby us for even more.

10 thoughts on “Bush Bails out the UAW”

  1. Don’t worry. It won’t work.
    I’d say it was too little money, and it is, but nothing can change the corporate culture inside. Unless you think they’ll come up with a ‘plan’ by the March deadline.

  2. This may be a legacy thing? He may want to be remembered as the guy who saved the auto-industry? I’m not generally a big supporter of the UAW or parasite unions in general, but I live in a region with about 3000 auto manufacturing jobs (not including spillovers). I just don’t want to see my already economically depressed area go down anymore than it is.

    And if the parasite bank executives can get their millions, then I’m not about to get too ideological about free markets or anything like that. Some of my friend’s fathers think I want a “New World Order” becuase I support free trade. One of them even accused me of being a “Communist” for driving a Volvo? They’re good people though, so I support “saving the middle class” as they would say/claim.

  3. Seerov

    I think that it is a legacy thing but more along the lines of not wanting to be remembered as the President who allowed 2 of the Big 3 auto makers to go out of business during his term in office. Bush does not have enough time left to enforce the needed changes so he has basically decided to punt the issue into the next administration. He is also using this issue to empty out the last of the TARP funds so that Obama will have to get new appropriations from Congress for any additional money that he wants to spend.

    For my part, I think that the auto industry and UAW could probably survive even with higher wage rates and the retiree cost burden if they would drastically modify their work rules so that managers could assign people to do what needs to be done rather than having to renegotiate everything with the union. But that is not what they chose to do and I am not sure that anything can save them now.

  4. Elambend,

    The UAW isn’t counting on a plan — it’s counting on the cost of not saving them to be too great for Obama to pay.

    Seerov,

    I understand the desire for the federal government to subsidize the lifestyle of a geographic region: farmers have been at it for quite a while.

    Before this bailout was announced, at least, the TARP was in the black. The region is that the federal bank bailout solved a liquidity crisis, as opposed to a bailing out firms with dysfunctional business models.

    Now, other good companies with good business models but without cash are allowed to go bankrupt all the time. Clearly Wall Street is using public funds for private benefit. But at least with AIG, the taxpayer has a de facto ownership stake (85% of corporate stock as a bond, IIRC). I don’t think anything like that is in the Bush-Paulson bailout of the UAW.

    Mark in Texas,

    Earlier in his administration, President Bush spoke of ‘lightening the load of others’ — by which I understood him to mean making politically hard decisions so that future policy makers will see the easiest route to also be the best. I think he has done that in Iraq, and in other areas. But his legacy here is party politics — hurting Obama — as opposed to helping the country.

    Michael,

    Detroit became the first 0-15 team when it was routed 42-7 by the New Orleans Saints on Sunday.
    “Awful, embarrassing,” Lions quarterback Dan Orlovsky said. “We stunk. Any bad adjective you can use, throw it in there.”
    The Lions try to avoid the dubious distinction of finishing 0-16 at Green Bay, where they haven’t won since 1991.

    Go Packers!

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>