Barack Obama's commitment to helping labor has always been suspect, but handing over the American car business to the investment banker Steven Rattner might well turn the president into the last great union buster.
It was only a matter of time before the imminent failure of one or more U.S. auto makers pushed AIG and the financial crisis off the front pages, at least temporarily.
And now that it's here, and we have to listen to talk of "restructuring" and "automobiles of the future" for the next month or so, I urge you to keep in mind just one historical fact:
Friends,
Nothing like it has ever happened. The President of the United States,
the elected representative of the people, has just told the head of
General Motors -- a company that's spent more years at #1 on the
Fortune 500 list than anyone else -- "You're fired!"
DETROIT - President Barack Obama's recovery plan for General Motors Corp. and Chrysler LLC appears to take aim at union retirees, a usually reliable Democratic constituency.
After studying the plight of the companies, the president's auto task force concluded GM and Chrysler's survival is dependent on greater concessions from the United Auto Workers union because the cost of funding retiree benefits had become unmanageable, especially given the downturn in global auto sales.
Rick Wagoner's ouster by President Obama hardly fixes General Motors' wagon. The extent to which GM did not get it, refused to get it, and never will get it was evident late last week. The same day that the government posted new fuel economy standards that raise the industry-wide vehicle standard to 27.3 miles per gallon in 2011, GM proudly announced the 2009 Cadillac Escalade Platinum Hybrid, "the most technically advanced large luxury SUV yet."
On Monday, President Obama announced that the United States government is effectively taking over General Motors and Chrysler and considering bankruptcy. But while Japanese automaker Toyota is also taking a hit as global auto sales slump, analysts expect Toyota to ultimately prevail. It's not just the Prius. Another type of hybrid built into Japan's economic model blends corporate interest with the common good. Japan's cooperative capitalism is the key to Toyota's future -- and ideally America's, too.
The
day of reckoning has arrived for the U.S. auto industry and much like the four
horsemen of the apocalypse (strife, war, famine, death) our nation's
policies (tax, trade, health care, energy) have helped decimate American
manufacturing. As a result, America has gone from the world's greatest
creditor nation to the world's greatest debtor nation.
Let's
look at how these long-standing policies have virtually eliminated several
industries from the productive side of the American economy – shoes,
TV's, textiles, electronics, and potentially the auto industry.
The rhetoric surrounding the auto industry this holiday season is deja vu all over again. I grew up in a suburb of Detroit. My parents loathed Walter Reuther, legendary head of the United Auto Workers. My father, a general surgeon, remarked on several occasions that Reuther, once wounded in an attempted assassination, was fortunate not to have landed on his operating table. He viewed Reuther as a communist whose government health care proposals would disrupt the voluntary doctor-patient relationship.
The global financial crisis deepens, with
more than 10 million in the U.S. out of work, according to the
Department of Labor.
Unemployment hit 6.7 percent in November. Add
the 7.3 million "involuntary part-time workers," who want to work
full time but can't find a position. Jobless claims have reached a
26-year high, while 30 states reportedly face potential shortfalls
in their unemployment insurance pools.
Imagine if the automakers had been offered the same kind of government assistance as the banks. Detroit's Big Three would each get new government capital totaling many tens of billions to replace their lost equity, as well as government guarantees running into the hundreds of billions. And government, oddly, would ask almost nothing in return. There would be no "car czar" to supervise Detroit's management, no wage and benefit cuts for employees, no review of product lines, and no government-mandated restructuring plan. A pretty sweet deal.
