Bad Bailout Backlash

by John Nichols

Thirty-six members of the U.S. House -- Democrats and Republicans, liberals and conservatives -- recently wrote to President Obama asking him to stop the White House Auto Task Force from taking actions that are harmful to American autoworkers, auto dealers and the states and communities impacted by plant and dealership closings.

Congressman Dennis Kucinich, D-Ohio, organized the effort with Ohio Republican Steven LaTourette in response to the administration's approach to the Chrysler bankruptcy and bailout.

But it now takes on new significance as the administration's approach to the General Motors bankruptcy and bailout -- a much larger endeavor -- parallels the bad strategies of the Chrysler deal.

Here is the text of the Chrysler letter, which was sent late last month:

The Honorable Barack Obama
The President
The White House
Washington, DC 20500

Dear Mr. President:

We are writing to express our concern over events that have occurred and will soon occur in the U.S. Automobile Industry. We are grateful to you and your Administration for the leadership demonstrated. However, decisions being made by the Auto Task Force and in the bankruptcy proceedings in New York are more than troubling.

In your announcement on Chrysler on April 30, 2009 you indicated that: "It will not disrupt the lives of the people who work at Chrysler or live in communities that depend on it."

While we know that was your intention, events following your announcement have made that impossible.

Specifically,

1.) Members of the UAW voted on April 28-29 to ratify a contract agreeing to significant concessions. Sadly, approximately 9000 auto workers at 8 Chrysler facilities went to vote on that contract without knowing that their jobs would be terminated. For example, 88% of the members of Local 122 in Twinsburg, Ohio voted on April 29th for the agreement, celebrated your announcement on April 30th, and discovered for the first time that their plant would be shuttered on May 1st;

2.) As part of the bankruptcy proceedings, those 9000 workers have been given to only May 26th to determine if they want to accept a buy out package terminating all rights of their employment;

3.) On May 4th in those bankruptcy proceedings, Robert Manzo of Capstone, Chrysler's consultant, testified that the Auto Task Force, after first suggesting that Chrysler not be permitted to spend any funds on advertising, begrudgingly agreed to permit them to spend half of their advertising budget;

4.) In those same proceedings, 789 Chrysler dealerships have been slated for closure. It is anticipated that up to 2300 GM dealerships will soon receive the same news. As you know an average of 60 people work in each dealership in the U.S. The result of direct job losses, without any factoring in of the supply chain, will approach 150,000.

As you will recall in 1979, the Carter Administration, when faced with the pending insolvency of Chrysler, worked with the Congress to create the Chrysler Loan Guarantee Act of 1979. That legislation recognized the Congress' Constitutional responsibility to receive and refer observances from all stakeholders. The 1979 legislation received broad bipartisan support and public acceptance because decisions were thoughtfully made by the nation's elected leadership rather than by a non-elected task force.

While we are mindful that time is of the essence, we are respectfully requesting that you return the Auto Task Force to its important advisory role to you and your Administration, but also return the Congress' Constitutional legislative prerogatives before it further disrupts the lives of people who work at Chrysler or live in communities that depend on it.

Signers of the letter included: LaTourette, Kucinich, Don Young (R-AK); Jesse Jackson, Jr. (D-IL); Pat Tiberi (R-OH); Tom Latham (R-IA; Glenn Thompson (R-PA); Mike Simpson (R-ID); Frank LoBiondo (R-NJ); Brett Guthrie (R-KY); Tom Cole (R-OK); Thad McCotter (R-MI); Judy Biggert (R-IL); Jo Ann Emerson (R-MO); Adrian Smith (R-NE); Jim Gerlach (R-PA): Paul Ryan (R-WI); Bob Latta (R-OH); Kenny Marchant (R-TX); John Duncan (R-TN); Lee Terry (R-NE); George Radanovich (R-CA); Neil Abercrombie (D-HI); Louie Gohmert (R-TX); Dennis Rahberg (R-MT); Geoff Davis (R-KY) Greg Walden (R-OR); Mike Pence (R-IN); John Conyers (D-MI); Mike Turner (R-OH); Mike Michaud (D-ME) Pete Sessions (R-TX); Dan Burton (R-IN); Shelley Moore Capito (R-WV); Devin Nunes (R-CA); and Pete Visclosky (D-IN).

Laura Flanders hosted Kucinich on GritTV Thursday for a discussion of the Obama administration's plan to make a federal investment of as much as $50 billion in General Motors at the same time that the company is preparing to shut as many as 20 U.S. factories and lay off as many as 20,000 workers. GritTV is always worth watching, but this is especially important programming, as most of the national media is strugging to catch up with this story.

The planned factory closings and layoffs are part of a broader plan to offshore much of the manufacturing capacity of GM to foreign countries.

Kucinich, one of the most passionate internationalists in Congress, doesn't think that it is a particularly wise strategy to have the U.S. government financing the downsizing of this country's manufacturing capacity.

He's right about the issue.

He's also right about the need for Congress to get involved with this issue.

Here's Kucinich's recent statement -- originally delivered to 600 UAW/GM retirees in Ohio -- on the dramatically-misguided GM bailout scheme:

According to news reports today, the federal government will provide up to $50 billion dollars in financing to see General Motors through perhaps the most complex bankruptcy in American history. U.S. taxpayers, including the workers of GM, are providing these funds. We must ensure that this investment works in their best interest.

We must not allow GM to use U.S. taxpayer dollars to close plants in America in order to open markets for products made in China and other countries. It is unacceptable to ask U.S. workers to subsidize the exportation of their own jobs. The taxpayer's investment should be used to protect American plants so that American workers can build the next generation of automobiles.

Public statements that Treasury cannot be involved in the internal matters of GM management fly in the face of the fact that U.S. taxpayers will own GM. They can and should intervene in order to protect the American automotive industry and the investment of American taxpayers.