Nothing more perfectly illustrates the real story of the campaign for a federal bailout of the Big Three U.S. automakers in Detroit than this – United Auto Workers union representatives were in the room for the climatic final negotiating session with Senate leaders, while the company executives were outside. The negotiations failed for one simple reason – UAW leaders refused to set a date certain for when they would free GM, Ford and Chrysler to pay workers compensation equal to that paid by Toyota, Honda and other foreign automakers with plants here in the U.S.
Wages and benefits under UAW-negotiated contracts saddle the Big Three with an estimated $1,500 more costs per car, compared to Toyota, Honda, etc. That is a crippling burden that prevents GM, Ford and Chrysler from being competitive and it puts every UAW job in dire jeopardy. It’s the fundamental reason why the Big Three lacked the financial reserves to get through the current downturn without outside assistance (with the possible exception of Ford).
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Now it appears President Bush will agree to fund a $15 billion Detroit bailout using funds previously approved by Congress in the $700 billion Wall Street bailout. Two things are clear: First today’s bailout is merely a bridge to a much more expensive bailout in 2009, and, second, without UAW concessions and new business models, GM and Chrysler are ultimately headed to extinction, with or without the temporary bailout. So Bush is simply buying time for the UAW till the Obama administration arrives to save the union for good (they think).
Be sure and check back here on dcexaminer.com for updates on this Hot Zone editorial.
UPDATE: Who Killed the Big Three?
Henry Payne has covered the Big Three for years in Detroit. He reports now on National Review Online that Democrats and UAW officials are already attempting to shift the blame for the failure of the bailout negotiations last night from the union to Senate Republicans like Sen. Bob Corker, R-TN.
UPDATE II: No Wonder UAW is Steaming
A majority of the Senate voted for the proposed $14 billion Detroit automakers bailout, but, thanks to Senate rules that require a 60-vote supermajority to get anything done, the measure failed. There were 35 senators who voted against the proposal. The Center for Responsive Politics looked at the campaign contributions data and found that UAW contributions to the 52 Senate bailout supporters exceeded the union’s checks to the 35 opponents by a margin of nearly 14-1. More details here.
On the House side, where the proposal was approved, MAPLight.org found a somewhat similar pattern:
“Members of the U.S. House of Representatives voted to pass the Auto Industry Financing and Restructuring Act last night. MAPLight.org’s research department revealed that over the past five years (January 2003 – October 2008), auto manufacturers, auto dealers and labor unions gave an average of $74,100 in campaign contributions to each Representative voting in favor of the auto bailout, compared with an average of $45,015 to each Representative voting against the bailout–65% more money, on average, given to those who voted Yes. The final vote: 237 Representatives voted Yes and 170 voted No, with 26 Not Voting and 1 voting ‘Present.’”
Go here for the full MAPLight report. It is important to note these two analyses cover different time periods, which accounts for the difference in dollars totals.
