Friday, December 19, 2008

Bush's Bailout

To start: Bush could have said "fuck it" and left the auto mess for the Obama Administration; I have to credit him for doing something.

But as always, the devil is in the details.

The current plan approved by the Administration today has several ugly pieces to it and some redeeming factors. Something, in this case, is better than nothing, but congressional failure to obtain full democratic unity and a coalition of moderate republicans will have a detrimental effect on autoworkers. The Bush plan mandates that the Jobs Bank be cut (a concession the UAW was negotiating in the round of congressional talks), and more insidiously, requires that half of the retiree health care fund be funded with company stock. The government can call for repayment of these loans as early as it sees fit, in order to force bankruptcy. Funding retiree healthcare with stock of a company that could be forced into bankruptcy on a government whim seems like a really, really bad idea. There are also provisions for the UAW to draw down wages to those earned by non-union domestic workers of foreign car companies.

Industry spokespeople have said that dealers are reporting that 20 - 25% of sales get to the final stage and people are unable to get financing because of the credit crunch. Why couldn't some money be thrown to the Big Three's financial services companies to free up some money for lending? After all, the credit freeze is the biggest thing hampering any kind of economic recovery. This is something Obama should consider.

Obama can change the rules next month. It will be interesting moment for him; a large part of his success was his ability to speak to working class workers in the Midwest (as evidenced by his wins in reliably republican Indiana and moderate Ohio). Will he make good on this?

I'm off to the embattled Midwest tomorrow; with 85% of my family laid off, this should be a somber holiday. Best wishes for the Alterdestiny community-- I won't have internet in the boondocks, so I will catch you all in the New Year.