Politics | 12/19/2008 10:35 am

Bush Stepping in to Aid Autos

By The Staff at wowOwow.com

Christmas came a bit early for the auto industry.

After weeks of debate, the White House announced today that it will offer ailing companies a short-term loan of $17.4 billion. Lamenting the ongoing economic crisis, President Bush stressed the urgency of the situation this morning: "Allowing the auto companies to collapse is not a responsible course of action" and hesitation could deal "an unacceptably painful blow to hardworking Americans."

The money comes with a few strings attached, primarily that the Big 3 — Chrysler, General Motors and Ford, which says it doesn’t need immediate assistance — must write up new game plans to prove they can sustain themselves. "The time to make hard decisions to become viable is now, or the only option will be bankruptcy," said Bush. "The automakers and unions must understand what is at stake and make hard decisions necessary to reform." Companies must also slash executive pay, truncate perks — like private planes — and give the government stock warrants. Those warrants give the government an option to buy into the companies, as they did with the floundering insurance firms.

The money will be taken from the $700 billion bailout package Congress passed back in October, which is already run down to about $350 billion. As the coffers run dry, Treasury Secretary Henry Paulson has asked lawmakers to release the additional funds. Critics argues that throwing money around does nothing to help the average American. And they’re right. But, then again, we can’t have our entire nation going down the drain. Decisions, decisions …

52 Reader Comments (so far…) Sign In or Register to comment

CRAP!

By John G on 12/19/2008 10:47 am

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Dang…I was going to buy a new car in January, assuming I’d get a good bankruptcy deal….

By Lorraine Bates on 12/19/2008 10:49 am

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It’s high time Congress and the rest of our government employees put their money where their mouth is and drive American cars. I was born and raised inside the Beltway, and still go back often. As far back as I can remember, 75% of the cars in greater DC have been foreign. At least the Congressman from Detroit, who lived across the street from us, always had two new Caddies in his garage.

By Lee Harrison on 12/19/2008 10:56 am

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Drive polluting gas hogs? what for? When Big auto in this country gets to the place where Norway and Japan are with electric cars then I’ll buy American —until then—no way.

By f p on 12/19/2008 11:14 am

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You drive an electric car? Cool!

By Lee Harrison on 12/19/2008 12:05 pm

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You’re buying into the myths, Frank. Ford and GM have more cars with 30+ mpg fuel efficiency than any other, and Ford and GM had truck and car-of-the-year, respectively. How about if the U.S. starts supporting its auto industry the way those other countries do, with health benefits and everything else. It’s funny how $700 billion was just handed to the incompetent, crooked investment bankers, like sauna-dipping AIG, with no questions asked. But when the American auto industry asks for a crumb because of the credit crunch - foreign automakers are reeling, too, because banks aren’t lending - it’s like a criminal investigation. Every hoop has to be jumped through. I will say this, though. The legacy costs of paying humongous pensions to retired UAW workers is what’s really crippled the auto industry, on top of the credit crunch. In no way am I absolving the clowns who’ve run those companies down, or the unions for getting greedy back in the day. And yes, the cars were garbage for years. But in recent years, wages ($14/hr.) and benefits have been driven drasticallly down, and the quality of the vehicles has improved markedly. That’s according to Motor Trend, J.D. Power & Associates and other independent industry trade companies. One thing about the investment banks: you won’t see a dime of that money down the road. But by keeping the Big Three afloat, Bush is keeping the manufacturing base in this country alive, setting the stage for a green-energy revolution, and sparring millions of people in automobile their jobs, automotive supply, dealerships, plastics, textiles and countless other industries operating. Hey, I don’t like throwing my tax money at clowns who show up on Capitol Hill in corporate jets, either. But if you’re going to do it, at least do it with a hope of getting a return on investment.

By James the Game on 12/19/2008 4:01 pm

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for its $10 billion to goldman sachs, the government got a thumbed nose while goldman sachs just spent more than that in bonuses to its own top employees. meanwhile, a like amount to general motors gives us hope of a future for the united states automotive industry, with the fate of millions of workers and retirees riding on the balance. the best aid the federal government could give general motors next is universal health care and pensions, thus easing the “legacy costs.” ford and gm both make fuel efficient cars for their european and asian markets. it’s time they made some of them here. in addition to that, there can be electric and more electric hybrid cars. i never thought i’d end up saying this, but bush did something right.

By mary lou s on 12/20/2008 1:52 pm

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Exactly, Mary Lou. The problem is, when you factor in all of the retiring health-care costs and what-not, the autoworkers’ pay comes to about $70/hour. Of course, that’s not what the current worker is earning ($28 for long-timers, $14/hr for new workers, according to the 2007 accord between the UAW & Big Three). One big point of contention is going to be Bush’s requirement that retiree health-care costs that are accepted into the UAW’s union-run health trust, VEBA, be half-stocks, instead of cash. Labor gurus say that could imperil health-care for millions of retirees. Ah, the health-care gorilla in this country’s room rears its head again. That, and the unfair trade practices of our foreign “partners”.

By James the Game on 12/20/2008 2:48 pm

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What do you have against pensions? If an industry such as this one that was making billions in profits doesn’t take care of their workers, then who should do it? And I also agree with Mary Lou. Bush got this one right.

By Brooklyn Gal on 12/22/2008 12:43 am

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I have nothing against them whatsoever. I’m pro-labor. It’s just the way things are structured under the current health-care system, that cripples industries like the automobile industry. Universal or some other system has to afford quality insurance without hurting the companies.

By James the Game on 12/22/2008 2:15 am

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But until that time comes, we have unions to protect us. I really don’t believe it is hurting the industry because this was an industry that refused to take us into the 21st century—labor does not make marketing decisions. If it weren’t for unions, there would be no protections. I am a retiree and receive health benefits. But I also paid my fair share of union dues to cover these expenses too. But I am sick and tired of the media and especially republicans trying to put blame on the unions.

By Brooklyn Gal on 12/23/2008 4:27 pm

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It’s definitely hurting the industry, Brooklyn. $70-an-hour average per-worker cost, when you factor in the retiree health/pension benefits, compared to the $28.12 hourly wage workers are earning. That’s why we cannot compete with the foreign automakers. I’m not blaming labor, though. You’re right: the auto companies are the ones that screwed up. But I do think univesal health-care is a step in the right direction.

By James the Game on 12/24/2008 2:46 am

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And again, this is where I disagree with you. This is a billion dollar industry, and $70 when you factor in benefits is not unusual. I remember the days when companies offered the best health care to their employees before going HMO. It’s health care in general that needs to change. I myself am covered for health care thanks to my union, and my benefits are constantly being cut due to rising health costs. I think people see these numbers and think it’s the problem when it really isn’t. We should never think of industry providing health coverage as something that “hurts” when so many other people are uninsured. I would rather put the blame again on management rather than employee benefits. I recently heard on news radio that companies that made huge profits this year are now using the economic crisis asking workers to cut salaries and benefits. That is not fair. That’s greed.

By Brooklyn Gal on 12/24/2008 6:41 am