A House GOP alternative to the UAW bailout
House Republicans have come up with a no-bailout alternative for the automakers. Take a look and tell me what you think:
House GOP Leaders Propose No-Bailout
Alternative for Auto Industry
WASHINGTON, DC – House Republican Leader John Boehner (R-OH), Republican Whip Eric Cantor (R-VA), Conference Chairman Mike Pence (R-IN), and other House GOP leaders today put forth an alternative to the $15 billion taxpayer-funded auto bailout proposed by House Democratic leaders. Boehner issued the following statement:
“The proposal put forth by our colleagues in the Democratic majority is unworthy of American auto workers and unworthy of American taxpayers. It guarantees failure at taxpayer expense. It will keep the industry dependent on taxpayer money instead of giving auto workers the security of a viable industry that is back on its feet and ready to compete. American auto workers and taxpayers deserve better.
“A responsible plan should protect taxpayers and help auto workers and their families by allowing the Big Three to become competitive again. Our plan does this.”
A summary of the House Republican alternative follows and is available here:
The American Automotive Reorganization and Recovery Plan
Working families throughout our country are struggling to pay their bills and facing economic anxieties not seen in America for generations. Employers are finding themselves torn between staying in business and laying off people over the holidays. Nowhere are these challenges more acute than in states that are heavily dependent on auto manufacturing. It is essential that Washington address these challenges not through taxpayer-funded bailouts that prolong working families’ pain and put taxpayers’ money at risk, but by fixing problems and removing barriers that make it harder for working families to prosper.
Washington has failed this basic test with respect to the American auto industry. Republicans want to make certain that in its response to the resulting crisis, Washington does not fail American taxpayers as well. A responsible plan should do two things: it should protect taxpayers, and it should help auto workers and their families by allowing the Big Three to become competitive again. The Democrats’ plan does neither. Congress should not be stampeded into rubber-stamping a plan that guarantees failure at the taxpayers’ expense.
The Democratic Bailout proposal has three fundamental flaws:
* The only thing crazier than trusting the same management and union officials who got the Big Three into this mess to get them out is trusting a bunch of Washington politicians and bureaucrats – the very same people who ran up a $455 billion deficit last year. American auto workers and their families deserve better.
* If no private investors believe the Big Three restructuring plans are realistic enough to support with their own money, why should we put up taxpayer money? American taxpayers deserve better.
* The Big Three restructuring plan and the Democratic proposal lack accountability. There is no guarantee that once they get taxpayer money the restructuring they promise will occur. Once the taxpayers prop them up once, there will be a big incentive to keep bailing them out – keeping the industry dependent on government aid, lashing it to the majority’s political agenda, and further denying American auto workers the security of a viable industry that is back on its feet and ready to compete. American auto workers and their families deserve better.
What We Should Be Doing: The American Automotive Reorganization and Recovery Plan
Hard Benchmarks:
On December 2, the Big Three presented to Congress their plans for restructuring. While the plans included laudable goals, too few details were provided as to how the companies will actually achieve the restructuring and the savings they have promised. In some instances new agreements to achieve the savings would not be entered into for months or perhaps years.
The Big Three must lock in the restructuring they have promised in a matter of weeks, not months or years. Congress should instead establish firm benchmarks and a tight timeline for restructuring. Such benchmarks will include for example requiring that by March 31, 2009 each company should reach agreement whereby:
* The companies’ creditors agree to a framework to reduce each company’s indebtedness by at least 1/3.
* The UAW holds to concessions already made and further:
o Concedes the elimination of Supplemental Unemployment Benefits;
o Concedes elimination of the Jobs Bank Program;
o Agrees to either reduce company retiree health care obligations or otherwise convert a portion of such obligations into equity; and
o Agrees to reduce wages and benefits to the levels paid by non-Big Three manufacturers.
A Process for Reaching Expedited Agreement, Instead of Nationalizing America’s Auto Companies
Because of the many legal and contractual hurdles to restructuring, the companies are urged to accomplish their restructuring through the use of a pre-packaged bankruptcy or another mechanism to bring all stakeholders to the table for an agreed-upon determination of their future. It is important that these stakeholders reach reasonable compromises amongst themselves. Creating a government bureaucracy or a “car czar” to arbitrarily pass judgment on the thousands of details involved with a restructuring is akin to nationalizing the auto companies.
Interim Financing: Insurance, Rather than a Taxpayer-Funded Bailout
The Big Three may need some form of interim financing as they finalize their restructuring. In normal economic times, if their restructuring plan is considered viable, such financing should be available in the private market. Because of the current credit crisis, limited assistance may be appropriate in the form of insurance, rather than a taxpayer-funded government bailout that replaces private investment. We propose that the government provide insurance, funded by the participants with a modest FDIC-like fee, which would cover up to 50% of the losses of new investment in the case of default, helping to unlock immediate private investment (not unlike debtor in possession financing). Such insurance would expire on March 31, 2009. This proposal ensures that taxpayers are protected and provides a powerful incentive for the Big Three to quickly implement their restructuring plans.
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Trackbacks
- The GOP’s Rebuttle to the Auto Bailout « Trust, But Verify
- HoosierAccess » Blog Archive » House GOP Offers Alternative to White House/Dem Auto Bailout
- Below The Beltway » Blog Archive » House Republicans Leaders Cave On Auto Bailout
- Bailout for Bloated Union Contracts | OpenMarket.org
- GOP Proposes New Plan for Automakers « Jane Q. Republican
- Grand Theft Auto Bailout: Washington D.C. « JoHNBRoDiGaNDoTCoM
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Start with “Bust the Union”.
Number 2, eliminate all reference to that absurd “Green house gas” concept. We need red, white and blue cars, not green ones.
More government involvement. This is hardly an alternative. No government involvement would truly be an alternative.
Abiding by the Constitution would be an alternative. The GOP fails you again.
Number 3, Ante in to the US citizen pot, is to buy one of these cars. Can’t buy a car, go back home. We must sell off the current glut of cars, before we build new ones.
Now if they would just suspend the Cafe Standards maybe they would actually exhibit some common sense.
The American Automotive Reorganization and Recovery Plan (AARRP)- It sounds better than the socialistic plan the Democrats are proffering.
I think I’d change it’s name though – sounds too much like the liberal AARP.
The Democrats plan is like Fannie Mae and Freddie Mac – privatized profit and socialized risk.
Chapter 11 and reorganization seem to work in a capitalist economy. Wise investors will pick up the pieces, install new management, negotiate new labor contracts, and new smaller and viable companies are born.
It is absolutely insane to throw taxpayers’ money down the Detroit rat hole. Time to stop the bleeding at the U.S. Treasury.
If you feel moved to call your Congresscritters:
Call Capitol Hill Switchboard TOLL FREE:
1-877 851-6437
1-800 828-0498
1-866 340-9281
1-866 338-1015
1-866 220-0044
The only way the Big 3 can survive is without the Unions. A company must be able to be flexible in difficult times. The Union eliminates the possibility for the company to be flexible enough to remain viable.
The Union will want to bring the whole company down if they don’t get what they want. That’s what they have done through their entire history. It’s their MO. If we make the deal so that the UAW doesn’t like it, we guarantee bankruptcy (the only way out in a capitalistic society).
Sounds like Boehner is finally coming around. After getting his butt handed to him in with the TARP, he’s learned Republicans, and most Americans, are opposed to any sort of bailout, for any industry, that only has itself to blame for the trouble they are in.
It sounds pretty decent, almost like bankruptcy proceedings but with congressional funds to keep them afloat while they are going through the restructuring. Sounds pretty decent, including forcing the damn unions to finally agree to the reforms they need and promised.
This is a great plan because the unions would never agree to it. Hopefully the Repubs can hold a filibuster and these companies go into bankruptcy, especially Chrysler which is a privately owned company.
I can’t prove it but I’m fairly certain that Conservatives buy more American branded vehicles than Liberals do. I propose we boycott the Big 3 if they accept bailout money. Supporting the bailout is supporting the UAW and the Democrat party. Why do it?
Michelle, how about a boycott if they take the money?
My only heartburn is with penalizing the retired workers. Granted they have on helllacious retirement package, but they did their time with the understanding what their retirement package would be.
Could the benefits be tweaked? Yes but to just advocate elimination of them outright is a disservice to those whose worked so long in hopes of getting this package.
Future retirement packages for current employees should certainly be looked at, but don’t punish those already receiving them.
Far superior to the Democrat’s plan, by leaps and bounds. Let the bloodletting and restructuring begin.
JAG – if I understand the “equity” part of the plan correctly, all retirees will get equity worth the value of their retirement for x number of years. They can sell the stock or collect dividends for income. Basically the retirees become shareholders and therefore vested in the success of the companies.
“fred5676 said:
Chapter 11 and reorganization seem to work in a capitalist economy”
The company I work for went through Chqpter 11 due to leverage buyout madness and the dream of an impossible 15% annual growth.
Company reorganized, sold off some parts, convinced creditors to loan money to buy other stuff. Through it all collected a paycheck and retained benefits. Missed out on an opportunity to buy “pink sheets.” Let’s have some creative destruction here.
Oh yeah, keep the government out. Look what Kennedy did back in the sixties for the steel companies. They became totally non competitive.
Much superior to the liberal’s plan.
I agree with DerKrieger. If the dems’ bailout plan goes through boycott GM/Ford?Chrysler vehicles.
On December 10th, 2008 at 1:52 pm, jjmurphy said:
Much superior to the liberal’s plan.
I agree with DerKrieger. If the dems’ bailout plan goes through boycott GM/Ford?Chrysler vehicles.
——-
My Toyota Tundra was made in the U.S.A. by American labor. Damn fine truck.
This is better.
The two main problems, the causes of the auto industry failures here, are the UAW and the CAFE standards.
CAFE started in 1978, oddly,(not really) the year the Big 3 began losing their market share…GM going from over 50% to not quite 20% now. (I think).
Most Americans don’t WANT small cars. We like our big cars and SUV’s.
I love my ‘69 “Hot Rod”.
Europe likes little cars, not Americans.
The gov’t caused this, keep them far away from running Detroit, they’ll only do worse.
Get UAW to cut and cut.
A job with a little less pay is better than NO job at all.
I wonder if the UAW was gone, tomorrow, just gone, how much more would the companies and EMPLOYEES keep… of their own money?
My next vehicle will be American made, just not by the big 3.
The DerKrieger PLAN sounds the best of all of them. Take the bailout, and Conservatives will bail on you. I have noticed that most of the liberals I meet drive foreign brands( and usually ones made overseas). I have always bought American, but if they take the bailout, my next vehicle will not be from the Big 3! They got themselves into this mess (mostly because of the greedy thugs in the unions), so they can deal with it themselves.
Much better – which means it doesn’t stand a chance in Obama’s vision of a future America.
‘In Hopes’ is the key word there.
Calculated risks.
But in fact, they were over paid and are still overpaid in comparison to the worldwide industry.
If they worked for any other company and made great money but that company went belly up they would lose everything.
We all make choices, they seem to have done more than well for decades and decades.
Should their income cause the loss of jobs for all the current employees?
It sucks, but it is reality.
I lost 55% of my worth the last few months, no one is paying me back.
I’m self employed, no big 3 retirement program for me at all.
Again, that was/is my choice.
I suppose another reason they are going broke is if in order to compete against Honda and Toyota (U.S. made)they have to take a loss on each car.
If they pay $72-$78 per hour including benefits and Toyota and Honda pay about $48 per hour they have to be taking a loss.
If not, then why aren’t Toyota’s and Honda’s a whole lot cheaper for comparable vehicles?
Any plan that forces the automakers to restructure without throwing good (tax) money after bad, works for me.
I’d prefer the UAW to go away to bring wages in line with the intelligent part of the industry. I’m not sure that removing the “green” rules will make that much of a difference, though. The foreign automakers do just fine with them in place.
Agreed. I also like the Union Busting suggestion too.
Well, there are lot of things that go into the price, including tariffs. So many variables have to be considered.
The only way to not have taxes be an impact is to pass the FairTax. That would fix the economy, too!
I’m told my Nissan Frontier was probably built in Sacramento…
I agree. A little free market hiring would solve this problem instantly.
I trust our current government to screw up any plan. Who has the cash to pay the “modest FDIC-like” fee that is supposed to cover 50% of (likely) losses?
Let one or all of the big 3 go bankrupt.
***
Boycott Bailout Recipients
Any proposal that attempts to restrict the union is a non-starter for the Democrats. They are up to their eyeballs in debt to the UAW and they are prepared to socialize the nation to pay them back.
Simple, the Little 3 are setting the high end of the price range, generally. Therefore, in order to present value, other manufacturers only have to discount from where the more expensive manufacturers price themselves (even if the more expensive producers are taking a loss, it doesnt matter).
So, Toyota et al, get to make out like minor bandits, because, even while taking a loss, the Big 3 inflate the market value of autos in general.
If the Big 3 market/labor cabal falls apart, you may see a price readjustment to the downside depending on how many players are left and half the auto industry isnt trying to subsidize its insane labor policy expenses with higher vehicle prices.
Just a guess.
good idea, besides I’m owned foreign cars before, German and Japanese , both were great cars. The Japanese was the best of the two.
The AARRP is better than the dems plan but it’s still not the answer, which is bankruptcy, period, reorganize top to bottom.
Everybody is missing a big problem.
the WTO
They have used various courts to enforce sanctions against US companies that get government aid and are doing business overseas.
So we are going to have to either forbid exports of Big 3 products, or give the same to foreign manufacturers in any market that the US exports to.
So this is going to instantly be transformed from a $15B pork to US unions and Big 3 management to a umpteen Trillion $ to all vehicle manufacturers even in countries that don’t export to the US. (as long as US companies export to those countries)
Just like every time before, the WTO says the US loses, and must pay.
One issue not mentioned is safety/design standards. There are multiple little differences between EU cars and American cars. If we could standardize the regulations, Ford and GM could make the same cars they sell in Europe here. Less design cost and greater selection.
Is it just me, or does it sound like the White House is the world’s worst negotiator when it comes to bailouts?
The Dems appear to be playing from the same bailout book that brought us the TARP:
- announcing that a deal has been worked out between them and the White House
- not showing the wording of the bill until they ask for a vote
- painting Republicans as obstructionists
- Republicans then buckle in the end, and
WE ALL SUFFER THE CONSEQUENCES.
All because the White House announces that they are in agreement “in principle.”
Good luck getting the UAW to agree to that.
To hell with the UAW. To hell with the “Worthless” Three. Let the market take it’s course.
I have just heard the 32 and 1/2 Democrat/pundit claim this Bailout scam is good for the taxpayers-if that is true what aren’t the Democrats/pundits lining up to put in their own money?
But I imagine many of them have figured out ways to get sons and brother-in-laws in on any gravy train. The one public works project I support at the moment is building a new federal prison out in the Mohave Desert-no air conditioning, no swimming pools, just big piles of rocks. We have lots of rocks in the desert.
The plan is a good start..the democrat version is nothing but a payoff to the union-it does nothing for the workers involved.
Scr#w the UAW…and BTW I have a lot of experience being blue collar..
That’ll go over like a turd in a butter churn.
Stop gasbagging and send an email to your two senators to say no to bailout.
Frequently, you can tell a lot about the creativity and wisdom of government programmers by the acronyms they create and use to market their product.
The “American Automotive Reorganization and Recovery Plan (AARRP)” says just about all you need to know about the GOPs inability to put together a marketable product for their ideas.
WITHOUT looking at any details, just looking at AARRP, you can pretty much figure out it’s incredibly weak on marketability and big to very big on details that the average Bubba will never understand.
When the GOP figures out you just can’t sell a Big Mac under the label “BS_CRAP & Stuff” they might actually start getting noticed… (Beef Shredded, Cooked Rare, Adding Pickles and Stuff.)
The American auto worker doesn’t need help. I hear he earns about $73 an hour, plus benes. The “job bank” gives them 95% of their base pay and benes, if they lose their job, up to 2 years. Sounds like a job I ought to look into. I wonder how much he will earn after the sympathic government and unions get more control….
I like the proposals……but…I have the impression that the UAW would rather the companies go down rather than EVER agree to major concessions. Union leadership will not be troubled seeing their members all lined up for “government cheese” because they themselves will never be on that line with them.
Just a thought; Instead of boycotting American cars it is probably a better idea to get rid of the politicians pushing this monstrosity. We don’t want to punish politicians by further wrecking our manufacturing base.
Let’s really get competitive and get rid of ALL gov’t regulations, airbags, ABS,pollution controls, etc…And see what happens in a free market. this market hasn’t been ” free” since FDR.