From Jim Houle
4/4/09 Ukiah, Mendocino County, North California
An auto worker said this week : “My opinion of him at first was that he was going to stick up for us, but there has been an abrupt change in attitude towards workers since taking office. I tried and tried to find something about that man that I liked but I couldn’t.” “Obama: I am looking at you, but there is something else underneath. You are not what you appear to be. Its like you were a Trojan horse”. WSWS 4/01/09
Obama complains that cost cutting programs have not gone far enough. Chrysler has to merge with Fiat or go bankrupt, he demands. If GM doesn’t fundamentally restructure in the next 60 days the government will throw it into bankruptcy. He emphasized his consternation by demanding the immediate resignation of their CEO. The main stream media enthusiastically praised Obama’s insistence that auto workers accept job cutbacks and salary reductions in order to return the US auto industry to profitability. Everyone has now piled on including the New York Times, the Financial Times, the Washington Post, and the Wall Street Journal. “It is important to hold UAW accountable and cut legacy liabilities” (previously agreed-upon retirement packages) said the Financial Times. The Post said: “It was important that the president did not flinch in demanding even deeper concessions from workers”. In distinct contrast to all of this, Larry Summers intoned on Meet the Press that the government could not force AIG to withhold bonuses because contracts can’t be broken. Apparently if you shower when you come home from work on the assembly line, your contract does not give the protection that those who shower before heading to a desk job in Wall Street receive.
Obama says the auto manufacturers must remake themselves with ‘fundamental restructuring’ but he doesn’t want the government to run the industry Counterpunch 4/1/09. GM management has not engineered any fundamental change in it business plan in the past 20 years. If he wants real change, Obama will have to install a management team committed to producing an electric car with a reasonable price tag, rather than the $40,000 ‘Volt’ they intend to put out in 2011. The auto industry task force set up by Obama on Feb. 28th consists of cabinet secretaries and senior advisors to the White House. Not one member has experience in the auto industry.
The New York Times predicts that GM will be forced into a ‘controlled bankruptcy’ (NYT 4/1/09) with an ‘Old GM’ and a ‘Good GM’. This ‘Quick Rinse Bankruptcy’ could include tearing up ‘debt obligations’ to union retirees for the health care plans promised decades ago under VEBA (Voluntary Employees Beneficiary Association). Counterpunch: Brenner, Gaus & Slaughter – 4-01-09. Bankruptcy has proven popular for the airlines, the steel industry and many other employers as a wonderful way to avoid their legal obligations under earlier contracts with labor unions. If GM is too big to fail, why doesn’t Obama take it over?
WHAT IF THEY TREATED DETROIT LIKE WALL STREET?
Maybe we’d see a plan to get the hedge fund investors to absorb some of the auto industry’s excess capacity by buying up the cars that can’t be sold just now and holding them as ‘legacy assets’ until the market brightens up. The government would put up 87% of the capital for this little booster program and the hedge fund investors 13% ($71 million to buy $1 billion worth of fine American-made cars – please don’t call them toxic assets). If the cars sold some day, the hedge funds would take the profit. If they didn’t, good old Uncle Sam would take all but $71 million of the loss Robert Weissman in Counterpunch 4/02/09. Hell it’s sounds good for the Wall Street banks, why not for General Motors?
The Geithner Plan for embattled banks contrasts sharply with the very tough, hard-headed approach taken towards the automakers. Why kid gloves for Wall Street and tough love for Detroit? Well, for starters, our financial community has made a long-term investment in our politicians and also provided most of the policy makers now in office at Treasury and the Fed. What would happen if they treated AIG like Detroit?
Sheldon Filger writes in the Huffington Post: 4/03/09: “If G.M. and Chrysler are in fact doomed, along with much of what remains of America’s industrial capacity, this will be largely due to a policy decision that establishes the financial sector as the center of gravity for the U.S. economy, reflecting the vastly more significant taxpayer dollars that have been allocated to that sector, with far fewer strings than are being attached to the paltry aid given to Detroit. How is it possible for the U.S. to rebuild its economy if the industrial sector, epitomized by companies such as General Motors and Chrysler, is largely sacrificed on the altar of Goldman Sachs, AIG, Bank of America and their ilk?”