Anyway, to the reports. The lead dog on opposing the auto bailout has been Sen. Richard Shelby, but there are other prominent Republicans on board, too. Michelle Malkin reports:
At noon Eastern today, five true maverick Republicans will announce their support of a UAW bailout filibuster in Washington.
Sen. Vitter will be on the Senate floor at around 11am Eastern to report that he "will use every procedural tool possible to defeat" the latest version of the bailout bill.
Which, by the way, is unavailable at this moment to the American taxpayers who will be paying for it.
Another Senate source tells me "Senate Republicans have been expecting the latest language, but Congressional Democrats haven't shared it outside their caucus. The White House probably has the text, but they haven't shared it" either.
There's your open government for you.
Hot Air adds this:And this, which backs up my earlier assertion that this is essentially a government takeover of the auto industry:
Democrats want this as a Trojan horse for government control of private production, and they're going to get it, unless Republicans stop it. Republicans in the Senate have already begun to align themselves for a filibuster of the bailout, and a new IBD/TIPP poll shows they have backing from the public. Almost two thirds of adults, including a majority of Democrats, oppose a bailout:
Sixty-three percent of Americans surveyed in the latest IBD/TIPP Poll — including 66% of investors, 59% of Midwesterners and even 53% of Democrats — disapprove of financial aid for U.S. automakers. Respondents also opposed bailouts for banks and other financial institutions by 53% to 45.5%, with only Democrats and Midwesterners in favor. They were more ambivalent, with 50% opposed and 45% in favor, when it comes to mortgage holders. Help for state and local governments won grudging approval. Republicans were opposed across the board.
Can Senate Republicans hold the line? It will probably be a close-run thing, especially with the Bush administration signaling its approval of the package. I'd watch Olympia Snowe, Susan Collins, and Arlen Specter most closely on this question. The GOP is fortunate in that this question will come before the 110th Congress rather than the 111th, where they will barely have enough in their caucus to block anything.
Of course, that will require Republicans to act like Republicans, and not Democrats Lite. They have public opinion strongly on their side. Can they exercise some political courage and stop the runaway bailout train?
I have a feeling this will be a very frequently asked question in the next couple years. Still, there is a good chance of killing this measure right now, with the current Congress.Jim Manzi asks the question of whether or not there is any good bailout, even a temporary one:
Let's start at the beginning. These companies have a solvency problem, not just a liquidity problem. When you add up all the contractually-obligated payments they have to make to employees, retirees, suppliers, bondholders and so on, there just isn't enough cash to go around. If they could escape these prior commitments and manage themselves more intelligently, there are profitable operating companies buried in there, but they are trapped underneath the absolute size of the commitments they have made. Everybody is either better off or no worse off if this happens, as compared to just liquidating the assets in a fire sale. This is exactly what Chapter 11 bankruptcy is meant to do.
Experts disagree about whether a literal application of a Chapter 11 process would work for the Big 3. So, if we could stipulate that we could get all of the effects of an orderly bankruptcy through some government-sponsored process that just had a different name, then of course we should do it. If we had a process called conservatorship or something, in which a set of government employees called an oversight board, who are insulated from political pressure and have very similar motivations and authorities to the government employee named by a bankruptcy judge, makes decisions that force renegotiation of contracts and a change of ownership, we would have a materially identical process to bankruptcy. This hypothetical alternative could — again, in theory — actually be superior if it could reduce some of the inevitable disruption in consumer demand that would very likely be created by bankruptcy.
Of course, as even thoughtful liberals have observed, this is easier said than done. What are the odds that members of Congress are really going to vote for a body that can be directly tied to them that will do things like tear up all UAW labor contracts, tell every holder of a share of GM stock in the U.S. that they're just out of luck, aggressively fire tens of thousands of white collar workers in politically-competitive states and districts throughout the industrial Midwest, and tell anybody who owns a house in Michigan that he has just gotten a lot poorer?
This seems to me to be the acid test of whether such a plan will work, in the sense of ending up with a competitive auto industry and minimum moral hazard, instead of an inefficient jobs program. Unfortunately, the key aspects of the requirements that Congress actually seems to be imposing look more like a political kabuki dance: government warrants (a good idea; but the key open question is the priority and assets against which this $15 billion will be securitized), limits on executive comp and the appointment of a car czar selected from the Washington bureaucratic class.
Bottom line: given that this is real life with real politicians, NO.So what should we do instead of a bailout? Well, if nothing is not an option -- which seems to be the consensus all around -- the House GOP has offered a viable alternative (as they did with the financial industry bailout, but which was stupidly overlooked). This is a bit long, but it is something you should take a moment to read:
* 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.
I have yet to see any analysis of this proposal, but from my basic understanding of the major problems with the Big 3, and with an eye toward free market solutions rather than nationalization of the auto industry, this looks like an outstanding plan. When people smarter than me start offering opinions, I'll be sure to pass them along. Until then, this appears to solve the key problems: union strangleholds, union over-benefits and over-pricing, and too many built-in legacy costs. This would allow the largest number of people to keep their jobs, trim at least part of the obnoxious amount of smelly blubber that is killing the Big 3's core business model, and keep the industry as intact as possible without putting billions of taxpayer dollars at risk.
If you'll notice, this will actually implement some real benchmarks and oversight (which the financial bailout didn't have), ditch the most odious parts of the union stranglehold (the jobs bank, where union members get paid 95% of their $75/hour salary NOT to work), and bring their payroll costs in line with their non-union competitors. It would also prevent the same sort of 'czar' debacle that is currently failing miserably in the banking industry. At this point, Czar Paulson just throwing idea after idea at the wall and hoping something will stick. He's clueless. Do we really expect a 'car czar' to do any better? Most importantly, it would keep almost all taxpayer money off the table, thus allowing the free market to fix things rather than bludgeoning the auto industry into socialism. That's why the Dems want it, of course.
You might go ahead and contact your Senators and Rep again, and suggest they not only oppose the bailout, but support the House GOP plan and the Senate filibuster. While you're at it, you might also point out just how well it worked the last time they ignored the House GOP and implemented a bailout: NOT AT ALL!
Once again, the House GOP is leading the way in terms of actual fiscal responsibility, and a small group of Republican Senators is taking a similar stand on their side to block what will inevitably be a big mistake with taxpayer dollars. If we complain when they screw up, we also need to support them when they do things right, and this is one of those times. If your reps aren't in this group of people finally showing some fiscal responsibility, feel free to (politely but confidently) voice your disapproval. My favorite tactic is to accuse my Republican Senator of being a 'Diet Democrat' and ask why he still calls himself a conservative when he refuses to act like one. I don't know how effective it is, but it sure makes me feel better, and does seem to really tick off the staffers on the phone.
Good! I don't care if they do the right thing for the wrong reason, as long as they just do the right thing!
There's my two cents.
Sources:
http://michellemalkin.com/2008/12/10/high-noon-5-senate-republicans-announce-filibuster-support/
http://hotair.com/archives/2008/12/10/video-the-auto-bailout-bill-is-a-travesty-says-shelby/
http://hotair.com/archives/2008/12/10/happy-days-are-here-again-agreement-on-auto-bailout/
http://corner.nationalreview.com/post/?q=YWFkNjA3MTFiNDE1OTU1N2JmY2MzMjI3N2Y3YTI3NTA=
http://michellemalkin.com/2008/12/10/a-house-gop-alternative-to-the-uaw-bailout/
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