As our long national economic nightmare unfolds, each day is crazier than the one before. Senate Republicans, seemingly against limits on CEO compensation, now demand that GM and Chrysler factory hands take a pay cut. The Bush White House, gone soft and fuzzy on us in its last weeks of power, is arranging for the money to keep the auto industry going until the new Congress can work its will.
You can sympathize with the Democrats' near-heroic efforts to prop up the Big Two-and-a-Half. Anything to keep people working. Who doesn't know someone who has lost his or her job? You don't have to read the blogs or watch TV news to be frightened at the number of people being thrown out of work.
Right now, in percentage terms, we are probably approaching half of the number of unemployed in the depths of the Depression. In absolute numbers, we have 10 million out of work, plus another 10 million who are either not counted or are working part-time, because that's all they can get. Republicans take note: they are not all Democrats.
Under these circumstances, Congressional Republicans are nuts to vote against the car bill on grounds that production line workers make too much money. If their motive is to break the auto workers union, they are wasting their time. The union is already busted; no Congressional coercion is needed to have it go along with another round of wage cuts.
The Republicans are right in one regard. The bailout legislation is a mess. It is a walking invitation for litigation brought on by the automobile companies' bond holders. The legislation's requirement that the companies come back by March reorganized for profitability is, car czar or no car czar, impractical dreaming.
The employment situation is so grievous that one can defend just giving the companies $14 billion as long as they promise not to lay people off for the next few months. That would leave us with thousands of employees with nothing to do, since there is no market for cars. The workers would be kept on the payroll oiling idle machines and wiping the floors, but the car manufacturers' suppliers would not be getting business nor would the car dealerships be helped. Yet, futile as the car bill is, killing it would demoralize the nation.
We are in a terrible fix. We have had enough experience with multi-billion dollar rescues the last five or six months to understand that they are extremely hard to pull off. Vast, unaccounted-for sums have done little more than keep huge, dysfunctional financial organizations on life support. Trillions of dollars have been committed to unnamed corporations for vague purposes with undetermined public benefits.
If an auto company bailout postpones the trauma of seeing an entire industry and its jobs vanish, it may be worth spending the money.
Our ventures into corporate rescue show that putting money into an enterprise without taking into account the situation in which the company must operate guarantees failure. The 1979 Chrysler rescue by a government loan guarantee worked, but conditions today bear no resemblance to those of twenty-nine years ago.
The Big Two and a Half cannot be nursed back to health without something resembling a national transportation plan, but you can hear the uproar in Congress at the very mention of it. For 200 years we have gotten by without foresight by virtue of pluck and luck. But it seems we have run out of both.