Bipartisan Objections to a Bad Bailouts

Thirty-six members of the U.S. House -- Democrats and Republicans, liberals and conservatives -- recently wrote to President Obama asking him to stop the White House Auto Task Force from taking actions that are harmful to American autoworkers, auto dealers and the states and communities impacted by plant and dealership closings.

Congressman Dennis Kucinich, D-Ohio, organized the effort with Ohio Republican Steven LaTourette in response to the administration's approach to the Chrysler bankruptcy and bailout.

But it now takes on new significance as the administration's approach to the General Motors bankruptcy and bailout -- a much larger endeavor -- parallels the bad strategies of the Chrysler deal.

Here is the text of the Chrysler letter, which was sent late last month:

The Honorable Barack Obama The President The White House Washington, DC 20500

Dear Mr. President:

We are writing to express our concern over events that have occurred and will soon occur in the U.S. Automobile Industry. We are grateful to you and your Administration for the leadership demonstrated. However, decisions being made by the Auto Task Force and in the bankruptcy proceedings in New York are more than troubling.

In your announcement on Chrysler on April 30, 2009 you indicated that: "It will not disrupt the lives of the people who work at Chrysler or live in communities that depend on it."

While we know that was your intention, events following your announcement have made that impossible.

Specifically,

1.) Members of the UAW voted on April 28-29 to ratify a contract agreeing to significant concessions. Sadly, approximately 9000 auto workers at 8 Chrysler facilities went to vote on that contract without knowing that their jobs would be terminated. For example, 88% of the members of Local 122 in Twinsburg, Ohio voted on April 29th for the agreement, celebrated your announcement on April 30th, and discovered for the first time that their plant would be shuttered on May 1st;

2.) As part of the bankruptcy proceedings, those 9000 workers have been given to only May 26th to determine if they want to accept a buy out package terminating all rights of their employment;

3.) On May 4th in those bankruptcy proceedings, Robert Manzo of Capstone, Chrysler's consultant, testified that the Auto Task Force, after first suggesting that Chrysler not be permitted to spend any funds on advertising, begrudgingly agreed to permit them to spend half of their advertising budget;

4.) In those same proceedings, 789 Chrysler dealerships have been slated for closure. It is anticipated that up to 2300 GM dealerships will soon receive the same news. As you know an average of 60 people work in each dealership in the U.S. The result of direct job losses, without any factoring in of the supply chain, will approach 150,000.

As you will recall in 1979, the Carter Administration, when faced with the pending insolvency of Chrysler, worked with the Congress to create the Chrysler Loan Guarantee Act of 1979. That legislation recognized the Congress' Constitutional responsibility to receive and refer observances from all stakeholders. The 1979 legislation received broad bipartisan support and public acceptance because decisions were thoughtfully made by the nation's elected leadership rather than by a non-elected task force.

While we are mindful that time is of the essence, we are respectfully requesting that you return the Auto Task Force to its important advisory role to you and your Administration, but also return the Congress' Constitutional legislative prerogatives before it further disrupts the lives of people who work at Chrysler or live in communities that depend on it.

Signers of the letter included: LaTourette, Kucinich, Don Young (R-AK); Jesse Jackson, Jr. (D-IL); Pat Tiberi (R-OH); Tom Latham (R-IA; Glenn Thompson (R-PA); Mike Simpson (R-ID); Frank LoBiondo (R-NJ); Brett Guthrie (R-KY); Tom Cole (R-OK); Thad McCotter (R-MI); Judy Biggert (R-IL); Jo Ann Emerson (R-MO); Adrian Smith (R-NE); Jim Gerlach (R-PA): Paul Ryan (R-WI); Bob Latta (R-OH); Kenny Marchant (R-TX); John Duncan (R-TN); Lee Terry (R-NE); George Radanovich (R-CA); Neil Abercrombie (D-HI); Louie Gohmert (R-TX); Dennis Rahberg (R-MT); Geoff Davis (R-KY) Greg Walden (R-OR); Mike Pence (R-IN); John Conyers (D-MI); Mike Turner (R-OH); Mike Michaud (D-ME) Pete Sessions (R-TX); Dan Burton (R-IN); Shelley Moore Capito (R-WV); Devin Nunes (R-CA); and Pete Visclosky (D-IN).

Laura Flanders hosted Kucinich on GritTV Thursday for a discussion of the Obama administration's plan to make a federal investment of as much as $50 billion in General Motors at the same time that the company is preparing to shut as many as 20 U.S. factories and lay off as many as 20,000 workers. GritTV is always worth watching, but this is especially important programming, as most of the national media is strugging to catch up with this story.

The planned factory closings and layoffs are part of a broader plan to offshore much of the manufacturing capacity of GM to foreign countries.

Kucinich, one of the most passionate internationalists in Congress, doesn't think that it is a particularly wise strategy to have the U.S. government financing the downsizing of this country's manufacturing capacity.

He's right about the issue.

He's also right about the need for Congress to get involved with this issue.

Here's Kucinich's recent statement -- originally delivered to 600 UAW/GM retirees in Ohio -- on the dramatically-misguided GM bailout scheme:

According to news reports today, the federal government will provide up to $50 billion dollars in financing to see General Motors through perhaps the most complex bankruptcy in American history. U.S. taxpayers, including the workers of GM, are providing these funds. We must ensure that this investment works in their best interest.

We must not allow GM to use U.S. taxpayer dollars to close plants in America in order to open markets for products made in China and other countries. It is unacceptable to ask U.S. workers to subsidize the exportation of their own jobs. The taxpayer's investment should be used to protect American plants so that American workers can build the next generation of automobiles.

Public statements that Treasury cannot be involved in the internal matters of GM management fly in the face of the fact that U.S. taxpayers will own GM. They can and should intervene in order to protect the American automotive industry and the investment of American taxpayers.

Comments (24)

1. I second the Objections!

   Posted by Happy at 06/03/2009 @ 6:27pm

2. Just to break the monotony of all this bad news, there was a bright moment today on Capital Hill.

   <WASHINGTON - This time, Ronald Reagan really was larger than life.

   Seven feet tall, in fact, cast in bronze and unveiled Wednesday in the Capitol Rotunda next to another popular Republican president, Dwight D. Eisenhower.>

   http://www.msnbc.msn.com/id/31087271/

   I had tears of both pride and joy for the memory of one of our nation's greatest presidents as I watched the ceremony this morning.

   Posted by antisocialist at 06/03/2009 @ 6:31pm

3. I had tears of both pride and joy for the memory of one of our nation's greatest presidents as I watched the ceremony this morning.

   Posted by antisocialist at 06/03/2009 @ 6:31pm

   tell that to the unemployed:

   ""This bill is the most important legislation for financial institutions in the last 50 years. It provides a long-term solution for troubled thrift institutions. ... All in all, I think we hit the jackpot." So declared Ronald Reagan in 1982, as he signed the Garn-St. Germain Depository Institutions Act.

   He was, as it happened, wrong about solving the problems of the thrifts. On the contrary, the bill turned the modest-sized troubles of savings-and-loan institutions into an utter catastrophe. But he was right about the legislation's significance. And as for that jackpot -- well, it finally came more than 25 years later, in the form of the worst economic crisis since the Great Depression.

   For the more one looks into the origins of the current disaster, the clearer it becomes that the key wrong turn -- the turn that made crisis inevitable -- took place in the early 1980s, during the Reagan years.

   Attacks on Reaganomics usually focus on rising inequality and fiscal irresponsibility. Indeed, Reagan ushered in an era in which a small minority grew vastly rich, while working families saw only meager gains. He also broke with longstanding rules of fiscal prudence.

   http://www.nytimes.com/2009/06/01/opinion/01krugman.html?_r=2

   Posted by frosty zoom at 06/03/2009 @ 8:26pm

4. First I heard of it was your post, LVL. I burped.

   Posted by srjenkins at 06/03/2009 @ 9:28pm

5. Who's going to bailout the American taxpayer? The Chinese?

   Posted by srjenkins at 06/03/2009 @ 9:32pm

6. Posted by frosty zoom at 06/03/2009 @ 8:26pm

   Perhaps Frosty you should have read Robert Scheer's article on the home page

   <Reagan Didn't Do It By Robert Scheer

   June 3, 2009

   How could Paul Krugman, winner of the Nobel Prize in economics and author of generally excellent columns in the New York Times, get it so wrong? His column last Sunday--"Reagan Did It"--which stated that "the prime villains behind the mess we're in were Reagan and his circle of advisers," is perverse in shifting blame from the obvious villains closer at hand.

   It is disingenuous to ignore the fact that the derivatives scams at the heart of the economic meltdown didn't exist in President Reagan's time. The huge expansion in collateralized mortgage and other debt, the bubble that burst, was the direct result of enabling deregulatory legislation pushed through during the Clinton years.

   Reagan signed legislation making it easier for people to obtain mortgages with lower down payments, but as long as the banks that made those loans expected to have to carry them for thirty years they did the due diligence needed to qualify creditworthy applicants. The problem occurred only when that mortgage debt could be aggregated and sold as securities to others in an unregulated market.>

   http://www.thenation.com/doc/20090615/scheer

   Posted by antisocialist at 06/03/2009 @ 9:38pm

7. HA HA! Another half million jobs not saved last month, just another half million more for a cooool million not saved in only 60 days. But, I mean, he is soooo cool.

   Posted by mike63 at 06/03/2009 @ 10:18pm

8. But, I mean, I am so dopey. Posted by mike63 at 06/03/2009 @ 10:18pm | ignore this person | warn this person

   Posted by emile duBois at 06/04/2009 @ 07:23am

9. The conflict between Paul Krugman and Robert Scheer can be easily resolved. It's another case of the old "necessary versus sufficient condition" distinction.

   Krugman's point is that Reaganomics was a NECESSARY condition for the deregulatory mania of the two decades that followed his Forrest Gumpian eight-year shuffle. It is unlikely that any less charismatic President could have popularized such patently putrid economic poison. (Carter may have tried in his day, since the deregulation of S&Ls actually began under him, but he was no Reagan.)

   Scheer's point is that Reagonomics by itself was not a SUFFICIENT condition for the colossal collapse of our banking system. Reagan simply didn't remain in office long enough, and some of the most advanced devices for screwing up the banking system (credit-default swaps, etc.) simply hadn't been invented yet in the Eighties. It was necessary for Bush I, the Clinton-Gingrich team, and Bush II to finish what the Gipper had started.

   As you can see, "antisocialist," these two points do not contradict each other and are logically easily reconcilable.

   Stay cool, "frosty"!

   Posted by JakobFabian at 06/04/2009 @ 07:43am

10. Of course, the most amazing thing about this thread so far is that "Happy" agrees with DENNIS KUCINICH.

    THAT certainly doesn't happen every day. Hey "Mask," have you seen THIS?

    Posted by JakobFabian at 06/04/2009 @ 07:53am

11. Posted by antisocialist at 06/03/2009 @ 6:31pm

    He raised taxes, including gas taxes and even CORPORATE taxes.

    He increased the size of Government, including a brand new Cabinet level post.

    He offered TOTAL nuclear disarmament to the Soviets (with SDI of course.).

    He ended NO programs and helped to save, rather than to privatize Social Security.

    But the Myth is bigger than the History, isn't it Larry?

    Posted by Mask at 06/04/2009 @ 07:56am

12. Hayek's The Road to Serfdom historically promoted by General Motors and distributed in condensed Reader's Digest pamphlets.

    What a stunning reversal of philosophy as they beg for protections and intervention by the State.

    I guess economic liberalism depends on whom is seeking help from the State.

    Hayek's The Road to Serfdom left that chapter out.

    Reaganomics and Thatcherism - poison pills for the long term public good; candy for aggrandizement of private wealth.

    Posted by OneVote at 06/04/2009 @ 09:53am

13. i pinned this on reagan a long time ago. mr. krugman's comments just kinda made me feel vindicated.

    then again, a good argument can be made for blaming nixon.

    what a tangled web.....

    Posted by frosty zoom at 06/04/2009 @ 11:20am

14. "Bipartisan Objections to a Bad Bailouts"

    i think mr. nichols hires mexican illegals to write his columns.

    aren't you agree?

    Posted by frosty zoom at 06/04/2009 @ 11:24am

15. a good argument can be made for blaming nixon.

    what a tangled web.....

    Posted by frosty zoom at 06/04/2009 @ 11:20am

    Just to be Fair and Balanced, shouldn't blame also be laid at the feet of folks who gave birth to Barney Frank, Chris Dodd, Bernie Madoff, and all those who think gambling w/house purchases with next-to-nothing down, Alan Greenspan.....?

    Posted by Happy at 06/04/2009 @ 11:24am

16. The people at the top of the automobile industry are the ones needing to be outsourced and replaced, for it is they who effed up big time by not producing fuel efficient cars and instead used their lobby powers to cut back on fuel efficiency as well as pollution standards.

    If they spent half as much on R&D as they did on lobbying and friggin commercials, they might actually have been able to come up with a decent vehicle.

    The article below shows the stupidity of the GOP. Instead of coming up with sensible cuts like in defense spending, they'd rather cut funds to put sidewalks in for kids to walk to school on. Yep, the GOP is all about family and family values....not! It's about corporate profits and only corporate profits and to hell with the citizens of this country. The GOP needs an enema in a big way.

    http://www.msnbc.msn.com/id/31100427/

    Posted by Wolfgang1 at 06/04/2009 @ 11:38am

17. Happy thinks the Guillotine is fair and balanced. The King is dead, long live the king.

    Posted by srjenkins at 06/04/2009 @ 11:44am

18. http://www.msnbc.msn.com/id/31100427/

    Posted by Wolfgang1 at 06/04/2009 @ 11:38am

    I'd like to point out further, that the idiots in the GOP are all for cutting benefits for federal workers who retire before 62, but scream bloody murder for curbing the pay of executives of companies that the federal government recently bankrolled.

    As stated before, the GOP is a party of lying hypocrits. If they just stated their position more truthfully and called themselves the Big Business Party, they'd at least be somewhat more respectable because they could honestly say what their end goals where versus lying every time they step up to a microphone.

    I look at a lot of the dem politicians with contempt, but look at the GOP as nothing more than bought off lying stooges that think everyone buys into their B.S. Evidently about 30% of the country buys into their game anymore. Eventually even some of that 30% will realize that they've lost everything they have and have been lied to. They will either become independent, not vote or worse yet for the GOP, become democrats.

    Posted by Wolfgang1 at 06/04/2009 @ 12:12pm

19. Where some of this makes sense, that's fine,

    But how is a car company going to sell anything without advertising. Objecting to that is not reasonable.

    John Froelich

    Posted by balataf at 06/04/2009 @ 12:55pm

20. But how is a car company going to sell anything without advertising. Objecting to that is not reasonable.

    John Froelich

    Posted by balataf at 06/04/2009 @ 12:55pm

    John, Of course they are going to have to advertise, but I'll bet they spent more on advertising, marketing and lobbying than on R&D. That's great if you are the company kicking everyone's butt and are ahead technologically, but not so good if you are having your ass handed to you by Toyota, Mazda, Kia, Mitsubishi or whatever. No matter how you slice it, the management of the big three screwed up royally. It's not the assembly line workers, it's the people calling the shots at the top that sunk those corporations.

    Posted by Wolfgang1 at 06/04/2009 @ 4:11pm

21. Happy thinks the Guillotine is fair and balanced.

    Posted by srjenkins at 06/04/2009 @ 11:44am

    Not just any ol guillotine......only those made in HAPPY Gulch/Valley or by FOX Foundry!

    Posted by Happy at 06/04/2009 @ 5:54pm

22. It should by now be very clear to everyone that Obama is part of the DLC, everything corporations want, gang. The flaw in their thinking of course is that these are multinational corporations, not American Corporations.

    What is best of them isn't what is best for America. We need to take care of our vets, our children, our schools, our infrustructure. And they can either be here and be with us or they can leave.

    I say "hand over your passport and your citizenship on the way out. Bye bye."

    Posted by masher at 06/04/2009 @ 6:45pm

23. I look at a lot of the dem politicians with contempt, but look at the GOP as nothing more than bought off lying stooges that think everyone buys into their B.S. Evidently about 30% of the country buys into their game anymore. Eventually even some of that 30% will realize that they've lost everything they have and have been lied to. They will either become independent, not vote or worse yet for the GOP, become democrats.

    Posted by Wolfgang1 at 06/04/2009 @ 12:12pm

    you're a joke

    Posted by antisocialist at 06/05/2009 @ 1:19pm

24. The GM execs need pilloried. These pompous asses are still stewing over giving up the corporate jet for the ride to the "grillings" in DC. They really think it's all about THEMSELVES.

    The repugs wail that bailouts & public financing of these guys is "socialist." I think not. A real socialist govt would retrain these guys as rickshaw drivers.

    Posted by Sorelish at 06/06/2009 @ 12:44am