Just a few weeks after the Bush administration (with help from both congressional Republicans and Democrats) enraged the public and ballooned the federal deficit with its mega-bailout of the financial industry, Senate Majority Leader Harry Reid, Nevada Democrat; House Speaker Nancy Pelosi, California Democrat; and President-elect Barack Obama are pushing for another bailout.
In special sessions this week of the lame duck Senate and House, Mr. Reid and Mrs. Pelosi are aiming to secure their chambers’ rubber-stamps for legislation that would hand, in what is almost certain to be only a down payment, $25 billion in taxpayer-funded loans to General Motors, Ford and Chrysler, still often referred to as the Big Three - although this label is increasingly inapt.
Mr. Obama has already publicly endorsed the Reid-Pelosi scheme, but the American public seems, at least for now, very cool to it. A USA Today/Gallup poll taken Nov. 7-9 found that just 1-in-5 of those surveyed thinks helping the auto industry and other big firms is “critical” or “very important.” Aware that they have a tough sell, proponents of the proposed Obama-Reid-Pelosi bailout claim it is necessary to protect workers and jobs. But this claim quickly withers under scrutiny.
For decades, United Auto Workers (UAW) officials have wielded their monopoly power under federal labor law to negotiate wages, benefits and work rules for virtually all front-line employees of the Big Three, including union members and non-members alike. UAW bosses’ irresponsible exercise of their extraordinary, government-granted bargaining power, and Big Three managers’ unwillingness to resist outrageous Big Labor demands with fortitude, have played leading roles in rendering the firms uncompetitive.
And the UAW bosses’ stranglehold over the Big Three hurts not just employees of those firms, but all auto-industry workers in regions of the country, especially Michigan, where significant numbers of Big Three plants remain. As economist John Tamny noted recently in an op-ed for Investor’s Business Daily, in Michigan, GM’s “continued existence under weak management has served as a capital repellent such that capital and jobs will continue to flee the state if GM is saved with the money of others.” On the other hand, if the Big Three automakers go bankrupt, the U.S. auto sector and its employees will ultimately benefit, because bankruptcy will allow either Big Three managers themselves, under Chapter 11 provisions, or a future purchaser of the firms’ assets to get front-line employees out from under the UAW union monopoly so that they can be deployed far more efficiently.
Firms that currently furnish supplies for the Big Three and their employees would benefit enormously from having more stable commercial relationships with better managed companies. Overall employment in the American auto sector would almost certainly resume growing in the wake of Big Three bankruptcies.
Mr. Obama, Mr. Reid and Mrs. Pelosi would have Americans believe that autos and trucks can’t be manufactured profitably in the United States any more, so in order to save jobs the industry has to be converted into a taxpayer-subsidized utility - perhaps even led by a presidentially appointed “auto czar.” Their premise is pure bunk. Today, Toyota, Honda and other non-Big Three, nonunion manufacturers employ more than 110,000 Americans, mostly in right-to-work states, where forced union dues and fees are prohibited, and are proving you can still make money building cars in the United States.
Big Labor and Big Labor puppet politicians are desperate not to protect American employees, whose fortunes do not depend on the Big Three, but rather the UAW union monopoly over GM, Ford and Chrysler auto assemblers.
Even more than they fear the potential loss of hundreds of millions of dollars in union dues every year, union bosses fear the example Michigan would set when its long-dormant economy sprang to life in the wake of the collapse of the UAW’s forced-unionism empire.
Americans who instinctively oppose another massive industry bailout shouldn’t allow the self-interested claims of union officials, feckless Big Three CEOs and their propagandists to cause them to second-guess themselves. Instead, they should call their senators and congressmen today through the congressional switchboard (202-224-3121 or 202-225-3121) and urge them to oppose the Obama-Reid-Pelosi Big Three bailout on all votes.
Mark Mix is president of the National Right to Work Committee.