Barack Obama has noted, carefully and correctly, that we have only one president at a time. Yet on at least one issue he has taken the lead and nudged the man who will soon be his predecessor in a direction that he might not have taken without prompting.
It is an issue, moreover, that points up the tension between Obama's appeal to young voters and his calls for creating a new America on the one hand and, on the other, policies that he backs which seem designed to freeze in place the America we have.
The issue is whether the federal government should bail out, with a capital injection the size of what would have been unthinkable four months ago, General Motors and perhaps the other two U.S.-based auto manufacturers, Ford and Chrysler.
As one born and raised in Detroit and its suburbs, who once lived next door to Big Three factory workers and later went to school with the children of Big Three executives, I have mixed feelings about this proposal. My native Michigan is ailing, with the highest unemployment in the nation, plummeting housing values and cascading foreclosures. Its economy, despite the efforts of two previous governors — Democrat Jim Blanchard and Republican John Engler — is dangerously dependent on what used to be called the Big Three and are now called the Detroit Three.
The bankruptcy of one or more of them would deeply impact the personal lives and dash the seemingly reasonable expectations of those who, directly or indirectly, have depended on them. I can't help but think of these people when the issue is raised.
And yet the implications of a bailout are frightening. The Detroit Three were unprofitable well before the current financial crisis hit, and GM is reportedly hemorrhaging $1 billion a month. The huge cost of lavish employee and retiree health care benefits, negotiated with the United Auto Workers (UAW), makes it impossible for the companies to sell for a profit anything but the big cars and SUVs that, after gas prices hit $4 a gallon last spring, almost no one wants to buy.
No one in the private sector is willing to pony up a dime for this business plan. GM stock is below its 1946 price, and one investment house has priced it at zero.
The Detroit Three are taking advantage of the passage of the $700 billion financial bailout to argue that they, too, need government money to go on.
But as Megan McArdle of The Atlantic argues, the finance firms are different. If credit coagulates, everyone suffers, while if the Detroit Three go bankrupt, their shareholders lose their stake, employee and retiree pay and benefits are cut, and real estate values go down in areas where the companies and their suppliers operate — but life for most of us goes on.
McArdle, native of a similarly bedraggled industrial area (Upstate New York) and an Obama supporter, further argues that the capital invested in keeping the hulk of the Detroit Three operating pretty much as they are, unprofitably, will not be available to those whose startups could morph into the Microsofts and FedExes of the future. We don't know who today's Bill Gateses and Fred Smiths are, but markets sure have a better chance of finding them than the federal government.
Obama's presidential campaign was an entrepreneurial enterprise whose success owed much to harnessing individual initiative through an innovative management structure and creatively using emerging technology. The campaign, as well as the candidate, helped inspire under-30 voters, who preferred Obama by an unprecedented 66 percent to 32 percent margin — as opposed to his 50 percent to 49 percent margin in those 30 and over.
But keeping the Detroit Three in their present form, with their extravagant health care benefits and the union's 5,000 pages of work rules, is an exercise in preserving in amber the America of the past.
And of course the Detroit Three will not be the last flagging enterprises to line up for government subsidy. Michigan is not the only state that has a talented congressional delegation capable of enlisting allies on relevant committees and from states with economic stakes in failing companies. Other unions, noting the UAW's success in maintaining benefits, will be standing in line.
George W. Bush may well acquiesce in a Detroit Three bailout. GM could run out of cash over Christmastime (Big Three plants don't operate between Christmas and New Year's), well before Jan. 20. If so, I will feel happy for the respite provided my friends and relatives in Michigan. But I will wonder if in preserving the past we are giving up the chance to get to a better future.
To read more political analysis by Michael Barone, visit www.usnews.com/baroneblog. To find out more about Michael Barone, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.
COPYRIGHT 2008 CREATORS SYNDICATE INC.
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Sir;... I live in the wasteleand, though I never saw the side you came from... And I can tell you that what is wrong with big three is wrong with America, and it is old age and low wages...That company has done everything to modernize, but the Government was no help, so that many jobs went to Canada because their extravagant health care was spread, as it should be, across the whole society... I have worked in many auto plants, and as long ago as thirty five years ago they were working with robotics that bit by bit whittled away at their work force... Robbots don't run to the doctor, and the don't strike, and they don't ask for contracts and they don't retire; but they don't buy cars either... And now you can't go into a plant where robbots don't do the vast majority of the work... It is not that those people ask so much... It is that the downward pressure on wages has been relentless at the time where every pressure was exerted to water the stock, and reduce the work force... Where is the market??? Do they get so much insurance??? Not enough, like everyone else...But a fraction of people with health insurance pay all the bills not paid by a population without insurance... It is not their problem...Public health is a public problem, but so long as the rich demand higher profits, the price will be born by those who pay, and finally the government... Now, workers across the board have been robbed by the rich, and so has the government been robbed to support a growing public health emergancy... And this is nothing new... All kinds of wealth has been taken out of Appalachia, and when the wealth is gone, the representatives asks who will help the poor people of appalachia... Let those who stole their wealth help them... The wealth of this whole land has been stolen by the rich, and sure, the big three have made some poor choices... But to say this is all their fault is nonsense... This is part of a systemic problem, of a blown market, an aging workforce, low wages, and all our national wealth taken by the rich... The rich of general motors are no different than any others rich... They have all brought this problem to their door... What every one of them wants is to lower their own workers wages, and lay them off, and work the remaining ones all the harder... But when this happens across the board, no one benefits except the first one to do so...Now, the big three could use some better product... But they could also have less competion, between themselves, and from abroad... Competition is not the great blessing we are led to believe... It is usually used to reduce quality and labor, and the price of wages... It is workers who alway pay for it... We do not need new auto producers who have their choice of workers, who can shop for the right deal on taxes, who are not burdened with fair wages and working conditions...We need all companies to have the same impediments, and the same obligation to the society... If you really want to help, stop importing cars and exporting profit, and give the companies to the workers...You can afford them...You can't afford the rich who ride them... Thanks...Sweeney
Comment: #1
Posted by: James A, Sweeney
Sat Nov 15, 2008 9:30 AM
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Ah, yes, the vision thing. You flip alternately from outright hallucination (there goes "Sarah Delano Palin", practically ready to become the next messiah) to wild ravings (I was really yust yoking when I accused the liberal media of wanting to kill Palin's Down syndrome baby) to chump-of-the-year willingness to sell off the family jewels. ...................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Why don't just go and find some right-to-life approved doctor to chop out one of your kidneys and sell that off too while your at it, Barone? What do you think the United States of America is going to do without the capability of manufacturing its own automobile fleet? And what do you think all of the businesses that support auto manufacturing are supposed to do, take up flipping burgers? ...................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Do you really have so little faith in the U.S. that you think we can't make a decent car? True, we can't do it when a bunch of pot-bellied, martini-slinging, weekend yacht captains have commandeered the industry and are bent on sucking the juice out of it as they steadfastly refuse to consider selling a product that doesn't come with the admonition "buy second rate American--it's the patriotic thing to do." ...................................................................................................................................................................................................................................................................................................................................................................................................................................................................
But we can kick the bums out, give their right wing apologists (that would be you) a one way ticket to outtahere, and start doing what nobody can do as well as us: bring in creative, hard working managers who believe in making honest money, and give them the mandate to design and build machines that we can be proud of again. That would be the conservative and patriotic thing to do, but of course those two lost concepts are bound to get a blank stare from you and that gas-guzzling, guaranteed-to-break-down-in-the-first-year-of-purchase, hunk-of-junk political party you shill for. You all lost touch with the American way many trillions of national debt dollars ago.
Comment: #2
Posted by: Masako
Sun Nov 16, 2008 9:40 AM
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Barone is an idiotic globalist hack.
Comment: #3
Posted by: James Reinhardt
Tue Nov 18, 2008 1:33 AM
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Michael, for the most of you life goes on but my daughter has already lost her GM job and Ifear for my pension as a surviving spouse of a retired salary employee. I have already lost my health care benefits. You are underestimating the contribution GM makes to the US economy.
Give more thought to this issue.
Comment: #4
Posted by: Maryhelen Hagood
Thu Nov 27, 2008 2:47 PM
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