Dec. 12, 2008
Auto Bailout Moves Risky For GOP Senators
Politico: Dramatic Revolt Against White House Is High Stake Gambit; Cheney Told Senators It's "Herbert Hoover" Time
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What's Next For The Big 3?
Economist Peter Morici tells Maggie Rodriguez what he thinks is next for the Big 3 and how he expects the failed auto bailout plan to affect the economy.
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Auto Bailout Dies In Senate
The Senate has shot down the auto bailout plan largely because the United Auto Workers refused to accept pay cuts. Sharyl Attkisson reports.
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Senate Republicans’ dramatic revolt against a White House-backed auto industry rescue plan is fraught with political risk.
While the high-stakes gambit places them squarely within the mainstream of anti-bailout public sentiment, at the same time it exposes the party to potentially devastating criticism that its failure to compromise doomed the Big Three automakers and deepened the economic recession.
Republicans argue that their rejection Thursday evening of a $14 billion loan package came in response to the concerns of angry taxpayers who are unwilling to pay for an auto industry bailout on the heels of October’s $700-billion financial bailout package.
"I think it would appear that the people who voted against this are carrying out the will of the voters as expressed through the phone calls to our offices," said Sen. Charles Grassley (R-Iowa).
But that sentiment betrays the deep rifts the issue has revealed within the party, pitting Rust Belt and auto-state senators who joined Democrats in a plea for federal aid against their Southern colleagues who represent states where foreign-owned automakers constitute a significant economic presence. All of this takes place against the backdrop of an intraparty debate over whether the GOP has lost its core value of limited government.
“I’m not even thinking about the politics of it, I’m talking about the substantive part of it, the people who are losing their jobs, the suppliers and the automobile dealers,” said Sen. George Voinovich (R-Ohio), who faces re-election in 2010 and was one of just 10 Republicans who voted to advance the bill Thursday night.
By opposing the automaker bailout, Republicans now find themselves vulnerable to charges that they are insensitive to ailing American auto companies and the millions of workers reliant on the domestic auto industry, a problem compounded by their inability to rally around a clear alternative to the $14 billion package of loans that had been backed by Democrats and the White House.
“Clearly, it’ll be on their heads,” said Sen. Kent Conrad (D-N.D.). “It passed the House, and Democrats in the Senate and the White House are on the same page. They’re the odd person out here. It will be on their shoulders if it doesn’t go forward.”
Republicans furious at the government’s intervention to prop up the economy say the vote against the bailout marks the beginning of the party’s return to its small government roots. But even those members acknowledged the downside risk.
Sen. Jim DeMint (R-S.C.), a fierce critic of the bailout, said the failure of the bill could hurt his auto-state colleagues, but noted, “politically, I think Republicans can show a real difference [with Democrats] here.”
The bigger risk, he said, was pumping more money into companies whose problems were bound to get worse and would likely return to Congress asking for more money.
“I think the public is going to turn on all of us as we go through a deeper recession over the next few months because they are going to see all of this money being thrown at this thing and more and more people realize that the foundations of the recession were based on bad government policy,” DeMint said.
Some strategists say rejection of the package could prove costly to Republicans in the industrial parts of the Midwest.
“The big question is what happens next, if the auto companies are still in business in January or March, whenever it happens to be, [there won’t be] much fallout,” Senate Majority Whip Dick Durbin (D-Ill.) told Politico. “But if something dire occurs, if one of the companies or more face bankruptcy or layoffs and that has a dramatic negative impact on communities, families or the economy, then I think there are some questions to be answered to think whether this might have been enough to keep them in business and hep them survive.”
Administration officials have been warning for weeks that failure to pass the bill could lead to an even deeper recession.
That was the message Vice President Dick Cheney brought to a closed-door Senate GOP lunch Wednesday, reportedly warning that it’ll be “Herbert Hoover” time if aid to the industry was rejected, according to a senator familiar with the remarks. A Cheney spokeswoman would neither confirm nor deny the vice president’s remarks.
The White House could still use its authority under the financial bailout law known as the Troubled Assets Relief Program to provide aid to the industry, but the Bush administration has strongly resisted that approach. Meanwhile, Federal Reserve Chairman Ben Bernanke has warned that he could not be relied on as a backstop if additional loans were needed for the first quarter of next year.
That means the White House could take the blame both for spending money and failing to stabilize the auto sector.
Ron Bonjean, a Republican strategist, predicted “neither Republicans nor Democrats are going to get the blame because the White House will use TARP money.”
The Bush administration’s resistance to release the money has put the onus on Congress. But Senate Republicans stayed away from negotiating a bailout, allowing the White House to broker a deal with Democrats, which the House approved Wednesday night with 32 Republicans, mostly from auto-producing states, joining 205 Democrats in voting for the measure.
Minority Leader Mitch McConnell (R-Ky.), who has auto plants in his state, has been torn between the warring factions of his party. He had waited until Thursday to announce his opposition to the bill, then later embraced a proposal by Sen. Bob Corker (R-Tenn.) to beef up the administration bill by setting out specific steps for bondholders and labor to take to slash General Motors’ debt and operating costs by the end of March or see the company go into bankruptcy.
Republicans had hoped to use the Corker proposal to deflect blame that they had no viable alternative.
“If we’re viewed as being proactive and trying to solve this problem with a good solution … I’m not sure they can argue we weren’t trying to fix the problem,” said Sen. John Thune (R-S.D.).
But Republicans failed to rally around the Corker plan until late Thursday, preventing them from properly explaining it to the public. McConnell dispatched Corker to find a bipartisan solution with Democrats, but the talks stretched through the night, and Corker ultimately failed to sell a revised plan to the GOP caucus.
Republicans will now have to convince the public that they sought a middle ground, but ultimately decided to side with the taxpayer.
Otherwise, “they look like they’re in disarray,” said one top GOP strategist, speaking on the condition of anonymity because one of his auto clients backed the $14 billion in loans.
By Manu Raju
Copyright 2008 POLITICO





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See all 314 CommentsJust think of those NASCAR fans with no Chevy''s and Dodge''s to watch anymore -- they will be down to Ford''s and Toyota''s. Maybe it will be Toyota only racing in a year or so. That should be really exciting with the same manufacturer winning year after year after year.
1. They''ve agreed to absurd one way trade policies that have decimated US industry including the automakers.
2. They have given to ONLY 6 million Israelis hundreds of billions of direct aid. 6 million foreigners get vastly more per capita aid from our own government than our own US citizens. That needs to end because we can''t afford it.
3. Some in Congress would rather blame and break unions than protect our own self sufficiency and our manufacturing and defense base.
Repugs are corporate ******, the auto industry is a corporation but is unionized. Insurance and banks use their bail-out money to lobby more repug ******.
You should have focused prior bailouts on Main Street rather than Wall Street.
PS--Mr Cheney, do you intend to take back the bailout $ from AIG since they plan to continue giving people millions in bonuses under the new name of ''retention pay''?
The problem with GM cars is perception. Japan has spent BILLIONS of government money to convince the people of the United States that their stuff is good and ours is junk. They receive subsidies from their govenment to sell their cars here cheaper than they are made, while placing tariffs on our products. All to kill our auto industry. Just like they did to the television industry, electronics industry and toy industry. And you are helping them. Did you know it is TAUGHT in the Pacific Rim countries from the earliest age levels that it is bad to buy American Products. Some countries instruct the young children to spy on their parents purchasing habits and to come back to school and tell if they bought American products. How in your feable Republican mind (I realize that being Republican means you can not think and must be told what to say or do, so I forgive most of your misgivings) can you justify that we have FREE TRADE with these countries?
Rowdyntex, I am sorry about your Ford. I have owned GM (Pontiac specifically) my entire adult life and never had serious problems before 150,000 miles. The cars were well built and durable. The last one had 375,000 miles when I gave it to a friend. I replaced the transmission once. I forget how long he had it but it was a few years and probably be still running today if he had not wrecked it (skidded on ice). The problem with GM cars is not quality. They are the best built vehicles with the highest safety records in the world. Have they had their lemons? Of course! What Corporation does not?
Posted by RowdynTex at 10:15 AM : Dec 12, 2008
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That''s a neat trick. How did they figure out how to design a car that way?
Posted by sicdagit
You are being played by the union haters. Auto workers make $20 to $30 on average. The $70 rate is when you include benefits like health insurance. No average auto worker makes $150,000 a year unless you are an executive.
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Well, instead of "wondering" and expelling stench like this from between you sphincter lips, why don''''t you do a little research and prove yourself to be full of ...
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Posted by GoGWGo at 10:40 AM : Dec 12, 2008
WOW - you are a nasty so-called Christian Republican - aren''t you!!!! I never commented on any of your posts and yet the BEST you can do is be a GOP JERK!!!! LOSER!!!!
There is Southern corruption at American taxpayers expense!!!!!
Posted by nycgirlnaz at 10:38 AM : Dec 12, 2008
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Well, instead of "wondering" and expelling stench like this from between you sphincter lips, why don''''t you do a little research and prove yourself to be full of ...
Posted by GoGWGo at 10:40 AM : Dec 12, 2008
Public record: Alabama has given $1.4 billion (with a B!) to Mercedes and Honda to get them to move their plants there. And this is only includes about half the money they used for infrastructer improvements (roads, bridges etc for you Republicans). Yet they have yet to receive ONE DOLLAR in tax revenue for the Corporations. I have to wonder why Alabama''s public school system are always at the bottom of the rankings, along with South Carolina (Toyota and Hundya, I believe), Arkansas (Nissan, I think) and Mississippi (I forgot who is here, but it does not matter). Oh, my goodness, I just noticed: Each of these states are RIGHT TO WORK (meaning Unions have a snowball''s chance in H3LL) and are RED. HMMMM.
But the state%u2019s chief business recruiter said Wednesday that the benefits from VW%u2019s $1 billion assembly plant far will exceed what could top $500 million in government assistance and tax breaks for the project.
%u201CThe Volkswagen investment in this community is going to have a tremendous economic gain for the entire region,%u201D said Matt Kisber, Tennessee%u2019s commissioner for economic and community development. %u201CI%u2019m confident we%u2019re going to have a very reasonable incentive package when you look at the initial costs of what is being offered compared with a much bigger long-term return.%u201D
Depending upon the final calculations of training assistance, site preparation work and property tax breaks, the total incentive package for VW in Chattanooga is likely to top the previous record high of $419.4 million offered in 2006 to recruit Kia to West Point, Ga.
Thanks Frankie - I been finding plenty of @rap to throw at the pig - "GoGWGo".
But he said the Mercedes plant proved a %u201Ccatalyst for bringing jobs%u201D and resulted in a %u201Csea change%u201D in how the world viewed Alabama.
The city and county will give Volkswagen the land, valued at $81 million, after the federal and state highway departments already spent $23 million to build an interstate interchange exit to the site. Another $25 million is planned in road and rail improvements to and around the property.
State and local governments also are expected to provide more than $300 million of franchise and property tax breaks over the next 30 years. Volkswagen will qualify for Tennessee%u2019s $5,000-a-year credit for each employee for up to 20 years because of the size of its investment.
The city and county governments also have agreed to give up local property taxes, other than those used for local schools, for 30 years, Hamilton County Mayor Claude Ramsey said.
Here are preliminary estimates, subject to change, of what is being offered for the VW plant and related development:
* $81 million %u2014 Property given to Volkswagen. The city and county will provide Volkswagen about 1,350 acres of the Enterprise South industrial park. The land is listed at $60,000 an acre.
* $30 million for worker training. Tennessee will pay for recruitment, screening and training of new workers hired for the plant and will help pay for new training center to be built at Enterprise South. Comparable with retraining incentives at GM%u2019s Saturn plant, the state would spend about $12,000 per employee. Federal, state and local governments also have pledged to build at least a $6 million technical training center on site. Training incentives could be even more over time.
* $43 million on roads, highway connections. Federal and state governments will spend more than $20 million on connector roads and a 4-lane thoroughfare through Enterprise South. A $23 million interchange on Interstate 75 at mile marker 9 was completed in 2006.
* $3.5 million in rail line upgrades. Through the Hamilton County Railroad Authority, the state, city and county have pledged to upgrade rail connections to the VW site from both the Norfolk Southern and the CSX railroads.
* $150 million to $350 million %u2014 Property tax breaks over 30 years
Pending approval, the city and county will give up all but the educational component of local property taxes on the $1 billion plant for 30 years. VW will pay at least $5.5 million annually in school property taxes. But the rest of the property tax abatement initially would save at least $12 million a year on a $1 billion plant. Plant machinery is assessed at 30 percent of value and will depreciate after eight years, so the ongoing value of the personalty tax break could drop. But taxes on the land and buildings, assessed at 40 percent of value, will maintain the tax break through 2039, assuming the company meets job and investment targets.
* Other incentives. State and local governments also have pledged to help prepare the site, add utilities and fire protection, offer sales tax exemptions on industrial machinery purchases and pollution control equipment and give job tax credits to suppliers that locate immediately around the plant.
Posted by WDRussell1
Its all about jeolousy, plain and simple. It is beyond me the pettiness some of these people have because auto workers probably make better money than they probably do. Are autoworkers overpaid for what they do? Probably. But I am not going to begrudge middle class people who get a big break. There are so few of those breaks in life. I say, more power to ''em.
Posted by sicdagit
A lot. If they get $6400 in benefits a month ($40 x 40 hours x 4 weeks), at least $4,000 for a family of 4 ($1000 x 4) goes to insurance. That leaves $2400 a month for other benefits, including retirement, sick leave, etc.
It is sad to see how some Republicans just watch corrupt and racist FOX news and think they know the truth. I truly hope that Bush does the right thing and gives GM the loans. It is the least he could do because he has caused so much damage to this country in the last eight years with 2 wars and an economic and environmental meltdown all on his watch and with his input!!!
Posted by withad
Maybe they should live in poverty to satisfy your envy of their good fortune.
Posted by withad
Then you were dumb for risking your life or getting mained for $12 bucks.
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Hey you little booger munching, neo-Marxist, NObama worshipper, where in anything I have ever offered any board have you ever witnessed me assigning Jesus Christ''''s name to mine??
Or, is this just you exhausting from between your butt cheeks what you was most recently breech loaded with??
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Posted by GoGWGo at 11:10 AM : Dec 12, 2008
Wow - you must be the type of loser-guy who hates educated women because the only woman you come in contact with - you must drug or beat to keep her!!!
It will cost GM billions to eliminate excess capacity and shut down plants.
Maybe the Fed Government should receive a billion worth of police cars, fuel efficient agency cars and school buses in return.
Posted by GoGWGo
So auto workers should be as dumb as you for risking your life for $20 thousand?
As I said, hating the UAW is nothing more than jeolousy. They got over and you didn''t.
Posted by withad
So I assume you will turn down your next salary raise since you wouldn''t want to be greedy. Right?
No, greed is taking a 20 million dollar contract to go to a losing team over a 15 million contract with a winner.
An auto worker making $30 an hour instead of $15 is good fortune.
Interesting that many on the republicans against this have foreign car plants in their districts. I guess we see where their allegiance lies.
WHERE DID THAT NUMBER COME FROM???? IGNORANCE!
We all need to unite and send a strong message to the Bush Administration, the automakers and the union as they conspire to move forward in defiance of the US Senate. Each of us has a duty now to do our part to make sure the madness stops NOW. If you act NOW you can play a very integral part in stopping the madness. But you can%u2019t delay. Take a 30 minutes and make your voice heard on as many newspaper forums and blogs as possible. We urgently need to get the word out that WE ARE MAD AS HELL AND WE ARE NOT GOING TO TAKE IT ANYMORE. Your voice and a united message that ENCOURAGE EVERYONE TO BOYCOTT GM and Chrysler if they accept bailout funds. If we stand united it will force the automakers and the unions to make the hard sacrifices that are critical if the industry is going to survive. PLEASE JOIN US WE DESPERATELY NEED YOUR HELP TODAY!!!
Posted by GoGWGo
Last time I am going to play with a hateful, nasty loser like you...
From what you wrote above - you make approx, $20k a year risking your life climbing poles. I know that Northerners who do that type of work for Con Ed make 3 times as much for the same work. Therefore, you must be a Southern. Well, you really should stop smoking the GOP crack and get an education!!! I made $92K last year as an accounting and don''t risk by life on a daily basis for it.
But since you are a very nasty person - who cares!!!! So keep on ranting your spit at me - because that is all you know how to do!!!!
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A little booger munching NObama worshipper like you actually considers yourself "educated"??
By what measure?? Academic credientials??
For you clearly reveal no more real world education than what we see being offered by your messiah NObama.
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Posted by GoGWGo at 11:20 AM : Dec 12, 2008
Keep spiting your uneducated, GOP hate!!!! We will see who is better off in the next few years - and, hopefully, it will be the entire country (except for you - as you will have accidentally touched a hot wire and descend into hell).
Posted by sandee0917
I was explaining how the $70 an hour number came from. If they make $20 to $30 takehome, then the remaining $40 must go to benefits. But its money workers don''t see because it goes for paying for benefits, like health insurance. Is that right?
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