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

(The Politico)  This story was written by Manu Raju.

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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.

[faletinme]

Of course, the auto industry won''t "close" if they declare Chapter 11. It will either reorganize or new owners will acquire the assets free of all the scum sucking union contracts. Thus, unencumbered the industry will thrive. It''s hilarious that dems and union types don''t want to highlight how much these bloodsuckers have cost the industry.

The thing that is cracking me up is watching all the dems who criticized McCain for supposedly "voting with Bush". What are those dems doing?..That''s right they''re voting "WITH BUSH" on every handout they can!!! Makes you wonder.....do I smell...hypocrisy?

Truly, it''s moments like these that make life fun.

[smithville01]

People have the story so wrong. These companies have supported America for over 100 years. Each year, pay taxes well into the billions and make up over 10% of our GDP. This about it - GM, Ford, and Chrysler account for around $600 billion in sales worldwide. That money gets circulated. Imagine taking all that money out of the system. That is $600 billion that goes to suppliers, employees, and the vast number of business related to autos. Here are the top people that will suffer:

- Auto Suppliers
- The Ad Industry
- Small Businesses located around automotive plants and design facilities
- Tooling shops
- High Tech groups that sell software to these companies to manage their businesses
- The group that receives the millions in charity - including the $10 million given by GM to Red Cross after 9/11.

The list could go on...

It seems everyone wants to live in an America where we produce nothing - but just consume. If the autos fail, it is an industry that can never be built back again. We would then be held to whatever autos the foreign makers want to ship us. We would now be dependent on foreign autos with no control.

[smithville01]

It is clear who Corker, Shelby, and other southern senator side with foreign automakers. They are ready to throw Detroit under the bus in order that their states gets more low paying jobs from non-American producers.

Key - if one of the big three fails - just wait and see how much you will pay for your Toyota. At minimum, due to supply and demand consumer will pay at least 30% more. This would average out to be approximately $9000 more due to lack of competition.

Note: GM is still the largest producer of cars in the world, with Toyota being second. People tend to forget what happens when you take 9 million vehicles out of the supply chain. There is no possible way for these other vehicle makers to bring this type of volume to the table. Therefore, prices will rise dramatically and goes to the highest bidder.

[libsnemesis]

Maybe U.S. taxpayers should be forced by Congress to pay UAW benefits and salaries that are double the industry average. Maybe we should keep "bailing out" sinking boats instead of plugging the leaks in the hulls. Maybe the government can convince us that it is for our own good that we should throw tax dollars into black holes.....

NAH!

[ioweign]

66% of the public doesn''''t want to do the bailout. Sounds to me like the media has it wrong - per usual.


Posted by Speakinup21 at 04:50 PM : Dec 13, 2008

Since when what the public wants counts??

66 percent wanted/s the USA out of Iraq for "years" too.

[bhappy2-2]

This is risky to ALL Americans and our rights. They want to rewrite our Constitution and eliminate our rights. Read this:

http://www.congresscheck.com/2008/12/12/globalist-constitutional-convention-dealt-a-defeat-in-ohio/

They only need two more states before they can convene, yet NO MAJOR NEWS agency is covering this. WHY NOT?

[irmcvet971]

Oh what to do... what to do. Do we allow MILLIONS of American''s to end up with NO JOB and watch the entire Industrial base of this nation fall apart so we can be fascist and bust the union or do we do the right thing and extend to the Auto Makers the same as we did the banks? Hummm difficult times in the Party of the Confederate Flag!! Difficult times indeed!!

[hotwitch]

The Big 3 auto makers came to congress without a business plan for recovery or even an explanation of how much money they would need. They and the UAW guy just sat there looking stupid. Try going to your local bank and asking for billions of dollars without a business plan, hear them laughing? Republicans have it right, we give them money it will gone in no time, and they''ll be back for more.

[grumpas]

I don''t think the Republican''s really care what happens to this country! They never have and never will as long as they are getting their fair share of the pie. It''s due to their mismanagement the country is in shambles today. They see a chance at demolishing unions are going to take it. They didn''t have any problem lending banks and big business 700 billion with no oversight. It should be clear to every American who runs the Republican Party....big Business!!! I personally will never vote Republican again!

[irmcvet971]

Republicans should vote their conscience and beliefs, of course. However, if their vote permits a failure of the Big 3, they should be ready to pay a very steep price for a long time into the future...and that is the way it SHOULD be.

Posted by tmn123 at 02:47 AM : Dec 13, 2008

There IS no future for the Fascist Party. Outside the South they couldn''t be elected DOG CATCHERS right now!

[irmcvet971]

I will never again refer to the Republican Party as that. From this point on they will be called what they truly are, the FASCIST Party!

[ffoulkes-2009]

$700 BILLION for CORRUPT BANKS

$ 000,000,000.00 for working people & homeowners !

ERADICATE THE GOP TOTALLY !!!!!!!!!!

Posted by Terrorislame at 07:56 PM : Dec 12, 2008
_____________
Democrats including Obama voted for this too. Wanna bit@h about it, start with your own party...suppose we should eradicate the dems too, right?

[ffoulkes-2009]

Should pay US senators and reps the same way Texas State pays State congressmen. 600 bucks a month...that is all.

[ffoulkes-2009]

Also curious to know if any of you out there work in an environment where a mistake could find you under a 4 TON press, or momentary lapse of attention could cause you to lose an arm, hand or finger... for $60K/yr...

Posted by sandee0917 at 11:09 AM : Dec 12, 2008
______________
Steel Pre-fab...far more dangerous work environment with FAR less pay.

[ffoulkes-2009]

Is it dumb to do the work that is available for you? You see, some people prefer to work at 12 bucks an hour even if it is a fairly dangerous job as opposed to collecting welfare checks.
----------------------------
You know...All these lefty enviro nuts keep saying Ford and Chevy should build what people want to buy...Well...in 2007, the F150 was the top selling auto in America followed closely by the Silverado 1500. They are building what people here want to buy.

[heartlandjim]

Do the Republican Senators not realize they are about to kill NASCAR. Dale Earnhardt and Fireball Roberts are rolling over in his graves and the Jr. fans will be enraged!!!!!!!!!!!!! What a bunch of slimball Republicans!! Killing NASCAR for foreign auto makers!!!

[tmn]

If the any of the Big 3 go under, the blame will lay with Republicans for many years to come. They will not escape the repercussions. It will be felt now, in 2010, 2012, 2014, and well beyond.

This is a macroeconomic issue. Anyone with investments in the stock market will be hurt. Anyone with a 401(k) that contains market investments will suffer. The economy will be damaged long-term. The US and all it citizens will pay the price for such shortsightedness.

Republicans should vote their conscience and beliefs, of course. However, if their vote permits a failure of the Big 3, they should be ready to pay a very steep price for a long time into the future...and that is the way it SHOULD be.

[PacificGatePost]

It wouldn''t be risky if they structured it right.

CERBERUS Is Leveraging Billion Dollar Connections In Congress

For Chrysler, if the bailout was Structured effectively, the Cerberus share position would be rendered irrelevant.

http://pacificgatepost.blogspot.com/2008/12/leveraging-billion-dollar-connections.html

The Deal Structure is always, always the key.

[ajl12865]

There is substantial evidence that Debtor in Possission financing is not availible due to the fact that the credit markets are still stuck. So the idea that the automakers can re-organize is unrealistic.

The reason that the UAW won''t take a pay cut is substabtially tied to the fact that management will not take a consumerate pay cut down to the lower level japanses executives are paid (less by millions and millions of dollars per exec).

The whole thing is an extension of the class warfare and wealth re-distribution that the republicans have been spearheading for almost three decades.

There is clearly a different set of rules for the wealthy and business elite than there is for the average citizen. Auto workers must see thier pay cut in half yet the people at the top of the pyrimiad still get full pay and go on spa retreats! Sounds like a ponzi scheme - oh wait, it is!

The only solution is to drain the swamp, lock them all in the bastille and let nature take it''s course before we all are left to eat cake.

[jowand]

This time the Republicans have it right, GM and the Unions were told for thirty years they had big problems and wouldn''t listen. Enough of this and let them file for Chapter 11 Bankruptcy Protection, this is what it is for.