Missing Trees for Forest in Auto Maker Bailout

For the past week, the heads of the three largest auto makers in the United States have made their way to and from the halls of the United States Congress desperately seeking a financial aid package to help bail them out of their financial woes. Critics of the bailout argue that bailouts are wasteful and rarely do more than prolong the inevitable collapse. Supporters argue that, despite the repugnance of providing a bailout to yet another sector of the U.S. economy, a bailout is preferable to a collapse of the auto industry.

Clearly, both sides have it wrong in this issue, at least as far as the bottom line is concerned.

Those arguing in favor of a bailout--led by House Speaker Nancy Pelosi (D, CA), Senator Carl Levin (D, CA), and some venerable Republican members of Congress--argue that failing to provide a bailout will result in massive unemployment, not only in the automobile production business, but also in related fields, most notably among businesses that provide parts to the big three.

After listening to the appeals of the CEOs of the big three auto makers, Pelosi and Senate Majority leader Harry Reid (D, Nev.) rebuffed calls for immediate legislative injection of liquidity into the auto industry, opting, instead, to draft a list of conditions that the big three must first meet before Congress will entertain such overtures. Those conditions, though not yet public, are said to focus on CEO pay and bonuses, government interest on loans, government oversight of the industry, and a requirement that the big three jointly and individually draw up plans for righting their businesses.

Opponents of the bailout argue that now is the wrong time to provide assistance for an industry that began showing signs of wreckage many years ago and that has steadfastly refused to adapt to a changing environment in which higher gas mileage and alternative fuel-sourced cars are both more sensible and in greater demand. These opponents largely argue that the big three failed while others, most notably Honda and Toyota, forged ahead, allowing them to remain viable in the new world order.

Proponents of the bailout thus contend that, given the likely harm to workers, a bailout probably is inevitable, but that the terms ought to be favorable to the party providing the bailout. Opponents, meanwhile, generally argue that Congress ought to take a pass on the opportunity to bailout a failing industry, allowing the wheat to fall from the chaff.

While the two primary sides to the bailout debate offer sensible points in support of what appear to be their final positions on the matter, neither side is both looking at the practical problems suggested by the big three failings and addressing those problems.

Contrary to what opponents of a bailout suggest, a failure of the big three is more than a mere market correction. Tens of thousands of jobs will be imperiled by the collapse of the big three with the majority of those losing their jobs going first to the unemployment line and the public dole and then who knows where when the benefits run out. While Darwinians might have little sympathy for those trained in nothing other than riveting auto panels to an auto's frame, they ought at least to have some concern for what becomes of tens of thousands of people who have no job and no legal source of income. Clearly, outright opponents of a bailout of the big three have some things to consider before making their absolute statements against the bailout.

Similarly, proponents of the bailout of the big three have questions that they ought to be asking of their own position. For, as they took turns deriding the CEOs of the three auto makers for flying corporate jets to Washington, they failed to recognize the primary issue is not whether the big three survive, but how those whose livelihoods are attached to the success of the big three will make do should the big three go under.

What members of Congress ought to be discussing right now is not how to save the big three, but how to ensure that if and when any or all of the big three succumb to their own shortsightedness and greed, those who depend on the big three for their livelihoods do not go down with the ship.

How does that happen? That part is actually fairly simple and, though expensive, no more expensive than what the big three is now proposing as a bailout, with future pleas certainly in the offing.

The answer is that, rather than provide the big three with bailout money, Congress ought to put money into an interest bearing trust to invest in the aftermath of a possible collapse of the U.S. auto industry. The funds from the trust will be used to ensure that non-executives, who rely on the big three for an existing pension plan and health plan, retain those benefits if and when their company ceases to cover those benefits. The trust also will be used to extend unemployment benefits for workers laid off of work as a result of the downsizing or bankruptcy of any of the big three, with the condition that workers of non-retirement age obtain retraining in a viable field.

The solution is not a perfect one as, more likely than not, it will include considerable waste and bureaucracy. But it is far preferable to simply doling out money to an industry that has been sinking for some time with the objective of propping up companies rather than focusing on the harms that would result were the companies to fail. This is particularly true when one considers the outsourcing that has become the hallmark of the big three.

The guess here is that Congress is neither far-sighted nor brave enough to allow the big three to fail while saving only those left in the wake.

Correcting An Egregious Misnomer

Convinced that Senator John McCain will lose to Senator Barack Obama in this year's presidential election, Republicans have already begun casting their net on the reasons for the defeat. The real reasons--a disastrous run by arguably the most incompetent President in the modern era, a war in Iraq that continues to siphon money from the domestic economy, and a deepening recession--so far have fallen outside of this broad net. Instead, Republicans are trotting out the same tired excuses for their failures--the media hate Republicans, illegal voters pushed Democrats over the top, and too many intelligent people voted.

Now, Republicans are adding another herring to the fish stew. In addition to the prevailing excuses, Republicans are floating the notion that Senator Obama is winning because he is black. Yes, because he is black.

Could anything be more absurd? Unlikely.

In a country in which black people were disenfranchised until only recently, in which the Ku Klux Klan still sports a following, in which the incarceration rate for blacks is nearly twice that of similarly charged white defendants, Republicans are lamenting that Senator Obama, should he win, will have won largely through the help of votes of sympathy? This might be the single most disingenuous political argument ever trotted out to the American public. And that's saying a mouthful.

The argument that Senator Obama has gained an advantage due to his race is not a new one, of course, having first reared its image during the Democratic primaries. That's when current Obama supporter, then Senator Clinton strategist, Paul Begala, suggested that Senator Clinton was the victim of voter desire to support a black man over a white woman.

Despite the irony of Begala's statements in the face of his own candidate receiving massive support from women who, as black voters undoubtedly hoped to do with Obama, wanted to break a political barrier for a previously maligned group, at least Begala's comments could be taken with a grain of consideration. After all, it was conceivable that some Democrats, perhaps even many, supported Senator Obama over Senator Hillary Clinton due to their desire to support the first black male candidate for President. Perhaps. And perhaps many of those in that camp were even white voters. Again, perhaps.

To contend, however, that a significant percentage of voters in the Presidential election are supporting Senator Obama over Senator McCain because of their desire to put a black man in the White House is off the range. And one need not even know much about final numbers to know that this is the case.

Black voters typically vote 90% Democrat. That trend appears to be holding in early returns today, with Senator Obama probably picking up some votes from Blacks who might not otherwise have voted. Those are not the voters to whom Republicans refer, however, probably because, even if these voters support a Black candidate in greater numbers than they would a white candidate, making the argument that Black voters turned out to support a Black candidate offers little traction in the realm of political subterfuge.

Instead, what Republicans who are promoting this argument seem to be suggesting is that white voters--moderate white voters who otherwise would have voted Republican--are voting for Senator Obama because he is Black. That defies logic; it defies the history of moderate voters; and it defies common sense.

If Senator Obama wins this election, as it appears that he will, Republicans would be best served looking inward toward the rightward lurch of the Party--a lurch that prompted the placement of Governor Sarah Palin on the ticket and fomented a campaign geared toward policies that seem very similar to those that have entrenched the United States in the position as that of an outsider in an international system that otherwise looks upon the United States for leadership.

If Senator Obama wins today, it is because Americans viewed him as the best option for delivering the nation from an era in which Republicans not only failed to deliver what they promised to deliver, but failed to acknowledge the true failures so that they can be rectified going forward. That, despite a campaign when it was not only permissible, but strongly advisable, to run from the Republican platform of the past eight years. If you cannot cut the cord on disastrous policies under such circumstances, it is difficult to understand when one can. And if Republicans insist on making an Obama victory a history of "lovin' the Black man" it will be a history that the Grand Ole Party will be destined to relive.