What About GM?

Volt Dashboard

[UPDATED BELOW]
The latest company to go to Washington asking for a handout is General Motors, and after the less than auspicious start to the $750 Billion Wall Street/bank bailout, many people, not just “free market” conservatives, are asking, “Why should we bail out the big American auto companies?”  The underlying implication among conservatives is that labor unions are the source of the problem.  Others think, rightly so in my opinion, that the car companies got themselves into this mess by ignoring fuel efficiency and building ever bigger and heavier gas-hogs.  So why not let them go belly up?  That’ll teach ‘em a lesson!  As is usually the case, it’s not that simple.

Jane Hamsher at Firedoglake has an interesting post discussing the impact of a possible GM bankruptcy on the development of the greatly anticipated Volt electric car:

So maybe the people who seem to know even less about auto manufacturing than they do about economics should consider that GM is in the forefront of green engineering with the Chevy Volt.  From US News:

The prototype Volt that GM has been showing off is a sporty four-seater with futuristic touches meant to draw in mainstream gearheads. The dashboard controls are touch-sensitive and set in a white console reminiscent of an iPod. Instead of standard gauges for speed and RPMs, there’s a digital display that looks like the screen of a Sony PSP. Wind-tunnel engineering has made the Volt even more aerodynamic than a Corvette, critical for milking the most mileage possible out of the battery. GM says that recharging the car at home, through an ordinary household outlet, will cost less than $1 per day and drain less power than it takes to run a refrigerator.

But before you put the Volt on your 2010 wish list, consider that sending GM into bankruptcy would do more than just break the UAW — it could condemn the Volt from ever reaching the market:

Ever since Ronald Reagan fired all the striking air-traffic controllers in his first year in office (a strikingly irresponsible thing to do), conservatives have fantisized about ridding the country of labor unions.  Never mind that labor unions were largely responsible for the rise of the middle class in American in the mid-twentieth century.  As Hamsher points out:

In fact, in their last contract the UAW made deep concessions that put GM wages at a par with their non-union counterparts in the US.  But this isn’t about facts, this is a religious crusade where “free-marketeers” want to impose Shock Doctrine tactics for philosophical reasons with little regard for the consequences.

The president of GM once famously said “What’s good for GM is good for America.”  Most of us would probably take exception to that these days.  But there is a kernel of truth there: letting GM fail could be disastrous for America, especially now with the economy, after eight years of the Bush administration, careening like a football bouncing down a staircase.  Bush’s own suggestion is particularly poor (who would’ve guessed…).

George Bush is in favor of helping GM.  But he wants to take the $25 billion in loans to automakers from the 2007 Energy Bill and repurpose them, he doesn’t want to use funds from the $700 billion Wall Street bailout (which Harry Reid and Nancy Pelosi have indicated they would like to do).

Congress approved the funds for a Department of Energy program that would help the automakers to develop fuel-efficient vehicles.

Got that?   George Bush wants to kill the program that would build more fuel-efficient vehicles.

There are some other ideas floating around that make a lot of sense in the long run, like this one via Atrios:

As Josh says, if we’re throwing around billions and trillions of dollars we might as well get something good. Instead of writing a big check to the auto companies or loaning them money we could, you know, enroll all their employees in the new national health insurance system.

The point has been made repeatedly that the cost of healthcare is one of the big factors that makes it difficult for U.S. automakers to compete effectively with companies in countries that have some form of national health insurance (that would be ALL of them, except the U.S.).  So, what an elegant solution it would be to remove the financial burden of providing health insurance from the car companies as part of a universal health insurance program.  Makes sense to me.

UPDATE: Digby has more on this here.  Regarding the role of unions in all this:

You simply can’t wipe out a million jobs or more as we are just going into a terrible worldwide recession. It’s like telling someone they have to go on a diet when they are in the middle of a heart attack. There has to be a bailout.

But there is something else going on, which I mentioned last week in this post — the Republicans’ reflexive political response is to take the opportunity to break the unions…

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And, in the big scheme things, I think we can all agree that well paid, secure employees make for a stable society. The problem with the Big Three has far less to do with their employees than it does with their management — and a capitalistic ethos that requires a myopic obsession with quarterly profits over long term investment. The union members just make the cars they’re told to make. It’s not their fault if Americans insisted on buying behemoth gas guzzlers and the auto executives insisted on giving them to them knowing full well a day of reckoning was coming.

Tags: democratic issues, economy, environment, republican issues