Great News! Automaker Bailout Dies In The Senate!

This is good news for America. The proposed bailout for the Big Three in Detroit has died and for very good reasons. The remaining GOP Senators demanded that the United Auto Workers scale back their demands to be more on par with the compensation given to auto workers employed by Toyota and Honda.

That was a more than reasonable request given the current economic conditions, but the UAW wouldn’t budge and the Dems couldn’t do anything about it.

Associated Press has this to say via MSNBC:

Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit’s beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with U.S. plants of Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.

Why is such a request meaningful? Because of this:

Congressional Republicans have been in open revolt against Bush over the auto bailout. Senate Minority Leader Mitch McConnell of Kentucky joined other GOP lawmakers Thursday in announcing his opposition to the White House-backed bill, which passed the House on Wednesday. He and other Republicans insisted that the carmakers restructure their debt and bring wages and benefits in line with those paid by Toyota, Honda and Nissan in the United States.

Hourly wages for UAW workers at GM factories are about equal to those paid by Toyota Motor Corp. at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour. But the unionized factories have far higher benefit costs.

GM says its total hourly labor costs are now $69, including wages, pensions and health care for active workers, plus the pension and health care costs of more than 432,000 retirees and spouses. Toyota says its total costs are around $48. The Japanese automaker has far fewer retirees and its pension and health care benefits are not as rich as those paid to UAW workers.

If the Japanese carmakers can produce cars for only three-quarters of the cost that American carmakers incur, then there is absolutely no reason why American carmakers can’t bring themselves in line with the lower costs.

But the unions are against this, mostly because it reduces their power and because the union bosses will no longer have any justification for their own high salaries nor for the massive donations they routinely make to the Democrat Party.

The GOP was absolutely right to make sure this deal is killed. It will be a day of reckoning for the UAW and for the Dems who have failed to pay them back for their support. Plus, it aims the spotlight exactly where it needs to be pointing.

You can access the complete article on-line here:

Auto Industry Bailout Plan Dies In The Senate
Associated Press via MSNBC
December 12, 2008

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