The Auto Bailout

The $15 billion guaranteed loan packaged to the big 3 didn’t pass the Senate. Not a big shock that Biden, Kerry and Kennedy didn’t vote at all. But it was interesting that Senators Baucus (MT), Tester (MT) and Lincoln (AR), all democrats, voted against. Bush is considering using a portion of the funds approved by Congress to only be used for the financial bailout funds (TARP), to fund the auto loan package.

The media say that Bush is going to use the Congressional approved TARP funds to fund the car companies anyway. Again, I have a different take on what’s going on. Bush came out BEFORE the vote and said he would try and use the funds for the bailout if it failed in the Senate. Brilliant. He’s a good guy to the UAW and the rest right? Well, if he were sincere. The fact is, his announcement only gave those opposed to the UAW more incentive to push hard for concessions – it was the GOP’s last chance.

There is no way he can use the TARP funds for the auto companies. Given the overwhelming numbers of former attorneys in Congress, everyone involved, except the media, understands this! So, unfortunately, the vote really didn’t matter unless the UAW mistakenly cared. The UAW thought it was such a joke they essentially didn’t respond to the Senate at all.

Congress has adjourned for the year. Obama and the rest will fund these companies in 5 weeks. The question is, what will the UAW concede? The only answer is they must cut benefits. Assuming their pension plan is in fact funded, former employees will continue to receive their checks regardless. Healthcare is the item on the table. Wages are the same across the board in all US factories regardless if they are foreign run or not! The huge discrepancies are in the benefits. And how fortuitous the new administration is all for universal healthcare… literally, the entire universe, but, again, I digress.

You see, capitalism works in not just the good times. Our country, unlike the former USSR and others, have bankruptcy laws that are designed to get businesses reorganized without massive government intervention. Next post will deal with the massive costs of the coming socialized auto bailout. Think for a moment if all $15 billion were used to just close several thousand dealerships. Now imagine if each dealership has 50% excess inventory, and the production lines keep producing. Socialism at its finest.