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Thread: Pelosi calls for emergency bail-out for Detroit

  1. #1
    Vulture of The Western World Eric's Avatar
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    Post Pelosi calls for emergency bail-out for Detroit

    House Speaker Nancy Pelosi called for "emergency and limited financial assistance" for the battered auto industry on Tuesday, and urged the outgoing Bush administration to join lawmakers in reaching a quick compromise.

    Five days after dismal financial reports from General Motors Corp. and Ford Motor Co., Pelosi backed legislation to make the automakers eligible for help under the $700 billion bailout measure that cleared Congress in October.

    In a written statement, the California Democrat said the aid was needed "in order to prevent the failure of one or more of the major American automobile manufacturers, which would have a devastating impact on our economy, particularly on the men and women who work in that industry...."
    "Congress and the Bush administration must take immediate action," she added. Administration officials have concluded that the bailout bill that passed earlier does not permit loans to the auto industry, but lawmakers are expected to return to the Capitol for a brief postelection session beginning next week.

    The plight of the industry has drawn attention from the White House and the incoming Obama administration in recent days, as well as among lawmakers.

    Last week, President-elect Obama prodded the Bush administration to do more to help the industry, and on Monday, aides said he raised the issue with President Bush in an Oval Office conversation meant to underscore a smooth transition of power.

    Officials familiar with the conversation said the president replied he was open to the idea.

    Before adjourning for the elections, Congress passed legislation providing for $25 billion in government-backed loans to the automakers to prod them to retool their factories to make more efficient vehicles.

    Since then, executives from GM, Ford and Chrysler LLC and officials in the United Autoworkers union have called for more than that to avert a possible collapse of one of the nation's most basic industries, including $50 million more to help cover future health care payments for about 780,000 retirees and their dependents.

    GM and Ford reported last week that they spent down their cash reserves by a combined $14.6 billion in the past three months. Ford said it would slash more than 2,000 white collar jobs.

    Pelosi's statement did not specify how large an aid package she prefers.
    Instead, she said she had asked Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, to draft legislation.

    A companion effort is under way in the Senate.

    The Senate is scheduled to meet next week in a postelection session, but until Pelosi issued her statement, it was not clear the House would follow suit.

    The House already has passed legislation to provide additional unemployment insurance benefits for some of the growing ranks of the nation's jobless, as well as a separate measure to stimulate the economy.

    That meant the Senate could have passed either or both bills and sent them to the White House for Bush's signature without further action by the House.
    Pelosi's announcement changed that, and raised the possibility of a postelection session that covers more areas.

    The Bush administration, for example, has said that enactment of a free trade agreement with Colombia is its top priority in Congress.

    Many Democrats oppose the proposed agreement as written. But it is unclear what, if any, compromise might be possible that would allow auto assistance and a trade agreement to be the last major measures signed into law by the outgoing president.

    In her statement, Pelosi said any assistance to the industry should include limits on executive compensation, rigorous government review authority and other taxpayer protections.

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    If Pelosi is for it, it can be pretty much assumed that it's a bad idea.

    Chip H.

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    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by chiph View Post
    If Pelosi is for it, it can be pretty much assumed that it's a bad idea.

    Chip H.
    Agreed.

    I am aware of the tremendous fallout that would attend GM (or Ford) going bankrupt - the ordinary workers who will lose their jobs, the peripheral effect on suppliers, etc.

    That said, before the taxpayer bails out these companies, they should be required to submit a reorganization plan that includes, among other things, massive cuts in CEO/executive pay.

    I have become completely disgusted by the way our system grossly over-rewards people at the top, who frequently do not deserve even a fraction of what they are "earning" - while average workers who had no role in the disastrous decisions made get royally screwed - even ruined.

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    Senior Member Mase's Avatar
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    Quote Originally Posted by Eric View Post
    Agreed.

    I am aware of the tremendous fallout that would attend GM (or Ford) going bankrupt - the ordinary workers who will lose their jobs, the peripheral effect on suppliers, etc.

    That said, before the taxpayer bails out these companies, they should be required to submit a reorganization plan that includes, among other things, massive cuts in CEO/executive pay.

    I have become completely disgusted by the way our system grossly over-rewards people at the top, who frequently do not deserve even a fraction of what they are "earning" - while average workers who had no role in the disastrous decisions made get royally screwed - even ruined.
    The workers (and their unions) as equally to blame as the CEO's. Excessive contracts with huge retirements and gold-plated medical benefits have added hugely to costs.

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    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by Mase View Post
    The workers (and their unions) as equally to blame as the CEO's. Excessive contracts with huge retirements and gold-plated medical benefits have added hugely to costs.

    That's a red herring - on multiple levels.

    Let me point out a few facts.

    Toyota's CEO earned just under $1 million last year ($903,000). His company is one of the most successful in the world; hugely profitable and close to being "number one" in terms of total worldwide sales.

    Ford's CEO, during his first year, was given a compensation package amounting to more than $30 million - literally thirty times the pay of Toyota's CEO.

    Ford, meanwhile, has been losing market share for years, and is in danger of going under. Things have actually gone from bad to worse under the "leadership" of the current CEO.

    Do you not think this is screwy? Seriously?

    Similar story at GM and Chrysler where the compensation packages for the top guys have been in the mutliple millions annually for years - even as the companies continue to lose money; even as the failures stack up. No consequences for the CEOs/management. They just "drive on."

    It's obscene.

    As a conservative, it makes me sick - because it amounts to rewarding people who aren't producing - and rewarding them with a rain of Manna that is almost beyond belief. And they have the gall to bitch about a "union worker" making $60k every year - or some retired worker getting $1,000 per month in pension!

    How many retiree pensions do you think $30 million would fund, eh?

    The fact is welfare queens sometimes wear suits; this isn't free market capitalism. It's corporatism - plundering the average guy for the sake of further enriching grotesquely over-fed elites.

    The most basic problem, however, is that GM and Ford have not been able to build cars people want to buy; and a gross excess of cars (and brands) within each automaker.

    GM, for example, maintains six full-line divisions, each of them selling a full line of vehicles - a business model based on the market of 1968, when it had a 50-plus percent market share - not 2008, when it has 20 percent.

    GM, Ford and Chrysler focused on short-term profits through the 1990s by selling cheap to make/high profit trucks and SUVs, while neglecting R&D on advanced powertrains, hybrids and small cars.

    Who is responsible for those decisions? The fish rots from the head down.

    The union thing is an old saw - corporate propaganda designed to deflect criticism away from the corporate decision makers ultimately responsible.
    Last edited by Eric; 11-12-2008 at 07:11 AM.

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