You have a point. But you ignore the hidden subsidies the (northern) union-friendly bluer states have doled out to Detroit. From cushy non-confrontational state unemployment insurance (many senior UAW workers take VOLUNTARY layoffs) to ‘economic development’, ‘job training funds’ or ‘cheap electric power for jobs’, all states are guilty of the subsidy game.

In the end, as a New Yorker, I’ll take a right-to-work state over my home state (of confusion) every time. +1 to Senator Shelby.

Let’s be ‘real’ for just a moment. This type of pablum falls under the umbrella of “they were just following orders”…

If they were cognizant of the horrid crap their company has been putting out for the last ~40 years,and they stayed, my pity meter is at zero. (Honestly, -4. On a 5 scale.)

Hey, you took the check as long as you could. Ride is over. Be thankful it lasted as long as it did.

Conversely, if you are such a rube as to not understand or face the fact that 20+ years of declining market share is a huge effen problem, well, time for your lesson in grown-up-life.

No mercy. No quarter. This is (right or wrong) the way it works in our economy. Provide the goods and/or services your clientele will pay you profitably for, or lose it all. That’s how the rest of us live. Time for these spoiled brats to man up.

If Cerberus won’t fund it, why should we?

They’re just playing a street hustle for a free loan they can default on by proxy.
-> Instant bump to the bottom line!

You are not alone. That would be the way to go IMO.

I’d call that just about the perfect civil service mobile.

Probably significantly more reliable than the Chevrolet Cavaliers, Ford Tauruses etc. that the civil servants (which they are ironically, NEITHER) that I’ve seen tooling around.

And why bail out the Domestics? They have so much in the way of tax credits for losing all this money that they could be profitable for fifty years and still never pay any taxes.

The TTAC commenters against the bailout have a much better grasp on what is driving this bailout than the pro-bailout forces, who can only offer hysterical predictions of a new Dark Age with the collapse of GM or rail against the “Japs” and “Krauts.”

snabster: Corker and Shelby and in the pay of the Japs and Krauts. No shame about it.

Please note that Toyota has said that it does not want GM to go under, and Honda has supported the idea of the federal government providing help to GM, Ford and Chrysler.

It looks as the “Japs” are in favor of some sort of aid to the domestics, so your conjecture is wrong.

Maybe these senators oppose a bailout because – gasp! – they recognize a bad deal when they see one.

snabster: The resistance to a deal was not being done by Republicans, but by Democrats. Being Democrats, they can’t tell the UAW that so they let Corker and Shelby be face men.

Really…I guess that explains the op-ed piece I just read by Democratic Senator Christopher Dodd supporting the bailout?

Eric_Stepans: Exactly. You prove my point. We, as a society, are constantly subsidizing and providing incentives for various economic interests, because we perceive it to be to our societal benefit to do so.

Compare apples to apples, please.

There is a considerable difference in STATES offering economic incentive packages to VIABLE companies in exchange for locating factories and facilities in a state and the FEDERAL GOVERNMENT offering bailout money to companies that will collapse even after receiving the government funds.

Please note that the domestics have regularly received the former type of aid when they threatened to close a plant or a facility.

And apparently everyone conveniently forgets the bidding circus that surrounded GM’s announcement of the Saturn venture in the 1980s. States were falling all over themselves with incentive packages to lure GM. Tennessee was the ulimate winner – and not because GM executives liked the warmer climate or southern cooking.

If you are against this type of subsidy – fine, I’m against it, too. But let’s please drop the fictions that only the transplants have benefited from this practice, or that this is the same type of aid that Detroit is now requesting, or that two wrongs make a right.

Eric_Stepans: Which is why Shelby and Corker saying we should *not* do this for the Detroit 2.75 (and their silence about the incentives in their own states) says more about who is lining their pockets than their political philosophies.

No, see above. And if any pockets are being lined, it’s the Democrats who received lots of manpower and financial assistance from the UAW in the last campaign. Amazingly enough, that is the organization that has the most to lose in a bankruptcy proceeding. Imagine that…

Eric_Stepans: I also note that, when complaining about unresponsive public officials, you choose to aim your ire at Nancy Pelosi and Harry Reid, not Dick Cheney and Hank Paulson. I think that says something about your perspective.

It probably has something to do with the fact that Pelosi and Reid are ELECTED legislators, and thus are expected to be more responsive to constituent concerns than appointed officials such as Cheney and Paulson, who answer to the individuals who appointed them.

That is the way our government was designed to work…

You wrote: Incentives like property tax breaks are SOP for state economic development boards

Exactly. You prove my point. We, as a society, are constantly subsidizing and providing incentives for various economic interests, because we perceive it to be to our societal benefit to do so.

Which is why Shelby and Corker saying we should *not* do this for the Detroit 2.75 (and their silence about the incentives in their own states) says more about who is lining their pockets than their political philosophies.

Excerpt from: http://news.yahoo.com/s/huffpost/20081204/cm_huffpost/148380

“…Alabama offered $253 million but the state offered to train the workers, clear and improve the sites, upgrade the utilities, buy 2,500 vehicles and it is estimated that that incentive package totaled somewhere around $175,000/per employee to create those jobs there. And on top of this, that state gave this automaker a large parcel of land-around $250-$300 million dollars. That was the same price or cost to them of building a facility.

I also note that, when complaining about unresponsive public officials, you choose to aim your ire at Nancy Pelosi and Harry Reid, not Dick Cheney and Hank Paulson. I think that says something about your perspective.

@snabster – Nice summary of the political realities surrounding this issue.

But as political commentators you make Lou Dobbs look reasoned and informed.

Corker and Shelby and in the pay of the Japs and Krauts. No shame about it. The resistance to a deal was not being done by Republicans, but by Democrats. Being Democrats, they can’t tell the UAW that so they let Corker and Shelby be face men.

Why the resistance by Democrats? Mostly about Obama wanting to have this mess handled NOW (before he is President) rather than later (where he has to take responsibility for it). the Climate-nazis are at it to — they really thought the DoE loans should be kept for building more fuel-efficient cars. Hence the argument about which pool of money to drink from. Democrats couldn’t get their own internal votes in order to give $35 billion from TARP.

What the deal does is give Obama some breathing room until March or so to dispose of the problem. That way the first act of his presidency isn’t the “bailout” or massive layoffs.

bad move by obama but an understandable one.

I will beat on my lonely drum with my suggestion (which I know will not be heeded): Sell the assets of General Motors to another business, in exchange for working capital, and Chapter 7 the rest.

On the cost side, Chapter 7 would wipe out the dealer and labor obligations. On the revenue side, the new owners would infuse capital, bring in new management and their pre-existing R&D and be able to employ the brands, the workers and dealers who survive and a few of the factories to rebuild it as a smaller company that can turn a profit by making products that people want.

Chapter 11 bankruptcy is too little, too late. The creditors have no incentive to agree to it, now that Uncle Sam has shown his cards and made it clear that the government does not want these companies to fail.

Chapter 11 made a lot of sense when the market was stronger, consumers were revved up and credit was easy to get. Now that the economy is in the toilet, it no longer makes any sense at all unless your real hope is to have it go into Chapter 7 liquidation. Times have changed, and that makes it necessary that the plan be changed along with them.

I wrote my Senators and Congressman about the bailout, but all I got back was a form letter. A few others I know wrote as well, and they got the same letter back verbatim. I’m guessing there’s a staffer somewhere on Capitol Hill who figures out what you’re writing about and sends back a pre-packaged response.

Even if any subsidies given to these companies were “massive” (and you offer no proof) your emphasis in that sentence should have been on the word states. Incentives like property tax breaks are SOP for state economic development boards. If TN or AL offered them, that’s something the citizens of those states had greater input on at the front end and greater ability to ratify or not at the ballot box afterward. But to say that this compromises Corker and Shelby’s credibility is ludicrous.

Here in Georgia, we were were looking to attract some of those same companies and bowed out when the price of incentives got too high for us. (We have a Kia plant scheduled to open next year.) By comparison, we have much less control over whether Reid, Pelosi et al. decide to waste our money on the Detroit gang. The 2.5 should ask the state of Michigan for incentives, but oh yeah, it’s as bankrupt as the companies based there.

From which alternate universe do you hail?

(1) Harmonize EU and US Federal safety and regulations so that a vehicle only has to be certified once. This opens up the US more readily to Ford and GM vehicles that are profitable in overseas markets, and it allows all US makers to operate as global companies rather than two houses divided.

(2) Abolish CAFE, or let Chrysler be Chrysler: Chrysler makes certain desirable products — Dodge Ram, Jeep Grand Cherokee, 300C — and it makes undesirable products — Dodge Caliber, Jeep Patriot, Jeep Compass, Chrysler Sebring. Why does it make these others? Consumers don’t want them; consumers don’t buy them. They clearly are made to compete on price rather than desirability or price. They have to make and move them because of CAFE. It creates a vicious cycle for Chrysler (and we can substitute Ford or GM here, too, but Chrysler has that beautiful, soon-to-be-stillborn new truck) where, to move the profit making vehicles people want, they have to shovel out the door offsetting larger numbers of crappy vehicles people don’t want, made crappier because, to get them to move, they have to take a bath on price to get the volume to cover the larger vehicles. Long term, Chrysler could be smaller but profitable and successful making big RWD cars, trucks, and SUVs only.

(3) Switch to a gas tax. There is an honest-to-God Constitutional role for a federal gas tax if it is spent in maintaining the network of interstate highways. Instead, we have stupid CAFE. CAFE and this bailout stink of Soviet-era central planning. The CAFE was born from that mindset. We have had an excellent example of the motivating power of gas prices — decades of federal regulations and manipulation of how auto makers in this country do their business could not switch consumers to want high MPG cars like gas prices hitting $3-4 could. You cannot force people to buy crap — either as the government or the domestic auto makers — people have to make the decision that is right for them. If gas is $4, and I want a pleasure car that I’ll drive 3k miles a year, it is my choice if the pleasure of driving is worth the cost of the gas. If gas is $4, and I want to drive 15k miles a year, I either pay the freight or I downgrade to a four cylinder. Consumers made these decisions themselves in the first half of 2008 with high gas prices; let consumers make their decisions. Make it a variable cost, the price mechanism will attribute it as efficiently as possible against whomever is using the roads the most, the mechanism of market price will accomplish more in changing the behavior of drivers because it will be in their interest than the meddling of central planners ever can or has, and American makes can survive making cars people want in that environment since it works in Europe, where GM and Ford are king.

Given that their states gave massive subsidies to Honda, Hyundai, Nissan, Toyota, Mercedes-Benz, etc. to build auto plants in their states (some estimates are $200k per job in Alabama), the should recuse themselves…or at least shut up as they have no credibility in this area.

It really bothers me that the ‘line in the sand’ is being drawn here with the auto industry after the banks, insurance companies, defense contractors, FEMA trailer manufacturers, etc. were given a ‘free pass’.

It has the stench of class warfare and union-busting being wrapped in the language of fiscal prudence.

Wow that’s a thin reed on which to hang things. Personally, I was hopping to appeal to their bitterness and resentment at being so badly beaten by the Democrats in November.

Generally speaking, each TTAC writer speaks for him or herself. But in this case, Mr. Elias summarized a broad consensus. While some of our freelancers would like to see a C11 ASAP, NONE of them (that I know of) want Detroit to die and disappear.