Say It Ain’t SO!

From the Globe & Mail, dammit:

A $14-billion (U.S.) emergency bailout for auto makers collapsed in the Senate Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts.

The Senate rejected the bailout 52-35 on a procedural vote after the talks collapsed.

Senate Majority Leader Harry Reid said he was “terribly disappointed” about the demise of an emerging bipartisan deal to rescue Detroit’s Big Three.

He spoke shortly after Republicans left a closed-door meeting where they balked at giving the auto makers federal aid unless their powerful union agreed to slash wages next year to bring them into line with those of Japanese car makers.   [more]

Holy crap!  What’s gonna happen then?  Are the Reprobates absolutely nuts?  Have they been spending time with Stephen Harper?  Or is it the other way around?

This is SO not the time to cut back on workers’ wages.  People are being encouraged to spend and invest to get the economy going again.  They’re not going to do that on lower wages. 

As Erin Weir noted when Jim Flaherty proposed to roll back and then freeze the wages of federal employees:

The household debt crisis was largely caused by stagnant employment income. A better response would be to increase the purchasing power of working Canadians by strengthening, rather than restraining, labour rights.

The UAW refused to allow wage roll-backs until current contracts expire in 2011 while the Reprobates wanted wage roll-backs by 2009.  We should remember that this year, in both Canada and the US, contracts that were negotiated by the CAW and the UAW contained massive concessions from the unions, lest we fall into the trap of believing that it’s the UAW that is to blame for this failure on the part of government:

Canadian Auto Workers (CAW) President Buzz Hargrove and his Executive Committee announced Monday that secret negotiations conducted with Ford Canada over the past month have resulted in an agreement on a Master Economics Offer (MEO) that will form the basis for a new contract with the auto giant effective through mid-September 2011. The offer, signed almost five months prior to the expiration of the previous contract with Ford, is unprecedented in the history of the union.

The agreement freezes current Ford workers’ wages for the life of the three-year deal, cuts 40 hours of vacation pay per year, tightens caps for long-term medical care, increases employee co-pays on prescription drugs, reduces pension entitlements, and freezes cost-of-living (COLA) adjustments for the remainder of the current contract and the first year of the new deal. It also lays the basis for the development of a two-tier wage system.

The MEO sets the stage for further layoffs with “improved restructuring benefits” clauses and ominously promises a “commitment to explore and establish a pre-funded, off-balance-sheet Retiree Health Benefit Fund.” This is a euphemism for shifting responsibility for managing pension benefits from the company to the union. Workers will be asked to permanently sell the gains won in decades of struggle for two one-time “bonus” payments totalling C$5,700.

The deal with Ford in many ways resembles the contracts struck by the United Auto Workers (UAW) union with the Big Three in Detroit last autumn. In that round of negotiations, the UAW completely capitulated to the demands of the automakers. It accepted a draconian two-tier wage system and massive benefit cuts and, in a watershed initiative, agreed that responsibility for managing and cutting “legacy cost” benefit programs should be shifted from the company to the union. In so doing, the UAW will quickly become one of the largest healthcare insurance providers in America, with a vested interest in squeezing its own membership.   [more]

I really should post this under “Ongoing Governmental Insanity”.

BTW, I guess I’m naive, but I can’t believe the mean, ugly, union-bashing and blaming comments at the Globe & Mail on the article referrred to above.  Who ARE these people?  The failure of the bailout belongs to the Reprobates, not the UAW.

UPDATE:  That G & M article has been edited even as I write.  It now points out:

Republican opposition to the bailout is also crassly political. Most of the Asian and European car makers now have plants in the south and southwest staunchly Republican states. These plants are all non-union, and their workers earn lower wages, pensions and benefits than workers at the Detroit Three.

UPDATE II:  The NYT‘s article on the failure of the bailout proposal takes a tone that is far less into union bashing.

From the NYT:

The automakers would also have been required to cut wages and benefits to match the average hourly wage and benefits of Nissan, Toyota and Honda employees in the United States.
It was over this proposal that the talks ultimately deadlocked with Republicans demanding that the automakers meet that goal by a certain date in 2009 and Democrats and the union urging a deadline in 2011 when the U.A.W. contract expires.

G.M. and Chrysler had already agreed to carry out sweeping reorganization plans in exchange for the help.

The negotiations over Mr. Corker’s proposals broke up about 8 p.m. and Mr. Corker left to meet with Republican senators to brief them on the developments. The Republicans emerged from their meeting an hour later having decided they would not agree to a deal. Several of them blamed the autoworkers union.

“Several” Republican senators blamed the autoworkers, as opposed to a newspaper ‘s headlines blaring blame in the direction of the autoworkers.  I’m sick of the G & M‘s slant.  I wish we had another national newspaper (sorry, I can’t count the National Post).

Also from the NYT:

Asia’s stock sank deep into negative territory on Friday in the wake of the collapse of a $14 billion bailout plan for the American auto industry.

In Japan, the Nikkei 225 index extended mild morning losses immediately after it became clear that drawn-out negotiations to extend a government lifeline to the automakers had failed to receive the needed Senate support. By early afternoon, the index was 5 percent lower.

The North American markets should look interesting today.  Good thing it’s Friday.

Some other problems with the bailout bill, noted at the NYT before it failed:

Most importantly, it fails to demand that top executives of any car company receiving taxpayer money step down. These companies need new managers who are not wedded to Detroit’s failed strategies. And the bill doesn’t set any conditions to ensure automakers invest in fuel-efficient vehicles. Any long-term plan must make sure the automakers don’t simply keep making gas-guzzling trucks and sport-utility vehicles, whose popularity — unfortunately — has recovered as gas prices have declined.

Can’t find anyone who was complaining about the union’s intransigence.

From the Wall Street Journal:

Sen. Christopher Dodd, a Connecticut Democrat, complained that Republicans had attempted to turn the wage issue into a political matter about organized labor, instead of making it an “an economic issue.” With the economy in recession, he suggested it wouldn’t be fair to force auto workers to accept wage cuts in 2009. “I’m deeply saddened. But more than saddened, I’m worried,” he said. “This will fail, we will go home, and I’m afraid our country will be in deeper and deeper trouble.”   [more]

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