There are three tidbits of interesting information I recently gleaned while listening to this past weekend’s dose of television and radio punditry about the debate over a federal bailout of the American auto industry.
The first interesting tidbit emerged from Sunday’s edition of Fox News Sunday, in which Chris Wallace interviewed Republican Sen. Bob Corker (R-Tenn.) and Democratic Sen. Debbie Stabenow (D-Mich.) At the end of last week — after it became clear that the Democrats couldn’t get enough votes to pass legislation to loan the auto industry $14 billion to stave off bankruptcy for a few more months — Corker proposed changes to the legislation, and claimed there was a good chance an amended bill would pass.
Corker’s proposed changes included forcing members of the United Auto Workers union to accept painful salary and benefit cuts to make the American companies’ labor costs equivalent to the labor costs at Honda, Nissan and Toyota plants in America. Ultimately, the UAW wouldn’t support the plan, which means Democrats wouldn’t support the plan, which means the plan died along with any immediate hope of Congress passing a bailout plan.
This raises an obvious question: Why didn’t the UAW agree to the changes? The changes may have been painful, but a painful bailout is better than no bailout at all, right? From an auto worker’s perspective, a pay cut is better than a job loss, isn’t it?
As it turns out, the UAW President Ron Gettelfinger knew there was a third option — at least according to Corker:
CORKER: And the reason that it didn’t pass was the — and Gettelfinger told me this — he knew the White House…
WALLACE: The head of the UAW.
CORKER: He knew the White House would bail them out. So at the end of the day, they knew the TARP funds were available and, unfortunately, it kept us from doing something that I think would cause the auto industry, GM, Chrysler…
According to Corker, Gettelfinger knew that if a bailout bill died in Congress, the White House would step in and bail out the auto industry. How does Corker know this? He explains later on…
CORKER: … We had everything worked out except for one thing and that is that the UAW had to be competitive. Now, that’s a loose term. And if Deb Stabenow is right that the UAW actually gets paid less than Nissan and Toyota and Honda, then it seems to me it’s a no-brainer.
Gettelfinger, I called him the next day and said, “Look, please, I’m pleading with you. This is not something that’s that difficult. I’m pleading with you to let the”…
WALLACE: And he said?
CORKER: And he said, “We know the administration is going to come forth with TARP moneys and I am not going to agree to do this with you.”
So Gettelfinger’s decision to reject Corker’s proposals makes a whole lot more sense to me now than it did when I thought Gettelfinger was just playing chicken with Senate Democrats. As it turns out, Gettelfinger was betting he could get a better deal with the White House. (Previously on this blog, I’ve voiced deep frustration with Gettelfinger for refusing to accept the deal, but in retrospect I cannot fault Gettelfinger for refusing to accept a deal that would have involved eliminating promised pensions, taking income from elderly widows, etc.)
The second tidbit is that at least two prominent Democrats — and one American auto worker — is willing to testify that Corker was genuine in his efforts to broker a deal. (In other words, they won’t support the idea that Corker’s real motive in proposing changes was to put forward a plan so horrible that the UAW would have no choice except to refuse it, thereby giving the Republicans a misleading story to tell about why the bailout failed.)
The first Democrat who spoke in defense of Corker’s efforts was Stabenow, who drew a big distinction between Corker and the Republican leadership in the Senate:
WALLACE: Senator Stabenow, do you think there was an effort by either Senator Corker or other Republicans, as Ron Gettelfinger suggests, to break the union?
STABENOW: Well, Chris, let me say this. Bob Corker and I have talked throughout this last week. I believe he is sincere and came to the negotiating table in a sincere way.
I also believe, and it was very clear, that his leadership did not want an agreement. While Senator Corker was in the room and while they were negotiating and actually coming to an agreement, leadership staff, Republican staff were already circulating a story that the unions had killed the deal.
They did not want an agreement. And here’s my biggest concern. That is a political agenda of the leadership at a time when the economy is teetering on the edge and we have potentially three million people that will go over into the unemployment rolls, taking us off the cliff, and we have the largest manufacturers in the country, which is the backbone of the middle class of this country.
That is not a slogan. The reality is we built the middle class because we could build things and the fact is that manufacturing is on the edge in this country.
This is not the time for a political agenda. Yes, bring everyone to the table. The bill we had in front of us was tough. I believe if Senator Corker and I and others by ourselves, without the Senate leadership looking over his shoulder, were able to come together, we could get an agreement.
The second major Democrat I know of who has spoken out in defense of Bob Corker was Sen. Carl Levin, (D-Mich.), who spoke on Face the Nation with Bob Scheiffer. Levin gave some more information about exactly how the negotiations broke down — and it all apparently came down to a definition of the word “competitive.” Apparently, Corker wasn’t originally in favor of imposing the extreme cuts that later became part of the last-minute negotiations:
LEVIN: By the way, no other country–no other country that produces automobiles is allowing its industry to collapse. They all have the same problem, they’re all providing loans to those industries. This is not unique to the United States. And I want to–and that goes even to China, by the way, Bob.
SCHIEFFER: Mm-hmm.
LEVIN: Even the Chinese auto industry is asking the Chinese government for loans. I want to commend Bob Corker, by the way. He did, at the end, right–finally, on Thursday night, come up with a formulation that was acceptable to him which was saying that the cuts had to be — make them — the auto industry competitive. That was the word that he used. That was a word that was acceptable to Senator Corker, it’s acceptable to the Democrats in the Senate, acceptable to the White House. That word was not acceptable to the Republican leaders in the Senate who insisted not just that the auto industry wages be competitive, but that we specify in law precisely that those wages and benefits had to be equal to Nissan and other foreign manufacturers in the United States. That is what broke this deal. So I commend Senator Corker for coming up with language acceptable to him, acceptable to the Senate Dems, acceptable to the White House but not acceptable, tragically, I think, to the Republican leadership in the Senate.
And in case you don’t trust Democratic politicians, here’s Brian Fredline, president of UAW Local 602 in Lansing, Mich., talking Monday to Diane Rehm on NPR’s The Diane Rehm Show:
REHM: Your union as well as the UAW at large has been asked to make concessions. In fact, the bailout will last week failed because Republicans felt that the UAW was not willing to go as far as they wanted. Tell us about the concessions your union has made in the past few years.
FREDLINE: Yeah, I actually, I found that quite surprising that that was the lead line coming out of the Senate, was it was the UAW’s fault. Ron Gettelfinger actually went in with Senator Corker which was pretty interesting to me, too, that a Senator from Tennessee would actually be the lead negotiator with the UAW. And Ron Gettelfinger reached an agreement with Corker, and then Corker’s job was to deliver it to his Senate caucus, and he couldn’t make that happen.
So it may be that Corker wasn’t actually the villain here who tried to turn honest negotiations over a bailout bill into political theater for the benefit of Republicans. It appears that the Republican leadership was actually the party responsible for insisting on concessions they knew the unions wouldn’t make. How could they be so certain that the unions wouldn’t make the concessions, thereby calling the Republicans’ bluff and forcing Republicans to either accept the deal or admit they’d been negotiating in bad faith? Simple — the Republicans had the same info Gettelfinger had, that the White House would step in and bail out the auto industry if Congress refused. The Republicans knew that Gettelfinger had no incentive to accept an unreasonable deal — and so they put the deal forward, manipulating events to their own political advantage.
We can only wonder what would have happened if George Bush hadn’t given the green light for Gettelfinger and the Senate to let the bailout die. If Bush had held the line — if he’d promised that no bailout would happen if Congress didn’t pass one — would Gettelfinger have refused to accept the Republicans’ demands, knowing the consequences would have been the collapse of the American auto industry? Would the Republicans have been willing to let the negotiations collapse, knowing the consequence would be millions of lost jobs and a renewed identification of the Republican Party as the party of Herbert Hoover (as Dick Cheney put it)?
We’ll never know. Bush was very useful to the Senate Republicans, because he enabled them to avoid passing a necessary but unpopular bailout bill.
The third tidbit is that it’s not clear whether Gettelfinger will end up avoiding the deep concessions the Senate Republicans demanded. Again, from Fox News Sunday:
WALLACE: But if I may, just briefly. The direct question is doesn’t that same dynamic exist now. If the White House were to insist on all of these concessions, Gettelfinger is going say, “You know what? They’re not going to let us go down. I’ll resist the concessions and the White House will blink.”
CORKER: Well, of course, I think we should deal with it legislatively. OK. But if that’s not going to occur, look, I’m here, I can be down to the Capitol in about an hour. I think Chris Dodd can be down from Connecticut.
I think we could solve this appropriately legislatively. But if the government, if the administration is going to use TARP funds, they can write in these same exact conditions.
Corker said something similar on Face the Nation, in response to the commendation from Levin:
CORKER: Well, I think it’s in the neighborhood of 14 billion. And I hope that if they choose not to do it through Congress, but themselves, that they’ll put in place exactly the same concepts that we almost agreed to the other night; and that is if the bondholders do not agree to taking 30 cents on the dollar by March the 15th, they have to file bankruptcy. If labor and management cannot agree that they would be competitive by a date certain, March 31st–taking them into competitiveness even in the next year, but that they agree to that by March 31st–that they will go–they will go into bankruptcy. It’s that crisis that actually causes everybody to want to come to the table.
And I do want to say–and I thank Carl for the nice comments. Actually what ended up happening is our caucus was fine with the words “competitive.” They just wanted it done in a finite time. I offered anytime during the year…
SCHIEFFER: Mm-hmm.
Sen. CORKER: …’09. And it was difficult to get the UAW there, but mainly because they knew the White House had these TARP funds and there was really no reason for them to agree to this.
So what happens now? Will Bush offer the UAW a better deal than the Senate Republicans offered? If Bush takes a hard line with the UAW and says, “take it or leave it,” will the UAW say no again? Can Bush afford to take a hard line with the UAW when Bush’s approval ratings are so low? Or does Bush’s unpopularity actually give him more leverage to play chicken with destiny? And what choice will Gettelfinger and the UAW have except to accept any offer Bush puts forward?
If no bailout happens, the next step would be some kind of bankruptcy — which some economists argue is actually the best way for the auto companies to restructure so they can be competitive in the future.
There is something very appealing about the phrase “play chicken with destiny.” There must have been some understanding that the White House would not make the same demands that the Senate Republican caucus was making; otherwise the UAW put itself in an even worse negotiating position. But in practice I’m sure there are no guarantees.
The question I am left with is this: there seem to be two accounts of the Senate Republicans’ response to the Corker-UAW agreement. One, related by Corker, suggests that they were willing to accept the vague language of “competitiveness.” The other suggests that they wanted specific language demanding wages comparable to what auto workers in foreign plants in the South make.
Comment by Lee — December 17, 2008 @ 2:41 am
Aren’t we all playing chicken with destiny?
I share the question Lee poses above. The sense I get is that Corker was originally willing to accept a plan where the word “competitive” is in the bill, but the question of whether “competitiveness” has been reached is left up to Obama’s next Labor Secretary to decide. Then, Senate Republicans said “we won’t accept a bill that leaves it up to someone else to decide when ‘competitiveness is reached — we want the workers to accept pay equal to Nissan, etc.”
Corker glosses over this when he says (as quoted above) “We had everything worked out except for one thing and that is that the UAW had to be competitive. Now, that’s a loose term. And if Deb Stabenow is right that the UAW actually gets paid less than Nissan and Toyota and Honda, then it seems to me it’s a no-brainer.”
The “no-brainer” is that if the American auto workers get paid less than the Nissan, etc. workers, then there’s no clear reason for the American auto workers to refuse to accept a plan that forces them to accept equal wages.
I’ve argued in the past that it is unfair (albeit necessary) for the feds to spend billions bailing out one group of workers while another group get no bailout — Lee’s post “The ‘Other’ American Auto Industry” makes a strong argument that the government gives financial help to businesses all the time and has helped the foreign auto makers in a big way, so it wouldn’t be unfair to help the American auto makers also – but I still think this sense that the unions are being unreasonable in demanding government help is at the crux of opposition to the bailout among most Americans, and in fact most Democrats. Some who oppose the bailout say they’re concerned that we’re just throwing good money after bad, flushing money down the toilet in an effort to avoid facing the truth that the American auto workers can’t succeed — but I think that behind this supposed enthusiasm for free-market capitalism is just a sense of resentment that some people get bailed out and others don’t — which, again, Lee’s post addresses.
This is the question that needs to be answered if supporters of the bailout hope to win public support: If the American auto workers get paid about the same as American workers for foreign auto companies, then why wouldn’t American workers be willing to accept a plan that forces them to accept “equal” compensation?
If this question can’t be answered, then the pro-union, pro-bailout position sounds fishy, as Corker indicates when he calls his proposal a “no-brainer” after Stabenow says American workers’ pay is the same. My sense is that the answer has to do with the fact that worker compensation can be divided into various categories — wages, benefits for current workers, benefits for retired workers, and benefits being set aside to pay for the benefits of current workers when they retire.
It may be complicated, but as David Mamet once wrote, “If you can’t say it in a sentence, they can’t put it in TV Guide.”
I believe TV Guide is almost bankrupt, by the way.
Comment by Ian — December 17, 2008 @ 7:50 pm