Could 10 or 12 economically conservative Republican Senators prevent a Big Three auto rescue and the cessation of domestic auto manufacturing operations? Indeed they could. Many of the conservative Republicans come from states where General Motors (NYSE: GM), Ford (NYSE: F) and Chrysler do not have a large manufacturing presence. Hence, there's likely to be little home-front pressure.
That fact, combined with the filibuster era - - whereby lawmakers routinely abuse the Senate's unlimited debate power to oppose any legislation that does not have 60 votes - - the total need to invoke 'cloture' or cut-off debate - - means a dedicated cadre of Senators has the political and procedure power to defeat any legislative item below the 'sweet 60.' Hence, in that sense a dedicated, numerical minority can undermine the will of the majority, the will of the people.
Now the real auto rescue debate begins
What's more likely is that the economic conservative Senators will use the filibuster weapon as a means to extract additional concessions from Big Three stakeholders - - primarily the United Auto Workers. And their goal is obvious enough: a UAW defeat will drive labor costs lower and represent another victory for those who believe the lower wages fall for the typical person and worker, the better. In this argument, wages are merely another cost in the production machine, and the less money allocated for this expense category - - as with any expense category - - the better.
Conversely, the UAW will argue that any attempt to weaken them - - or bypass them - - will hurt/eliminate the only organized power that the typical person and worker has at the bargaining table and in the American economic system. They'll also argue that a living and decent wage for all working Americans is the foundation for a strong, stable U.S. economy, with sustainable GDP growth.
Each side is likely to offer exaggerated business and economic statistics in favor of their arguments, in a Washington process known as 'rhetoric for dollars' that frequently accompanies appropriations bills and government loans. The economic conservatives are likely to argue that UAW total compensation costs are 'wildly above' those for auto workers in Japan and Germany. The UAW will likely argue that it's already made 'major concessions' in previous contracts, without noting that work rules haven't changed that much.
The ghost of economic theorists past
What could be the deciding factor in the auto rescue saga? If the Bush Administration's latest action is any indicator, it may very well come down to the status of the U.S. economy, itself. For example, during a robust economic time, with the economy adding hundreds of thousands of jobs per month, and median incomes rising, and corporate earnings soaring, and the Dow racing toward the sky, policy makers could neglect an underperforming sector. You guys had your chance and you blew it; you mismanaged, so you're out of business. Sorry.
But the U.S. economy is not growing. It's not even close to healthy. Jobs are not being created: they are being eliminated at an alarming rate. Median incomes aren't rising: they're falling, and have fallen for about a decade. And corporate earnings? They'll decline in 2008, and 2009, and if we're not careful, in 2010. It is the worst economic climate for the nation in decades and an auto sector collapse would drive the economy into a deeper recession, most economists agree.
Or, an auto sector collapse could make conditions even worse than that. As much as economic conservatives and market absolutists try to paint a picture that the problems currently affecting the economy are nothing a tax cut or two and more deregulation can't solve, they know that the financial system, and by extension, the form of capitalism as practiced by the United States, is facing its biggest crisis since the Great Depression. They may state that left to its own devices, the economy is going to be fine, but they know the Dow's level says otherwise. And they may also say that the collapse of Lehman Brothers was no big deal, but in fact, they know it was a big deal.
And they also know that an auto sector shut down may represent another trigger event of historic proportions.
So after the rhetoric dies now, look for the economic conservatives in the Senate to come to their senses.
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Reader Comments (Page 1 of 1)
12-12-2008 @ 4:41PM
japeruzzi said...
During another time, Senators such as these that would kill off American companies in favor of foreign competitors would be called traitors. It seems these clowns might be fighting the civil war all over again...the north versus south. I suspect this war will result in the same end.
12-12-2008 @ 5:14PM
Andy said...
These ten to forteen Republicans want lower wages for the Big Three Union workers. Period. You say it's against the will of the people...HOGWASH ! Every poll I've seen in the last month shows a huge majority of "the People" against any Federal intervention.
12-12-2008 @ 9:08PM
Dan Barnett said...
Andy,
Go to Pollster.com & see the article quoting the polls on the Auto Industry rescue/bailout. The point is that the result depends on how you ask the question.
Oh, and by the way, Auto Workers are the People (at least in part)