The GOP's “Hoover time”
Robert Shrum
I never agree with Dick Cheney. Well, hardly ever. But he was spot-on last week in his verdict on Senate Republicans’ opposition to a survival plan for the American auto industry. "It's Herbert Hoover time," he said, mordantly channeling the theme song of a hallmark children's show of the 1950s: "It's Howdy Doody time."
Like Cheney (but unlike Frum) I'm old enough for the show to have been part of my childhood DNA. The reference is almost appropriate: The Republicans' behavior on the auto industry bailout could easily be dismissed as childish if only it weren't so dangerous.
Their vote reflected a black-and-white ideology of free markets versus government—seasoned by a knee-jerk enmity to organized labor. The Republicans demanded several pounds of the average auto worker's pay, which they exaggerated in size and impact. The misleading figure they often cited to represent an auto worker’s compensation—$73/hour—has far less to do with current wages then with legacy costs including health and pension benefits owed to retirees. That kind of money doesn't reach anyone on today's assembly lines. In any case, the decisions that imperil the industry were made in boardrooms, not union halls.
Republican Senators also engaged in a bout of short-term populism that reflected the polling of the moment: Voters disaffected by the $700-billion bailout of Wall Street said they were against $14 billion more for the auto companies. The voters’ attitudes could change instantly, of course, if the Republican ideologues were actually to get their way. As General Motors, then Chrysler and probably even Ford was forced into bankruptcy, the likely outcome wouldn't just be a restructured industry. Markets would collapse, companies and jobs would be annihilated across the Midwest and a second Great Depression might well descend on the globe.
The foreign-owned automakers, with plants largely located in the South, whose interests Republicans were supposedly serving, would not be immune from the downward economic spiral. We saw a clear sign of that on Monday when Toyota cancelled the start of production at its new plant in Mississippi. Union-busting conservatives can't aid foreign companies by beggaring the Big Three. If they did, not only would they risk a general contagion, but you can bet public opinion would turn fiercely against Republicans, who would pay the price in 2010.
Last week, Senate Republicans could exercise their ideology without economic or political consequence. But they will face a more serious choice when President Obama takes office accompanied by a new Senate in which Democrats need only one or two Republican defectors to break a filibuster. The Republicans will be tempted to re-live the confrontational approach of 1993 and 1994, when a new Democratic President faced Republican hostility across the board. The result was a Republican landslide in the mid-term election. But this is a very different period; there is a national sense of urgency that transcends normal partisan and ideological boundaries.
In this climate, opposition for its own sake is likely to yield electoral pain, not gain. The accurate model may be the early years of the New Deal, when Republicans, frozen in their anti-government ideology, became an increasingly impotent minority. (The brakes that finally slowed the Roosevelt revolution in the late 1930s were applied not by the diminished and enfeebled GOP, but by Southern Democrats.)
Can Republicans bail themselves out of their past and their own pre-conceptions? Can they bring themselves to cooperate? That's what John McCain suggested this weekend; but of course, many Republicans suffer from the delusion that McCain fell short in November because he wasn't conservative enough. Similarly, they’ve reacted to the economic meltdown with the patently false assertion that it's government's fault, or with the economically illiterate proposition that we should slash the federal budget now.
If in the months ahead Republicans reincarnate an identity it took them forty years or more to shed, they will make themselves increasingly irrelevant while Obama remakes the country and realigns the political landscape. This time, the opposition party that does little but oppose won't succeed at the polls. It won't be "Herbert Hoover time" for the American economy. But it might be for the Republican Party.
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42 Comments
Posted by TrulyIndy, Tuesday, December 16, 2008, 8:38 am Wow...another lame point of view by Shrum. He should have stated, "Me and my fascist friends in the press will make everything, including the failed bailout, the Republican's fault." That has been their gameplan since they ran out of ideas when their best president was killed in 1963. Sad little fools and the useful idiots that believe them. Notice the point he leaves out...if the bailout WERE to happen, how is that going to help the big 3 compete, where their competition pays about 1/2 for help? That doesn't even account for the level of productivity difference. For example, if anyone knows ANYONE who works on the floor of a UAW shop - they've heard ENDLESS stories about how much productivity is lost when something simple as a light bulb burns out, due to the Union's protectionist rules in the workplace. ALL of these bailouts are foolish...but the auto bailout is the worst one...and I LIVE in Michigan. This is nothing more than bailing out the UAW. Let the big 3 go into bankruptcy, shed their FOOLISH UAW contracts, give them a contract similar to what the Honda folk's compensation is and require them to FIRE their entire board of directors - who have picked idiots to run their respective shows. Anything other than that will NOT fix the problem.
Posted by Billogger, Tuesday, December 16, 2008, 8:52 am Bob, The Senate Republicans were simply trying to get the Big 3 back on an even playing field with their competitors. It doesn't matter whether the cost imbalance is due to current employees or past employees (legacy costs) - the fact is that the Big 3 have a significant labor cost disadvantage. If that disadvantage is not fixed then the Big 3 will continue their downward spiral, which will lead to fewer and fewer jobs in the future. WE NEED TO THINK ABOUT THE LONG TERM VIABILITY OF THESE COMPANIES - NOT JUST THE NEXT COUPLE YEARS.
Posted by mrunpc, Tuesday, December 16, 2008, 8:58 am OK, pal. The GOP is the only hope of SAVING the US car makers. Do you actually think that caving in to the union guerilla's demands is going to actually SAVE them? Filing Chapter 11 reorganization is the logical way to go. That way EVERYONE of those union hacks could keep their jobs, one way or another and the companies could then dictate the terms to the AFL-CIO instead of the other way around. Thanks to Communist Big Media and "journalists" like you, the public is led to believe that paying 70,000 retired union HACKS to do NOTHING is solution. In fact, it's the demise of the companies. Just like keeping the public in the dark about the illegal Kenyan Muslim about to "sworn in" as POTUS, here's one big "THANKS FOR NOTHING" to all you Commie bastards who have taken over America's media. Think YOU'LL benefit from your anti-Americanism in the end? Think again! BUST THE UNIONS!!!!
Posted by Timothy L. Pennell, Tuesday, December 16, 2008, 9:00 am Yeah, I'm gonna listen to THIS guy. Mr. LOSER. Chapter 11 is the ONLY way out, for these Companies. But Chrome Dome Boy isn't thinking about what's GOOD for this Industry. These aren't 'PEOPLE', who might see their livelyhood DISAPPEAR. They're VOTERS. They're numbers and demographics. The situation with the Big 3, is gonna take GUTS to fix. Idiots, like this moron, want to put a bandaid on it. And they want to do that, FOREVER. Democrats don't want anything SOLVED. They NEED the issue. If stuff was to get fixed, they wouldn't have the parade of losers, who's goal in life, is to be taken care of.
Posted by MildlyAmused, Tuesday, December 16, 2008, 9:03 am Shrum's real fear is that the death of the unions will stop the constant flow of money to the Democrats who pay him for his advice. The unions need to face the fact that labor is a commodity and artificially inflating its price for years through political wrangling and intimidation has a cost and that bill has come due. Isn't it amazing that the financial sector is cratering due to risky loans that banks were forced to make to assist people to buy homes they couldn't afford and now the Democrats want to make yet another risky $15B loan to the Big 3?
Posted by Servius, Tuesday, December 16, 2008, 11:23 am Not buying it. They did the right thing. Chapter 11 is the answer. It wouldn't kill the automakers but let them reorganize without sticking us with the bill. If you keep bailing out failing industries they have no incentives to fix their problems.
Posted by Mark A. Sadowski, Tuesday, December 16, 2008, 11:27 am I favored bankruptcy over bailout as many Democrats did including economist Joseph Stiglitz and three Democratic Senators (not counting Senator Reid, who voted against it for procedural reasons). The UAW would have survived (most of their workers don’t work for GM or Chrysler anyway), and with the changes in Washington you can be sure card check is on the way. If GM and Chrysler go bankrupt it will be Cerebus, the bondholders, the shareholders, and the overpaid top executives that will probably take most of the hit, and I won’t be shedding any tears. However, the fact that the Republicans were demanding concessions from the UAW shows how out of touch they have become. GM has lost $15 billion and took in $166 billion in revenue in the last four quarters (thus total costs were $181 billion). The total compensation paid to its 74,000 UAW workers and an unknown number of UAW retirees in the last four quarters amounted to about $10.8 billion. In other words less than 6% of the cost of a GM vehicle is due to the people who actually assemble them (or assembled them in the case of the retirees). The total cost of that compensation was less than the amount GM lost last year. Slashing union worker compensation will not solve GM’s or Chrysler’s problems. Why didn’t the Republicans demand that top executive pay get cut? The top 30 executives at GM collectively make about $100 million in compensation. Last year the CEO of GM, Rick Wagoner, made $15.7 million alone. Does anyone think he actually earned that money? By trying to bust the UAW all the Republicans did was remind everybody that they are the party of the fat cats. Like Mr. Shrum I’m already counting how many seats they’ll lose in the Senate in 2010. By the way, guess how many autoworkers in Japan are unionized? The correct answer is all of them (the Confederation of Japanese Auto Workers or JAW). The Japanese autoworkers are not less productive because they are unionized and in fact several research studies have concluded unionization increases productivity due to the effect of efficiency wages. All the “right to work” laws in the south have done is to succeed in setting up a system where foreign corporations can exploit our relatively cheap labor as though we were a third world country. Also, how much do auto company executives get paid in Japan? The CEO of Toyota, Katsuaki Watanabe, only made $900,000 last year, and his company actually earned a profit. If American executive pay were truly determined competitively how do you explain Rick Wagoner’s bloated compensation package?
Posted by M, Tuesday, December 16, 2008, 11:33 am Looking at who all Shrum has advised, I'd stay far away from his advice. I stopped being a union supporter when the grocery workers in CA struck and I couldn't get into Ralph's - once I learned the cause of their strike, I crossed the picket line. Grocery workers in CA needing a Union? Give me a break. If the Unions are so proud of their work, why don't they speak up for the abhorrent quality standards in American made cars? Have you seen the consoles? What a joke. In today's America, with the media and meddlesome government as strong as they are, unions are outdated and past their usefulness. In the past, I can understand the need for them - now, in a modern factory in America, I don't see any need for unions other than a coal mine or dangerous work place. Come to the Southeast - it's Union free, and we have to actually compete to keep our jobs. Probably why the best cars are made here.
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