Quid Pro Quo
It seems that Democratic congressional leaders are not so interested in what I think and thus are plowing ahead with plans to press for federal aid to auto companies.
The general misguidedness of this aside, it seems to me that one should at least be looking for some kind of political quid pro quo here. Right now in the House of Representatives there’s a looming battle between Henry Waxman and the incumbent Chair of the House Energy and Commerce committee. The battle lines are being drawn along liberal/moderate lines at the moment, but historically Dingell’s been a pretty solidly progressive legislator. But he’s also from Michigan. And like a lot of Michigan legislators, he’s reluctant to endorse climate change legislation that is seen as bad by influential home state industries. Now I don’t care who gets to chair the committee at the end of the day, but I really do care about taking action on carbon emissions as soon as possible. It seems to me that it’s a mistake for the leadership to do a huge favor to the auto industry, to Michigan, and to Michigan-based politicians while at the same time the industry is lobying against key leadership priorities on energy and the environment.
37 Responses to “Quid Pro Quo”
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November 9th, 2008 at 1:27 pm
Political deal-making? No way–weren’t you watching the last Congress? The Democratic leadership gets down to business on telecom immunity, but they have a surprising reluctance to do battle for a liberal agenda. You’d almost think that they don’t share the same priorities as their voters.
Was there any reason to think the election would change that?
November 9th, 2008 at 1:31 pm
The Dems really suck at the quid pro quo game, and I have no idea why. They never seem to realize when they’re giving up something for free that they could exact a price for.
The bailout was a prime example. Right up front, the Dems should have let the Bush Administration know that unless there was a bailout for ordinary Americans hard hit by the downturn, there’d be no bailout for Wall Street. At the very least, the Dems could have bargained for the expansion of food stamps and the unemployment benefit extension that Bush will continue to block for the next ten weeks.
Same here. It should be made most clear to the execs at Ford and GM that the price of a bailout for them is not only their lack of opposition, either directly or through intermediaries, to climate change legislation, but their enthusiastic support for, and lobbying efforts on behalf of, any health reform bill that would reduce their financial obligations.
November 9th, 2008 at 1:31 pm
Professor Richard Green preaches to your choir on smarter ways to save the environment than giving handouts to auto companies.
November 9th, 2008 at 1:36 pm
There’s no surprise here. The economy is the perfect excuse for Congress to do more of what it does best and always – reward favored constiuents/campaign contributors.
Environment? We’ll see a repeat of the 1970s. Pols trying to get people to cut back on carbon fuel consumption but at the same time pandering to their desire for cheap fuel. Silly then, silly now. The rational thing is a carbon tax, so that’s what won’t happen.
November 9th, 2008 at 1:55 pm
I think that something needs to be done funding wise to keep the auto industry alive in America. Afterall I believe it is one of the largest union employers around, but I would attach strings to the cash. Make the money contingent upon a certain amount of fuel efficient cars coming out of Detroit every month same with hybrids, and a certain amount of $ has to be used on further research.
November 9th, 2008 at 1:55 pm
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November 9th, 2008 at 1:58 pm
A surprisngly large number of so-called progressives are sounding stupider than George Bush here. Whatever happened to the “Reality-based community”? Do you really hate autombiles that much? First off, any auto-industry bailout will be a lot cheaper than dealing with the millions (yes, millions) of unemployed people an auto industry collapse would create along with the assumption of pension benefits that would fall to the Feds. But please look at the damn election map! We just saw Michigan, Ohio, Indiana (!) Illinois and Wisconsin vote for the Democrats (!!!). If you’re really eager for headlines reading “Obama to Michigan: “Drop dead” then you might as well gift wrap those states and put them under the GOP’s Christmas tree.
November 9th, 2008 at 2:07 pm
JonF is right, so long as the bailout they’re talking about actually does the job.
If it’s going to take billions every quarter for several years to stand up the auto companies — so they can compete globally, maintain employment levels and meeting their pension obligations is quite a trifecta — then it might make more sense to provide assistance directly to the workers and convert the auto plants to newer industries.
If we’re going to start making all the turbines and pipes and solar arrays and batteries and transmission wire needed to move toward energy independence, perhaps we could make all that stuff in old auto plants.
November 9th, 2008 at 2:29 pm
First off, any auto-industry bailout will be a lot cheaper than dealing with the millions (yes, millions) of unemployed people an auto industry collapse would create along with the assumption of pension benefits that would fall to the Feds.
Jon F: This is way off base. The choice isn’t between massive, unending, counterproductive subsidies to three moribund firms and the disappearance of the industry (with attendant job loss); the choice, rather, is between the aforementioned subsidies and chapter 13 proceedings. Chapter 13 wouldn’t mean the disappearance of the industry; it would mean the big three would get a breather to restructure. I reckon the job losses will be greater with the latter than with the former, but job losses are coming no matter what.
I’d rather save our gun powder for measures that will really make a positive difference, especially when, as in this case, squandering our gun powder strengthens a precedent that is so harmful to the country’s long term interests.
November 9th, 2008 at 2:30 pm
I would feel better about bailing out the auto industry if their own mismanagement wasn’t a major contributing factor. Detroit fought any minimal increase in CAFE standards tooth and nail. Then, when gas prices hit $4, they complained that no one was buying their 18 mpg land yachts. So what, we’re going to give $500 billion to these geniuses?
November 9th, 2008 at 2:31 pm
If we’re going to start making all the turbines and pipes and solar arrays and batteries and transmission wire needed to move toward energy independence, perhaps we could make all that stuff in old auto plants.
Fine. But more taxpayer money down the rat hole that is the big three is exactly how not to go about it.
November 9th, 2008 at 2:37 pm
Not to mention that GM is exporting jobs to Russia.
November 9th, 2008 at 3:06 pm
It’s the US political systems which is very poor at bundled policy-making.
November 9th, 2008 at 3:08 pm
I’m still pleased that the posting system works so well here compared to the Atlantic.
November 9th, 2008 at 3:15 pm
Why loan GM and Ford $25B? We, the taxpayers, could buy them for $7 billion, total.
Right now, GM’s market cap is $2.47 billion. Ford’s market cap is $4.57 billion.
Buy them both, hire executive talent from Honda and Toyota to run the two companies, and they’ll likely be run more efficiently, and produce more energy-efficient cars to boot. Plus we wouldn’t have to worry about them lobbying against climate change legislation, because we’d own them and all.
What’s not to like about that?
November 9th, 2008 at 3:15 pm
The industry is in trouble precisely because it’s run by dittoheads who refuse to face the reality of climate change. Isn’t the quid pro quo obvious? I wish the Democrats would try doing the right thing once in a while and see how that turns out.
November 9th, 2008 at 4:00 pm
Absolutely. If something is really so important to the economy that it cannot be allowed to fail, then nationalize the damn thing — at least temporarily. We can sell it and make it private later, after it is functioning again.
Our fear of nationalizing companies is why we are flailing about, throwing good money after bad. This is just continuing the policy of “privatization of profit, socialization of risk”. If the taxpayer is going to be on the hook for this, then give us the assets as collateral.
This is why Gordon Brown has rescued his political career while Bush has turned the government over to Paulson.
November 9th, 2008 at 7:16 pm
Matt: “It seems that Democratic congressional leaders are not so interested in what I think…”
You think? (Double meaning there – think about it, heh, heh.)
You want a solution to the auto companies problems? Tell them they have to sell out to the Japanese. If the Japanese balk, loan the Japanese the money to buy the American auto companies. Put in Japanese managers, fire the American morons. We all know American managers are the worst managers in the world. Not that the Japanese are geniuses, but they have at least some clue what the word “quality control” means.
November 9th, 2008 at 9:54 pm
of unemployed people an auto industry collapse would create along with the assumption of pension benefits that would fall to the Feds.
Why would that happen? My father had like 25 years in as tool & die guy in a machine tool shop and it wound up trading hands three or four times before it collapsed. He wound up getting about .10 on the dollar of what he had put into his pension in the end.
BTW, you are right, if it comes down to nationalizing these places that’s fine but if you just dump millions (that’s not an exageration, for every auto worker there are like nine workers who supply the auto industry here) of unemployed people into the midwest the Obama presidency is an instant
November 10th, 2008 at 1:29 am
A by-product of a course of action you have endorsed previously, namely direct aid to state and local gov’t for infrastructure development in the name of job creation (and infrastructure improvement), will certainly be additional lanes of highway and likely new road construction under the build-and-they-will-come theory. Opposition to such outcomes are obviously a primary concern of the blog. While it’s true that such projects wouldn’t necessarily have to be part of a recovery agenda, you have to acknowledge that they’re virtually certain to be in practice. Does this give you pause in supporting fast-tracked general infrastructure grants to states and local government?
November 10th, 2008 at 6:58 am
One of the biggest expenses for the Big 3 is health care. Give them a loan, and do everything possible to make universal health care available.
And yes, they have made a lot of really dumb decisions, like Ford buying Jaguar and putting all their eggs in the oversize pickup/SUV market. But ask anyone who follows costs for Toyota and Ford (e.g.) and they’ll tell you the difference is legacy health care costs.
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