It’s an auspicious day for the auto industry, workers, American manufacturing, and the president who inherited the consequences of the previous administration’s policies — not to mention thirty years of disastrous conservative economic policies — as two of “the Big Three” American automakers head into bankruptcy this morning. General Motors begins bankruptcy proceedings in New York today, as the federal government prepares to own a majority stake in the “new GM.” Meanwhile, Chrysler secures approval to sell most of its assets to Fiat. Of course there’s no shortage of opinion about what it all means.
The Boston Globe spells out the stakes for President Obama:”Obama is taking several risks under the plan. None may be bigger than the decision that the US government will take a 60 percent share of the stock in a new GM, leaving taxpayers vulnerable if the overhaul is not successful.” If the president’s legacy is tied to the fate of the auto industry, it may also be true that he had no choice but to attempt to rescue the industry. Associated Press:
President Barack Obama couldn’t let General Motors fail, but he won’t concede he’s taking over the company.
Given the current economic crisis, the Obama administration’s aggressive intervention is a defining moment for capitalism. Whether the president’s actions serve as a private sector lifeline or a tether is a question that Obama and his economic team must confront not only with GM and Chrysler, another bailed out automaker, but with the financial sector as well.
But the sheer size of GM’s bankruptcy protection filing, the magnitude of the government’s role and the company’s status as a fallen symbol of American industrial might make this intervention perhaps the most remarkable.
But does that make him “CEO in Chief”? Should it? The Washington Post:
But is a massive, unbounded federal commitment to a company that evidently still can attract no private capital really the only option? It doesn’t take much imagination to forecast the political pressures that will buffet the government-as-auto-executive. We’ve seen one effect already in the preferential treatment of the autoworkers’ union at the expense of private creditors. The government sweetened its offer to creditors in the past couple of days, but they’re still getting less return on their debt than the union is. Meanwhile, the union can boast that it has been promised no loss in “base hourly pay, no reduction in . . . health care, and no reduction in pensions.” Influential members of Congress will insist on jobs in their districts; environmentalists will want electric cars; overseas sourcing will be frowned upon. How such decisions affect profits could become secondary.
…When the Bush administration first assessed its unpalatable options, Congress played an active and constructive role. Where are the legislators now? They should at least be pressing the administration to explain why nationalization is the best option.
The New York Times says if the U.S. is now an owner, the president should own up to it.
President Obama owes American taxpayers and voters a candid and detailed explanation of the government’s goals and the levers it intends to use to achieve them. He should make clear that the overarching objectives are to create a profitable company that makes cars that people want to buy, and that are more fuel-efficient.
In particular, he should be explicit about how the government will handle the conflicts between those goals, the administration’s perception of the public interest and the narrower goals of members of Congress.
What about the workers? Robert Reich concedes that “it doesn’t make sense for America to try to maintain or enlarge manufacturing as a portion of the economy. Even if the U.S. were to seal its borders and bar any manufactured goods from coming in from abroad–something I don’t recommend–we’d still be losing manufacturing jobs,” and concludes that “The biggest challenge we face over the long term — beyond the current depression — isn’t how to bring manufacturing back. It’s how to improve the earnings of America’s expanding army of low-wage workers who are doing personal service jobs in hotels, hospitals, big-box retail stores, restaurant chains, and all the other businesses that need bodies but not high skills.”
UAW members voted overwhelmingly this week to accept new labor concessions aimed at helping GM speed its way through a bankruptcy reorganization should it file for Chapter 11 on Monday, as expected.
As part of the deal, the union agreed to forgive $20 billion that GM owes to the retiree health care trust. In exchange, the union will receive a 17.5% stake in a reorganized GM, plus $6.5 billion in preferred shares, a $2.5 billion note and a warrant to purchase a further 2.5% of GM in the future. In total, the changes will save GM $13 billion, the union said.
Heath Care Reform Update
Speaking of health care, Politico writes that the Obama health reform plan is taking shape, saying the wealthy will pick up the tab:”Newly created insurance marketplaces would make finding a plan as easy as shopping for cheap airfare. People could keep their coverage, even if they switched jobs. And they might be able to choose between private insurers and a government-backed plan. …But here’s the catch — none of this would come free, with the wealthiest Americans likely to face higher taxes to help pay for coverage for all.” But the New York Times reports that those with high deductibles have been paying for a while now. Meanwhile, the New York Times highlighted a conflict between Sen. Ted Kennedy and Sen. Max Baucus over the inclusion of a public plan in health care reform.
Deepak Bhargava, on the importance of a public plan in forcing improvements in private plan:”The case for a public option is simple. People need insurance they can trust. They need insurance they can afford and public insurance has a better track record than private insurance when it comes to reigning in costs while preserving access. Without a public plan we will continue to lack a benchmark which to force improvements in private plans. Americans want public and private insurance competing side by side so that they can choose the best option for themselves and their families.”
A Side of Sotomayor
President Obama’s choice of Sonia Sotomayor seems to have accelerated the ongoing breakdown in the GOP. The New York Times reports on Obama’s confidence that efforts to derail Sotomayor’s appointment will fail. But if his stealth strategy was to coax the worst extremes on the right into the disinfecting glare of daylight, it may have succeeded.
GOP Senators may be dialing back their their criticism of Sotomayor, but they’re happy to let their surrogates carry that dirty water. The Associated Press:
Republican Senate leaders won’t call Sonia Sotomayor a racist. But they’re fine with Rush Limbaugh and Newt Gingrich playing the race card to rile up an out-of-power GOP.
Republican lawmakers and officials are cobbling together a strategy to oppose Sotomayor, an appeals court judge and the first Hispanic nominated to the Supreme Court. While some of Sotomayor’s past comments could pose a challenge for President Barack Obama’s nominee, elected leaders are navigating a tricky question of how to object without alienating the nation’s fast-growing – and increasingly politically active – Hispanic population.
For now, it appears Republican lawmakers will urge respect. But they’ll allow talk-show host Limbaugh to call Sotomayor a “racist” and former House Speaker Gingrich to say she’s a “Latina woman racist.”
Time’s Michael Scherer says the GOP strategy will only further its decline:
Meanwhile, the same comment has caused deep fissures within the Republican Party, which has long had a soft spot for debates over identity politics. Radio personalities and former politicians have been competing for the most controversial way to brand her a racist for those comments–a strategy that is sure to increase skepticism for the GOP from Hispanic voters. (The prizes go to former Rep. Tom Tancredo for calling the Latino civil rights organization a “KKK” without “the hoods or the nooses” and Rush Limbaugh, who accused her of “hating white people” and compared her to David Duke, a former member of the KKK.)
Such comments caused elected Republicans and their allies to lash out at the harsher comments. Texas Sen. John Cornyn, who is leading the GOP 2010 effort, said the comments of Rush were “not appropriate,” “terrible” and “wrong.” RNC Chairman Michael Steele chimed in today to say that Republicans should stop “slamming and ramming” on Sotomayor in favor of a more measured response.
That’s likely to lose the GOP what remains of their Latino support, according to Matt Yglesias:
As anyone who knows me can attest, I don’t have what you’d call a strong “Hispanic” identity…
But for all that, I have to say that I am really truly deeply and personally pissed off my the tenor of a lot of the commentary on Sonia Sotomayor. The idea that any time a person with a Spanish last name is tapped for a job, his or her entire lifetime of accomplishments is going to be wiped out in a riptide of bitching and moaning about “identity politics” is not a fun concept for me to contemplated. Qualifications like time at Princeton, Yale Law, and on the Circuit Court that work well for guys with Italian names suddenly don’t work if you have a Spanish name. Heaven forbid someone were to decide that there ought to be at least one Hispanic columnist at a major American newspaper.
Somehow, when George W. Bush affects a Texas accent, that’s not identity politics. When John Edwards gets a VP nomination, that’s not identity politics. But Sonia Sotomayor! Oh my heavens!
And Julia Sanchez: “I’ll cop to sharing some of Yglesias’ irritation at the treatment of Sonia Sotomayor, and if Republicans are managing to get a rise out of my pallid ass, I can only imagine the kind of damage they’re doing to their brand among, you know, real Latinos.”
Bill Scher is away.