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Monday, December 8, 2008

The Politics and Policy of the Auto Bailout for the Republicans

Everything that I have heard today about the bailout tells me that not only is it a bad idea but that this bailout offers a serious opportunity for the Republican party to regain their niche in the political world. The current bailout is for about $15 billion.

Congressional Democrats and the White House worked to resolve their last disputes Monday over terms of a $15 billion bailout for U.S. auto makers -- complete with a "car czar" to oversee the industry's reinvention of itself -- that's expected to come to a vote as early as Wednesday.

Top Democrats gave the White House their proposal for rushing short-term loans to Detroit's Big Three through a plan that requires that the industry remake itself in order to survive.

The Bush administration gave a cool initial response, saying the measure didn't do enough to ensure that only viable companies would get longer-term federal help. Negotiators worked into the night Monday to resolve differences.

Yet, this $15 billion is nothing more than a stop gap. Here is how Speaker Pelosi describes it.

So, essentially, the powers that be have decided to give a bailout that will do nothing but keep the companies operating for a few more months until they all need another bailout. This isn't merely bad policy but bad politics. (H/T to Hot Air) The bailout polls poorly.

In a new Washington Post-ABC News poll, 54 percent of respondents said they oppose the bailout request of up to $34 billion in government loans; 37 percent backed the plan. Support for the plan was little changed from late November, with the percentage of those "strongly opposed" outnumbering the plan's strong proponents.

As such, the Republicans have an opportunity, finally, to not only get on the right side of the public but finally get back to their small government and free market roots.

Those that support the bailout are counting on those that opposing it have weak knees because of the potential disaster that the failure of the automakers will create. Richard Shelby has hinted that the Republicans might filibuster a bailout.

Now, proponents of the bailout will immediately pounce on any filibuster and paint a gloomy picture if the autos fail. As such, Republicans must not only take a stand but be prepared to defend their position. A bailout does nothing to solve the structural issues facing the automakers. Democrats that are proponents of the bailout are also in bed with the UAW. It costs nearly $25 an hour more for GM to build a car than the foreign automakers that have no unions. No bailout will do one bit of difference to make a difference to help these companies be viable in the long term without doing something to renegotiate these contracts.

Small concessions by the unions are nothing more than window dressing. The reality is that their insistence on squeezing every last dime from the autos to pay their workers has caused these three to be on the brink of collapse. Unless the contracts, the pensions, and the health care plans are alll renegotiated so that costs can be put in line with those of the foreign automakers no bailout is worth anything. That is the case that those ready to oppose this bailout need to make, If they make it, the Republicans will finally grab an issue, and they will finally get back to their roots.

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