Government Subsidies to Foreign Car Companies

As Republican politicians, mostly from the South, rant and rail against the UAW and insist that the "free market" should be allowed to take down American car companies, it is helpful to keep in mind that most of the foreign car companies received subsidies to build plants in America. Good Jobs First, a group promoting green economic development, released a study of what foreign car plants received government subsidies. Here is a list of such companies and the amounts they received:

Honda, Marysville, Ohio, 1980, $27 million*

• Nissan, Smyrna, Tenn., 1980, $233 million**

• Toyota, Georgetown, Ky., 1985, $147 million

• Honda, Anna, Ohio, 1985, $27 million*

• Subaru, Lafayette, Ind., 1986, $94 million

• Honda, East Liberty, Ohio, 1987, $27 million*

• BMW, Spartanburg, S.C., 1992, $150 million

• Mercedes-Benz, Vance, Ala., 1993, $258 million

• Toyota, Princeton, Ind., 1995, $30 million

• Nissan, Decherd, Tenn., 1995, $200 million**

• Toyota, Buffalo, W.Va., 1996, more than $15 million

• Honda, Lincoln, Ala., 1999, $248 million

• Nissan, Canton, Miss., 2000, $295 million

• Toyota, Huntsville, Ala., 2001, $30 million

• Hyundai, Montgomery, Ala., 2002, $252 million

• Toyota, San Antonio, Texas, 2003, $133 million

• Kia, West Point, Ga., 2006, $400 million

• Honda, Greensburg, Ind., 2006, $141 million

• Toyota, Blue Springs, Miss., 2007, $300 million

• Volkswagen, Chattanooga, Tenn., 2008, $577 million

Total: more than $3.58 billion

You can read more about the Good Jobs First study here.

Sectionalism in Auto Bailout Debate

Last night, while the House of Representatives was taking a vote on a procedural matter on the automaker bailout legislation, CSPAN played a clip of Republican Senators denouncing the possible bailout. The Senators who spoke were Shelby from Alabama, DeMint from South Carolina, and Coburn from Oklahoma. All three states were part of the Old Confederacy.

Sectionalism is nothing new in American politics. Since the beginning of the United States, there have been sectional disputes centered around the economy. During the Jefferson Administration New England politicians debated the idea of secession. During the Jackson Administration South Carolina talked about secession. Obviously, during the Lincoln Administration secession became a reality.

All of these disputes centered around economic issues, including slavery. While slavery was a moral issue for abolitionists, it was a big economic issue in the South. A lot of Southern plantation owners had wealth tied up in owning slaves.

So sectionalism in American politics is nothing new, and sectionalism based on economic issues is certainly not new. Given that fact, then how do you rise about sectionalism? You rise about sectionalism by pointing out how interconnected the American economy is and how that what happens to one section hurts all sections.

What those of us in Northern states need to point out is that millions of Americans losing their jobs hurts all of us. Interestingly, there is an article on the Forbes website that points out that Southern auto workers realize this fact. Here is a quote from the article:

"If they go under I don't know what's in store for us," said the 41-year-old employee at Nissan Motor Co. (nasdaq: NSANY - news - people )'s Smyrna assembly plant. "Everybody at Nissan is scared."

The worker being quoted works at a Nissan plant in Tennessee. She realizes that the failure of GM and Chrysler would cripple auto production because of the effect on suppliers.

There is also the fact that bankruptcy of Chrysler and GM would actually cost more than the cost of the bailout being debated. If there is a bankruptcy, then literally thousands of jobs will be lost, leading to an increase for things like unemployment, medicaid, and a loss of tax revenue for local and state governments.

Southern politicians need to understand that poking the Yankees in the eye may lead to vision problems for residents of their states as well.

Republican BS on Auto-Bailout

When the Wall Street bailout came up in the Senate on October 1, 2008, 29 Republican Senators voted for the bailout. The Republican Senators voting "yea" included conservative Republicans Coburn, Chambliss, and Corker. All of them are now saying that they can't vote for a bailout of the automakers because there aren't enough guarantees that the bailout will lead to the United States car companies changing their ways.

Well, here is a question: what demands did these conservative hacks demand of the Wall Street firms? What guarantees did the demand of any bank getting TARP funds? Why all of a sudden do they want guarantees from the car companies?

Let's see, what is the difference between car companies and banks? Could it be that car companies are unionized and banks are not? Could it be that car companies employ blue-collar workers and banks employ white-collar workers? Could it be that a lot of Republican contributors work for banks?
We think it is all that and more.

This is just another example of Republican bs. If the auto bailout bill is defeated and if GM goes under, then the GOP will be responsible for America's swelling unemployment rolls.

Will Senate Republicans Kill Automaker Aid?

So, here's the latest from D.C. regarding aid to American automakers. The New York Times is reporting that the Democratic leadership in the House and Senate have reached a deal with the Bush Administration. The Democrats have agreed to allow the automakers to use 25 billion, which has already been appropriated for development of fuel-efficient cars, to help them stay afloat.

House Speaker Nancy Pelosi had been resisting this idea because she wanted Detroit to focus on getting more fuel-efficient cars to the market. She has agreed to allow the 25 billion to be used because she expects that money to be repaid, so to speak, when Obama takes over and there is an expanded Democratic majority in Congress next year.

The question now is whether the Republicans will block the legislation allowing this when it reaches the Senate. They would block it by threatening a filibuster, which could be ended by having 60 Senators vote to cut off debate. The Senate Minority Leader, McConnell, wouldn't commit himself to supporting the bill until he sees the details of the legislation.

If Republicans don't back this bill, and if one of the "Big Three" goes into bankruptcy, then the employment fall-out is on the Republicans' heads. If that happens, then Democrats should tar all Republicans with the brush of Herbert Hoover.

Editor's note: The above picture is from the Times article and is a shot of the executive officers of the Big Three and the head of the UAW at a recent hearing in Congress.

Senator Sherrod Brown's Remarks on Auto Industry Aid

Ohio's Democratic United States Senator, Sherrod Brown, made an eloquent and impassioned defense of the auto industry at a hearing held on November 18, 2009 by the Senate's Banking Committee. Take particular notice of the part that we have in bold type:

Mr. Chairman, thank you for calling this afternoon’s hearing.

The American automotive industry needs our help, and it needs it now. The surest way to turn today’s recession into a depression would be to let this industry flounder.

Like the banking industry, the auto companies have made some poor decisions. But they’ve had plenty of help. In 2005, for example, the House and Senate decided against raising fuel efficiency standards. Most of the members of this committee took the position that the CAFE standards were fine as they stood.

I wish the federal government had acted sooner on CAFE. But we didn’t, and so we are on shaky ground if we now shake a finger at Detroit for being ill-prepared for $4.00 gasoline.

I wish the federal government had acted a lot sooner to address the housing crisis, too. It was only a little over a year ago that the Bush administration began to realize we had a serious problem on our hands. Throughout last year, the administration and boosters in the housing industry told us the problem was largely contained.

It was contained, in their view, to the subprime mortgage market and to states like Ohio, Michigan, and Indiana. If you set aside those three states, according to one housing economist at the time, the market was doing just fine.

We’ve seen the success of that approach. Before long, every state in the nation felt the impact and every sector of the economy were dragged down by the troubles in housing. But that mistaken approach is exactly what some of my colleagues are suggesting we take in response to the crisis in the American automotive industry.

Sure, the biggest and most immediate impact will be in places like Ohio, Michigan, and Indiana. But auto suppliers and dealers and related industries in every state will soon feel the impact. This industry is woven into the fabric of our economy every bit as much as Lehman Brothers or AIG or the three banks that testified before the committee last week.

Each one of those three banks received $25 billion under the Emergency Economic Stabilization Act. If it makes sense to give one bank $25 billion, then we can certainly invest the same amount to save the entire domestic auto industry.

As we heard last week, the banks may or may not lend the money any time soon. They may or may not use it to buy other banks. They may or may not award nice bonuses to their executives this year.I do not know what those companies are going to do with the funds they received from the taxpayers, and I don’t know what impact it will have.

But I do know what the American auto industry will do with the loans it seeks. It will build cars using parts from every state in the nation. It will provide good jobs to hundreds of thousands of middle class families in places like Lordstown and Sharonville and Toledo, Ohio. And it will support a decent retirement for a million senior citizens in every corner of our country.

Nobody wants to write this industry or any industry a blank check, and if Detroit were indifferent to the challenges it faces, then I don’t think it would have a very good case to make. But if you need evidence that Detroit gets it, look at last year’s labor agreement.

Labor and management made unprecedented changes to bring their costs in line with the competition.

They didn’t anticipate the current economic environment any more than Alan Greenspan or Secretary Paulson did. But if failing to see the future foreclosed access to federal help, the line of applicants would be very short.

If that were our standard, the government wouldn’t aid the victims of floods or fires. But we don’t turn a blind eye to people who live near the Gulf Coast or the California hills. We help them. Economically and politically, we are the United States, not some confederation of islands.

And we must be united in rebuilding a strong and vibrant manufacturing sector, a sector that has withered over the past decade as we tried to build one Potemkin village after another. Our economy cannot make it on mouse clicks alone, and we cannot live by just lending to one another. We need to build real things.

Helping bankers is fine. But we have it exactly backwards if we help those who don’t need it and ignore those who do.

Thank you Mr. Chairman

Are Republicans Trying to Bust the UAW?

This is Senator Jon Kyl, (R-AZ). Jon-Boy is John McCain's Senatorial colleague. He is a Senator who supported bailing out the financial institutions that helped get us into the sub-prime mortgage mess and whose collapse would supposedly have triggered a very bad recession if not a depression. (You can see how Jon-Boy voted on that bill here.)

Jon-Boy was on a talking heads show on Sunday, and announced that he opposes helping out with Federal money the American auto industry. This is a quote from an AP article: Added Kyl, the Senate's second-ranking Republican: "Just giving them $25 billion doesn't change anything. It just puts off for six months or so the day of reckoning."

So, let's see if we understand Jon's position: Using 750 billion dollars of taxpayer money to bail out Wall Street is good, but using 25 billion to help save up to 2.3 million American jobs is bad. Does that make any sense to you, because it sure doesn't to us.

Unless, of course, the aim here is to destroy the UAW, which has long been a thorn in the sides of Republicans in particular and conservatives in general. If the Big Three domestic automakers are put out of business, or even forced into bankruptcy, the UAW will be severely crippled. A major political ally of the Democratic Party will be wounded and the American labor movement, which is, perhaps, on the verge of gaining some political ground come January, will be damaged. We'd say that's a big reason for ol' Jon-Boy to decide that it's okay to help bankers, but not auto-makers.