When Bush offered up non-binding "targets" as to how the Detroit automakers can achieve "financial viability," three of the four required blue collar UAW workers to make concessions:
- Reduce debts by 2/3 via a debt for equity exchange.
- Make one-half of VEBA payments in the form of stock.
- Eliminate the jobs bank. Work rules that are competitive with transplant auto manufacturers by 12/31/09.
- Wages that are competitive with those of transplant auto manufacturers by 12/31/09.
You’d think that UAW wages were the sole cause of all the Detroit automakers’ troubles. I can’t believe I’m going to quote Bill Kristol here, but I am:
Kristol: I don’t think it’s very smart for a bunch of Southern Republicans to decide that the future of the Republican party is to beat up working class union members in states like Michigan, Indiana and Ohio. The UAW is in a lot of trouble, they’ve shrunk by 2/3′s in the last years…
An average automobile, 10% of the cost comes from wages and they were going to cut wages by ten or twenty percent, so it’s one or two percent of the cost of the automobile. To have a huge fight for that. I think it was a mistake for the Republicans.
I guess the Republican contempt for science now extends to math, because there is no way you can juggle the numbers to prove that concessions from the UAW are ever going to make the automakers "financially viable." Demands for "financial viability" are a thin mask for pure culture warriorism.
But even the market watchers on CNBC are asking the obvious question — if the President is demanding concessions from the UAW, why is nothing be asked of Cerberus Capital?
Erin Burnette: Mickey Levyare you confident that we have heard what we need to hear as the American taxpayer to the answer about the private equity firm that controls Chrysler, Cerberus? Obviously they have money — they may not want to use it on this, but they didn’t use it to help Chrysler. I’m still trying to get my arms around this — if they wouldn’t bail out their own investment, if they have the money, why are we?
It’s a good question, which Mickey doesn’t have an answer for.
Cerberus Capital owns 80% of Chrysler, and 51% of GMAC. During the congressional inquiry Chrysler CEO Bob Nardelli said that Cerberus has "other fiduciary obligations" which keep it from injecting money into the Chrysler, but nobody probed any further than that.
Cerberus lobbyists including Dan Quayle (who is Chairman of one of their international units) have been twisting arms on Capitol Hill trying to unload their bad Chrysler investment on the taxpayers in a variety of ways. We’re still hearing that Chrysler should be absorbed into GM, something Bob Corker was pushing for.
But as Marcy Wheeler notes, Chrysler has little to offer GM — they already have too many brands and too many dealerships. How is forcing them to take more going to do anything but help a big private equity firm cash out of a bad deal?