For the U.S. auto industry to survive, we need the best minds to join to forge a possibly viable restructuring. Instead we get clowns and saboteurs

by Ken

Here are three statements issued last night in response to the Senate's 52-35 refusal to provide bridge loans to help tide GM and Chrysler over into the new year.

First from Senate Majority Leader Harry Reid:

Given the unhappy choice between a bridge loan and bankruptcy, Democrats have always believed that we must give the Big Three and the millions of Americans they employ every possible chance to succeed.

By rejecting every good-faith bipartisan compromise -- including those from the White House and Senator Bob Corker -- it is now abundantly clear that Republicans have no interest in keeping the Big Three from collapsing.

Because Republicans failed to act, three million Americans are more likely than ever to lose their jobs and our economy is at risk of suffering even greater damage. Our hearts go out to those families who will now have to deal with this burden as the holidays near.

Republicans may think that rejecting this legislation sent a message to the auto industry. Instead, they sent a message to every single American that they are more interested in settling scores than solving problems.

Then from Michigan Sen. Carl Levin -- an interested party, obviously, but still an informed one:

Congress should not recess and leave town without voting on the proposal to provide emergency bridge loans to our domestic auto industry. The consequences of our failure to act will be extremely harmful to our economy and to the lives and welfares of millions of working Americans in communities across our country.

I call on the leaders of the Senate to keep us in session, and let us go back to work tomorrow to try to fashion an agreement that will keep our domestic auto industry operating into next year and beyond. We certainly owe that much to all Americans who will be harmed by our failure to act here tonight, and that is most Americans since a failure tonight will be felt throughout our economy and in every community across this country.

Finally this from California Sen. Barbara Boxer:

Change is on the way, but it didn't come tonight. The American people will see who stands for the middle class of this country and who doesn't. Who cares for the working people and who doesn't.

Even the White House grasped the urgency of providing bridge loans to keep the U.S. automakers going until the next administration can take a stab at working out a major restructuring -- maybe, yes, involving nationalization (from a colleague: "Nationalization is the worst option, except for all the others") -- aimed at establishing a viable future for the industry, and preventing the large-scale further downward economic spiral that would accompany a collapse of the U.S. automakers.

It was the fringiest of the fringe rightists, people like Jim DeMint (R-SC), David "Diapers" Vitters (R-LA), and Tom Coburn (R-OK), who in concert with senators like Alabama's Richard Shelby who don't like to talk about the extent of state subsidies to foreign automakers with plants in their states led the charge against a more rational approach to the subject.

Not that the task would be easy.

The only hope for the U.S. automakers is neither a bailout nor bankruptcy but a genuine restructuring, a substantial overhaul that takes full account of the realities of the U.S. economy and marketplace and finds a workable way to harness the human and physical resources currently committed to the industry.

If we're lucky, there is a way this could all be accomplished, based on a coupling of some real economic brainpower and political knowhow -- "a way," note. Whereas there are undoubtedly thousands of ways that large-scale federal funds could be committed to the auto industry and wind up simply poured down a rathole. You know, the way the TARP billions seem to be disappearing without a whimper from the White House or the Treasury or the wingnut or Wall Street fringes. (As a colleague wrote in the wee hours last night: "The sheer economic logic of a loaning a fraction of the money to the auto industray that we've given away to Wall Street ought to be a no-brainer.")

Man oh man, those are some crappy odds: the chance of finding the one workable solution vs. all the money-down-the-drain business-as-usual ones. And understand what it means, which would be to bring together:

* on a good-faith basis, the knowledge, vision, and creativity of legitimate experts, people who genuinely understand the realities of the industry and of the economy, meaning people other than the strategic "visionaries" who got both the industry and the U.S. economy into their present states; and --

* in the event that a really hard-headed yet potentially workable plan can be developed, the political ingenuity and muscle to sell it to a Congress and public best by not just economic panic but legitimate apprehension about the

From those people, after all, come "economic" arguments that are painstakingly crafted frauds, like the wild misrepresentations of actual U.S. labor costs and the willful failure to consider the massive concessions already made by the United Auto Workers and the costs to U.S. manufacturers of health care and large pension-drawing retiree pools, and more important the failure to even look at the overwhelming portion of the per-vehicle cost of Big Three production which has nothing to do with labor. As a colleague writes, the Republican deal-wreckers "were not asking any concessions from the dealers or the creditors or the suppliers, just the blue-collar workers."

And there's no question that many of the obstructionists are driven by this thundering opportunity for union-busting. It's what these people believe in, and what they do. They really and truly despise people who work with their hands and yet have the temerity to think they should be treated as anything but menial sevants.

Late word is that economist Paul Stiglitz is advocating Chapter 11 bankruptcy for the U.S. automakers, a solution that most observers of the industry regard as its death knell. On the simplest level, the evidence is overwhelming that customers -- in the event that we ever actually have customers for new cars again -- will not buy cars from a company in bankruptcy. Apart from busting the UAW, the only likely result of Chapter 11 for the automakers is the purchase of selected chunks of their businesses by foreign companies. (Ritual bashers of the U.S. makers either forget or don't know that they're still in possession of substantial technology that other countries, notably China, would be only too happy to acquire, and for that matter that they have expanding markets outside the U.S., notably in Africa.)

Come January, of course, while many of the same loonies will still be present, the overall makeup of the Senate changes considerably. Meanwhile, it's pointed out that Treasury Secretary Henry Paulson could in fact find money for bridge loans in his giant TARP slushpile, and that Fed Chairman Ben Bernanke too could undoubtedly find the money if he wishes.

I guess we'll see.

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