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White House considering auto bailout
U.S. Sen. Bob Corker (R-TN) speaks during an interview on Capitol Hill after the U.S. Senate failed to come to an agreement on a bailout plan for U.S. automakers -- December 12, 2008
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Scott Jagow: Congress will not be bailing out the automakers.
Not this year. As you may've heard, the Senate shot down the $14 billion package last night.
But just a bit ago, the White House said it might step in. Here's Marketplace's Dan Grech.
Dan Grech: The Bush administration is considering tapping into the $700 billion bailout meant for Wall Street. The White House says it would be irresponsible to let the industry fail.
Meanwhile, the finger-pointing has begun on Capitol Hill. Democrats say the auto bailout failed because of Senate Republicans. Republicans wanted a guarantee that United Auto Workers would lower Big Three wages by the end of 2009. The UAW refused.
Peter Morici: Make no mistake, this morning there is no bailout because of the UAW, not because of those Republican Senators.
Peter Morici is an economist at the University of Maryland:
Morici: I'd like to know why a waitress making $12 an hour, $30,000 a year, in Indiana, should send her tax dollars to Washington to subsidize someone earning $80 an hour and who gets generous retirement and severance and benefits she will never see.
UAW President Ron Gettelfinger points his finger at Southern senators he calls anti-union and anti-Detroit. No word yet on when the White House will make a decision.
I'm Dan Grech for Marketplace.
It seems like more of the same from republicans We will help buisnesss to no end but when it comes down to the little guy Sorry there's nothing for you. At this point there willing to sacrifice a sacred cow like the car companies to stick it to the little guy wonder why the lost the election duhhhhhhh I for one am so tired of being trickled on.
Peter Morici is an expert on international commerce. He is apparently much less informed about domestic economics. Not only is his $80 dollar an hour wage claim wildly off the mark, in an appearance this morning on CBS's "The Early Show" he seemed completely unaware of the problems auto suppliers are already having getting credit and meeting payroll. In other words, we probably don't have time to wait for a GM or Chrysler bankruptcy. And as others have already posted, the UAW has already made concessions to bring wages down to parity with foreign automakers, and they have already negotiated reduced medical benefits, too. Besides, one day, the foreign automakers will have their own legacy costs.
(I have to suspect Mr. Morici is getting his misinformation from the pages of The Wall Street Journal, but that is probably a topic or subject worthy of its own "Marketplace" story.)
PS -- In the future, I hope "Marketplace" will include Mr. Morici's former title when identifying him or listing his credentials: Chief Economist at the U.S. International Trade Commission.
Scott got it right on the mark. I grew quite indignant when I heard such idiotic statements went unchallenged this morning. I think American auto industry undeniably has many problems: high cost, poor quality, etc. However, this problem was initiated by the credit crisis who got a $700 billion and $2 trillion in loans - some of which went to non-US firms. Where's Morici's faux waitress then?
After reading the posts here, I think that some actual numbers should be provided, rather then a random $80 figure. Here is the link to the GM handbook page of wages. http://media.gm.com/manufacturing/handbook/other_benefits.pdf
The total compensation was $73.26 per worker in 2006. Cash compensation was $39.68 in hourly wages (roughly $80,000 a year), and $33.58 in benefits/governemt programs, such as life insurance, disability benefits, pension benefits and health insurance.
For reference, Honda and Nissan pay roughly $44.20 in total compensation to their workers.
I can add no more than to say I agree. While I am not a union backer, they exist for a reason. Using select examples as a broad statistic is typical of the spin many economists are trying to put on this situation. It's bad enough to bail any of these companies out along with the Wall Street club, but to offer biased "help" is shameful as is Morici's blatant fact skewing.
I was disappointed to hear Marketplace allow Peter Morici's $80/hour claim go unchallenged. That misleading figure includes benefits and pension payments to current retirees, which GM has a lot of, since it was once a much larger company. The actual wage of a current UAW member is more like $28/hour, similar to what workers in Toyota plants make.
There's a not-so-subtle attempt underway to blame middle class autoworkers for GM's problems, much like there was an attempt to blame minorities for the collapse of the housing market. This is class warfare at its most pernicious. I don't recall anyone making an issue of the salaries of AIG's white collar workers when that company was bailed out, at a cost of more than twice what the auto industry is asking for.
Thanks to Scott Kilgore for writing exactly what I was about to on this story. I heard this on the way to work this morning and nearly ran off the road listening to Morici's fact-free, splittle-flecked transparently false rhetoric.
Even the simplest form of fact checking, doing the math on Morici's claims, shows that Morici is implying that autoworkers make $160,000 per year before the implied "generous retirement and severance benefits" on top of this amount. I'm sure if there were any autoworkers making $160,000 we would about that day and night in the media, but we don't because it is not true.
Morici is clearly smart enough to know that the $80 per hour figure is a lie, but Marketplace's reporters aren't quick enough to see the impossibility of the claim. Shame on Morici and Marketplace.
To Marketplace:
Why do you actually allow ill-informed commentators or just plain lyers like this economist Peter Morici on the air to further spread misconceptions or lies about the auto industry in the US?
People will hear this economist declare an outright falsehood like UAW autoworkers make $80 an hour, believe it, and repeat it.
And the press rarely corrects these pernicious statements.
GM autoworkers make a maximum of a little under $30 per hour, which is the same as at Toyota's US plants. And these figures, unlike the inflated figures critics like to use, actually come from the auto companies themselves.
US autoworkers have never made $80 a hour, even if you include all benefits, plus paying the benefits for all the retired workers. At GM, this figure for total compensation is, according to GM, $69 an hour.
Even this figure will be dropping to $62 an hour by 2010 under a contract that the UAW has already signed.
Quoting these figures as real wages and benefits would be like including the figures for paying all the retirement benefits for prior workers at any company. And that is not the compensation for line employees.
In addition, the UAW already gave up considerable wages and benefits in recent contracts. New workers at Ford and GM are only making $13 and $14 an hour. This is much less than the wages at any of the transplant foreign auto companies.
This sounds like "finger pointing" by an economist with an agenda of class warfare against unions and middle class workers.
No, the reason why there is no bailout is specifically because of those GOP senators who have also voted in the past for tax cuts for the wealthiest Americans, but have done little for the middle class but saddle us with the debt of their tragically poor fiscal policies. This is nothing more than another union busting technique.
Did Mr Morici's outrage extend to the much higher paid executives and employees at the Wall Street banks that have been bailed out with hundreds of billions without any real scrutiny or terms?
BTW, waitresses don't make $12 an hour in wages. In most places, they don't even have to be paid the minimum wage. They work on tips. It is just another example of how wrong and out of touch this economist is.
