December 11, 2008
The Ensign-Shelby Proposal
Posted by David Zaring

We've summarized the Corker proposal for you in the prior post, and to be comprehensive (and because we're taking tomorrow off), it's worth reflecting on the other Republican ideas re: the auto bailout.  The Ensign-Shelby approach works through bankruptcy, as Ensign's summary explains:

The Big 3 automakers need to restructure their firms in order to be viable and competitive companies in the future. Chapter 11 is the best way to ensure the automakers emerge in the future as successful companies. Bankruptcy court judges have the power to require concessions from management, labor, and the companies’ creditors. An auto czar would only be able to facilitate voluntary negotiations. Chapter 11 also helps protect the companies and their employees from the politicized process to which an auto czar would be constantly subjected.

This amendment would immediately provide debtor-in-possession financing to any of the Big 3 car companies should any of them file for Chapter 11 bankruptcy within the next 12 months. It would also guarantee the warranties of any new vehicles offered by a carmaker in Chapter 11 with the full faith and credit of the United States.

Which will fare better, if there is more faring to be done?  A DC source says:

I hear that the Corker amendment is picking up some support, even among Democrats, but I can't imagine the House would go for it...it really does force the labor issue, but it is hard to tell whether it could practically work--that is, would the unions and the creditors take the deal or not? And what about the dealerships problem? Plus, the bankruptcy provision for non-compliance is problematic, in that, at that point, the automakers might need to go into Chapter 7, which the bill would seem to disallow. This would make that provision, as Mickey Kaus puts it, "too big a stick"--one that would never be wielded.

Corker's plan does have a dealership problem, which must be absolutely crippling for the not-so-big three.

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Comments (4)

1. Posted by anonamonster on December 11, 2008 @ 15:01 | Permalink

Congressman Dennis Kucinich (D-OH), who has been a vocal proponent for aid for domestic automakers, today made the following speech during debate on H.R. 7321, the Auto Industry Financing and Restructuring Act:

“I rise in support of the rule and the underlying bill. The underlying proposition is this: Should the United States have an auto manufacturing industry? That is really what we’re deciding here. Because if this rule and/or bill goes down, we are faced with an untenable condition which will lead to the collapse of our automotive making capacity and, according to some economic policy analysts, the elimination of over 3.3 million jobs across the economy; jobs that are affected directly and indirectly by the automotive industry.

“I think it is important to step back and look at the context of this. Are we intending to stay a great nation, a world power, or are suddenly we retreating from the world stage? Because an America without an automobile industry is also going to be an America without a steel industry. We are already seeing our aerospace and our shipping industry affected.

“It is time for us to have a national economic policy, which says that the maintenance of automotive, aerospace, steel and shipping is vital to our national security. Not just our economy, but our security. Sixty-seven years ago, when the U.S. was attacked it was those industries which enabled us to be able to defend ourselves. Now I am a person who stands for peace, but I also believe in preparedness. To me it is unthinkable that the U.S., which was able to mobilize its productive capacity, would suddenly throw it away.

“We have to remember that our ability to make things is vital to being a great nation, and we have to remember that this is a moment that we should be able to rise to this occasion. It is a tragedy that we have to debate something that is a proposition about whether or not we remain a strong nation. You know we’re actually talking only about 2% of the amount of money that was given for the Wall Street bailout, which I spoke against and voted against. This is an altogether different proposition. We cannot totally reject industrial capitalism and remain a great nation. There are a lot of questions about finance capitalism which the $700 billion bailout brought out, but we have to have the ability to make things. And we can’t ask the autoworkers to work for nothing.

“We have to have the ability to make things. We also have to have the ability to see automotive in the scheme of a broader industrial policy. Let’s remember who we are as a nation. With all of our troubles, trials and tribulations, this is still the greatest nation in the world. What keeps us there? Our ability to make things. To make cars, to make steel, to make planes, to create ships- that’s what help makes America great. Let’s not give that up. Let’s not let this moment pass and decide this is just a trivial matter of just $14-15 billion. This is a question of who we are as a nation. Let’s be strong. Let’s vote for this bill.”


2. Posted by Jason on December 11, 2008 @ 19:24 | Permalink

We make lots of cars in Tennessee, and our workers don't get exorbitant union wages and job banks. We also have excellent transportation infrastructure in Tennessee, that we pay for with a 25 cent per gallon gas tax. Why should a well-managed state like ours have to bail out others? If the Big Three won't accept the concessions of the Corker plan, let them rot.


3. Posted by Jason on December 11, 2008 @ 19:36 | Permalink

Seriously, all this talk of bailing out mooching union labor and poor management of Detroit, bankrupt states like California, and rebuilding other state's broken down infrastructure, is enough to make any Tennessean want to go John Galt.


4. Posted by Brett McDonnell on December 12, 2008 @ 14:36 | Permalink

Jason:

As of 1999 (the latest figures I could find in a quick net search), people from Tennessee received $961 per capita more from the federal government than they paid into the federal government. People from Michigan paid out $1042 more per capita than they received. See http://www.allbusiness.com/accounting/budget/836054-1.html Like most red states, you folk are mooching off of the hard working blue states like Michigan who pay more to the feds than they get back.

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