Nothing has been more interesting to watch in recent months than the contrast between the way Congress has treated the Big Three U.S. auto manufacturers seeking a bridge loan to keep their troubled industry afloat and the overly generous handouts used to reward Wall Street greed.
Considering the different constituents, one would have thought the most hostility would have been directed at the fat cats on Wall Street, many of whom profited by betting that some mortgage-backed investments would go belly up. But that hasn’t been the case.
When CEOs of General Motors, Ford and Chrysler flew to Washington on corporate jets to
make a plea for help, windbags in Congress stepped over one another trying to express the most outrage.
Never mind that some of those legislators have themselves flown on corporate jets, never mind that they have traveled free on military jets, never mind that they enjoy health benefits and other perks far beyond the reach of most Americans. It was the equivalent of Jesse James complaining about the crimes of Frank James.
Whether you believe that the U.S. auto industry should receive a loan or feel they should be forced into bankruptcy in order to reorganize, it should be noted that car manufacturers and Wall Street were seeking two markedly different forms of federal assistance. The Big Three were asking for a loan while Wall Street was seeking – and got – a handout.
The Bush administration, after being given a $700 billion pot to pretty much spend as it wants, has evidently adopted the motto: No Bank Left Behind. Take the case of Citigroup, Inc. It recently received a $20 billion infusion of cash from the feds and a guarantee of $306 billion against its high-risk assets. That’s on top of a previous $25 billion the federal government had doled out to Citigroup. In exchange, the federal government will receive preferred stock shares with an 8 percent dividend.
We’re in the middle of providing nearly $1 trillion to Wall Street yet no one has talked about Wall Street executives’ use of corporate jets, or their coming up with an acceptable plan before receiving the money or removing the inept leaders that plunged the industry into this morass,
The heated debate over helping the U.S. auto industry has not been advanced by sloppy news
As Media Matters, the watchdog group, notes: “Several media outlets have used data that combines the average cost of current wages and benefits and future benefits to falsely assert or suggest that autoworkers make $70 or more per hour. But, as analysts and some media outlets have noted, the figure includes not only future retirement benefits for current workers, but also benefits paid to current retirees.”
Dean Baker, co-director of Center for Economic and Policy Research in Washington, wrote on his blog, ““The New York Times told readers that GM's autoworkers are paid $70 an hour (including health care and pension). This is not true. The base pay is about $28 an hour. If health care cost per worker average $12,000 per year, that adds in another $6 an hour. If the pension payment takes up 25 percent of base pay (an extremely high pension), that gets you
another $7 an hour, bringing the total to $41 an hour. That's decent pay, but still a long way from $70 an hour.”
Most of those opposed to helping the Big Three supported the Wall Street bailout plan. That’s the same group that railed against welfare for the needy but voted to support corporate welfare for the greedy.
Republican lawmakers have strongly objected to granting a loan to U.S. carmakers. Senators Richard Shelby of Alabama and Bob Corker of Tennessee have been helping lead that effor.
While they oppose loans to Detroit, they didn’t object to taxpayers in their respective states subsidizing foreign automakers. According to Good Jobs First, a non-profit group that monitors corporate subsidies, more than $3.5 billion has been used to subsidize foreign manufacturers that built plants in the U.S.
Alabama, for example, used $258 million to subsidize the Mercedes-Benz plant in Vance., $252 million to support Hyundai in Montgomery, $248 million help Honda in Lincoln. and $30 million to assist Toyota in Huntsville.
Corker, the former mayor of Chattanooga, Tenn., neglected to point out that Tennessee gave up $577 million in subsidies to encourage Volkswagen to build a plant in his hometown and $233 million to Nissan in Smyrma and another $200 million to them in Decherd, Tenn.
“As elected officials debate aid for the Big 3, taxpayers have the right to know the full extent of government involvement in America’s auto industry,” said Greg LeRoy, executive director of Good Jobs First. “And while proposed federal aid to the Big 3 would take the form of a loan, the vast majority of subsidies to foreign auto plants were taxpayer gifts such as property and sales tax exemptions, income tax credits, infrastructure aid, land discounts, and training grants.”
George E. Curry, former editor-in-chief of Emerge magazine and the NNPA News Service, is a keynote speaker, moderator, and media coach. He can be reached through his Web site, www.georgecurry.com.
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