Sen. Jim DeMint (R-SC), who opposes the proposed bailout of U.S. automakers, says the companies should go into Chapter 11 bankruptcy, which would force them to reorganize. He says the proposed “car czar” to oversee the automakers’ restructuring is a “ridiculous” idea.
Senator DeMint quite often gets it right, and this is one of those times. To imagine that a “government czar” can better oversee the management of the Big Three than the boards of those Big Three, or the executives of the Big Three, is so silly as to be laughable. Sadly, the government is determined to “do something.” They cannot seem to figure out that, sometimes, doing nothing is actually doing the best thing. The market can sort this out, on its own, if we will let it. And the final result will be – – whoever is standing when the dust settles will be strong enough to survive. The customers will ultimately decide, not the government.
Chap 11 is the only thing that can ultimately save the auto mfrs because that will allow them to break the labor costs. They cannot compete right now because every vehicle cost is weighted down with at least $2,000 of labor pension costs and much more in inordinate hourly wage costs, due to union contracts from long ago, that the foreign car mfrs (especially those with plants in the US) don’t have. A car czar will not be able to break these labor contracts, but bankruptcy can. This is what the American public and moderates and conservatives in Congress need to look at before they support in any way Obama’s check card write off that would take secret ballot away from workers, when a union is attempting to organize them.
Car czar: ridiculous. The government is already insolvent, why should we look to it for guidance? Republicans? Dinosaurs. They are stuck in paradigms from decades past. Southern Republican Senators? The most calcified of all and hardly objective since they have lavished huge incentives on foreign automakers to lure them to build facilities in their states. Bankruptcy? I can’t believe people are serious when they say a company should declare bankruptcy so it can turn its back on contracts and obligations. What is the rationale behind that, especially when GM has kept its end of the bargain and fully funded those pensions?
#3, I’ve said why Chap 11 (which is reorganization not full bankruptcy Chap 7) would be effective, so the auto makers can stop funding those things it has to fund now and so they can lower their present labor costs. But you seem to poo-poo every potential remedy. What is your fix?