Yesterday the House voted to help save the economy. Today it went to the Senate where there was a question whether enough Republican votes were available to pass it.. This morning, the Senate Republican leader, Mitch McConnell of Kentucky, spoke out forcefully against the bill, effectively dooming its chances despite the urgings of the White House.
Reading Bloomberg’s synopsis I was impressed by one fact…
The administration saw the dire need to pass the bailout package, stating that “the economy is in such a weakened state right now that adding another possible loss of one million jobs is just something our economy cannot sustain at the moment”. Simultaneously, “that one” who was overwhelmingly elected because he opposed everything the current administration has done, said earlier….”we cannot simply stand by and watch this industry collapse. Doing so would lead to a devastating ripple effect throughout our economy.”
Yesterday the House voted 237-170 to approve the bailout package. That means 58.2% voted in favor. Today most precounts anticipate the Senate will vote 59 to 40 in favor of the bailout. Unfortunately under the act of cloture, the number 60 must be reached for anything to pass inside the Senate. (Old rules used to be 51.)
What we have here, is a minority holding up the will of a majority.
The very reason we went to war with Great Britain.
If the bailout fails to pass, Bloomberg predicts job losses would total 2.5 million to 3.5 million from an automaker failure in 2009, including 1.4 million people in industries not directly tied to manufacturing, according to a Nov. 4 report from the Center for Automotive Research, which does studies for government agencies and companies.
This would be the same as if the entire population of Nevada ( on the low end) or every person in Connecticut ( on the high end) lost their job on the same day.
Our economy simply cannot recover from such a hit. Chapter 11 is being touted by some Republicans as a viable alternative.. The only problem is that under chapter 11, invoices are renegotiated, not paid. Receiving no money for work already performed, means up to 3.5 million people immediately stop receiving income. Unemployment will have no choice but to pick up the pieces. (The cost of carrying 3.5 million people has been estimated as high as 25 billion, far more than the loan being given..)
After all we are to receive a payback on the guaranteed loan. However that massive expense going to out to unemployment, is gone forever.
And here is what Congressional staffers are saying is being touted within the Republican Senate caucuses. Apparently all Republicans realize Obama is on the right track. They understand that as his recovery works, their prospects of election are quite dim in two years. They realize that only if America is in the throws of a Great Depression, and they can throw blame upon Obama for the worsening conditions occurring on his watch, will they have any foothold upon which to stand… They are intent on destroying our economy to enable their potential future gain. Hence the opposition to this measly expenditure, which is being made by them.
As the bridge loan fails, despite the 60% overwhelming majority of those supporting it, it fails solely because insider Republicans want an campaign issue around which they can rally..
Forget that people get hurt because of their action. Forget that a number of people equaling the entire population of Connecticut will soon be out of work… Principals to them are more important.
kavips 
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December 11, 2008 at 6:05 pm
Steve Newton
Our economy simply cannot recover from such a hit.
If that’s the case we are in so much trouble that nothing anybody does will matter–pure hyperbole.
Chapter 11 is being touted by some Republicans as a viable alternative.. The only problem is that under chapter 11, invoices are renegotiated, not paid. Receiving no money for work already performed, means up to 3.5 million people immediately stop receiving income.
No, that’s not what it means. Thousands of airline employees, for example, worked through and continue to work under Chapter 11 reorganization.
Apparently all Republicans realize Obama is on the right track. They understand that as his recovery works, their prospects of election are quite dim in two years. They realize that only if America is in the throws of a Great Depression, and they can throw blame upon Obama for the worsening conditions occurring on his watch, will they have any foothold upon which to stand… They are intent on destroying our economy to enable their potential future gain. Hence the opposition to this measly expenditure, which is being made by them.
I am sick and bloody tired of everybody claiming that anyone and–more importantly–everyone who disagrees with them has only a partisan political motive and is willing to let the country fail to save their party. You are arguing here exactly what the GOPers argued for the past four years about the Dems in Iraq (“They want defeat in Iraq so that they can win an election”).
Has it crossed your mind–even occasionally–that you might be wrong? When you were saying “Congress saves the world” about the original bail-out over 135 economists nationwide dissented and said we needed to wait and act more deliberately. Since then, the ill-conceived emergency we-must-do-it-now-or-the-sky-will-fall bailout has (a) only distributed half the money Paulson said would be handed out; (b) and failed to place restrictions on the banks to do what Paulson wanted them to do because the program was thrown together too quickly.
So what would it take to make you concede that other people might have a position different from your own that is not held for nefarious purposes?
December 11, 2008 at 8:42 pm
anonone
“Has it crossed your mind–even occasionally–that you might be wrong?”
Steve,
Sure, but it is the repubs we’re talking about. They have a long documented history of putting the welfare of their party above the welfare of the country. We shouldn’t be the frog that lets the scorpion ride on its back.
http://allaboutfrogs.org/stories/scorpion.html
December 11, 2008 at 9:44 pm
Mike Protack
Domestic Auto Industry In the Balance
What to Do and Who Pays?
Possible solutions for the domestic auto industry run the gambit from bailout to bankruptcy to buzz off. These are tough times for workers who are waiting on the auto executives to make a good case to the Congress for government intervention. Unfortunately, the only people in America more out of touch with reality than the auto executives are the people who will make a decision- many members of the U S Congress. The question is what to do now? We must act smartly and quickly. I offer a unique perspective as member of a company who underwent bankruptcy because of poor corporate leadership, planning and strategy plus the final straw, the events of 9/11.
The similarities between the auto industry difficulties today and the airlines in recent times are eerie. We in the airlines used to get 80% of out profits from 20% of our travelers (business) and the auto companies used to make almost the same margin on SUV’s and trucks. Unfortunately, the bottom fell out on the airlines with many factors but especially 9/11. In the auto industry the fuel spikes of 2008 and the recent credit crash was almost as severe as the impact in the World Trade Center Buildings. The auto industry needs a fix, but what would work?
I think the best option is not bailout but a pre packaged bankruptcy with debtor in possession financing from the government. A bailout is simply prolonging the inevitable at taxpayer expense and will not bring about the needed structural changes which have been long delayed. The auto executives have asked for $34 billion which is more than was asked for only two weeks ago and in reality is maybe half of what they will ask from us. I can tell you from first hand experience that many of the inefficient things we were doing in the airlines like flying the B 777 to Atlanta to Orlando with hundreds of cheap internet fares instead of now flying the B 777 to international destinations would not have happened without bankruptcy.
Bankruptcy is indeed a harsh process but total failure is worse. So what are the questions?
Can America survive without the domestic auto industry? It doesn’t have to but yes, it can. The domestic market share in 1970 was almost 90% and is now about half that percentage.
Won’t we have massive unemployment? No, Bankruptcy is a restructuring of production, vendor contracts etc. and not a funeral. The number of 2.5 million job losses is an exaggeration. Plants, auto models and jobs will likely be reduced by a small percentage but as things are going entire companies will fail, bailout or not.
Won’t the crashing of auto industry send shockwaves through the economy? No, it will send the signal of adjustment and rationalization to all those connected to the auto industry. People will still buy cars but they will buy ones which match the needs of the populace in the numbers needed not the old Detroit way of trying to pump up production to 14-15 million cars with the wrong kind of cars.
Will the UAW accept any adjustments? Yes, of course they will. In my industry unionized pilots took 38% pay cuts and lost our pensions but we saved our company and we are clawing our way back.
Didn’t we bailout Wall Street? Yes, we did but access to credit and liquidity dwarfs the problems in the auto industry.
Isn’t Bankruptcy a dire step? Yes, but at one point 62% of the airline industry capacity was in bankruptcy and yet we safely flew every day and despite sky rocketing fuel prices survived last year. We adjusted, adapted and overcame.
I expect this proposal to generate thought and I am sure some sharp comments. In the end, I support collective bargaining, believe in capitalism and I am incredibly skeptical of anything the government does but the desire is not to walk away from workers but to walk away from what is not working. A prepackaged bankruptcy with debtor financing from the government gives access to capital within a restructuring plan and not a bailout of unknown amounts and terms.
December 12, 2008 at 1:22 am
kavips
I think anonone said it better within his fable than I could, but my pithy answer was that when Republicans stop acting stupid, I’ll stop talking about it.
What they did here was stupid.
So I talked about it.
Instead of ranting, try proving for a change, that what they are doing is not stupid?
You can’t. No one can. (But I am looking forward to your attempt.)
And your case that Republicans are using the same tactic they accused the Democrats of using, is damning in itself.. After all, that is all they know.. which for one, is why they accused it, and two, why they are using it…
Yes, they are that stupid… When are you going to realize that saying such is not partisan banter? It’s the truth.
December 12, 2008 at 1:46 am
kavips
Mike, at this point you seem far more rational than Steve … (a point which makes Copeland and Burris look even more like buffoons…) That should be interpreted as a compliment; Steve is usually one of our more rational players.
I’m intrigued by both your’s and Steve’s analogy of the airline industry, and will look into that a little deeper.
What I will need to check, is whether the amount of lost jobs is equvilent between the two occupations. With the airlines being a service industry, and with the automobile being a manufacturing one, that difference leads me to think that both your’s and Steve’s pronouncements regarding the losing of a number of jobs being an exageration, …. may not hold up under scrutiny.
What I seem to realize and guessing from your answers that you don’t, is how pervasive the tenticles of car manufactures extend into the fabric of our communities.. We see the plants with closed signs. But we don’t see that tiny business hidden within a row of garages making the special seat covers to spec for one seat of one model of car….
Then there is the trucking industry that brings all those tiny pieces together… Then there are the warehouses that hold those products until needed… All of these using credit to make their products, and then getting paid, and paying off their creditors..
That, I think, is the difference. And a casual reader may not be aware, but the bailout is a warrented bailout with control over the board of directors. It is just a bridge, and is very much like a Chapter 11 in its effect. Likewise, the bailout can return a profit, one which can then be used to pay down some of this nation’s debt…
Chapter 11 can work, and should be allowed to work in a roaring economy.. But when an economy is on it deathbead, achieving the same results without laying off the entire population of the state of Connecticut, is the better option…
As I said, I’m intrigued by the airline analogy. I’ll look into it.
December 12, 2008 at 4:53 am
Today’s Headlines Bash Republican’s Bailout Vote « kavips
[…] My mistake! ….. Here’s one…… […]
December 12, 2008 at 6:01 pm
Mike Protack
The caveat is a Pre packaged bakruptcy with government guaranteed Debtor financing.
Pre package means no interruption in vendors or jobs.
Restructure, Restructure, Restructure.