Senate Democrats Had Enough Republican Votes to Pass the Bailout

[Fieldmouse]

FYI you Dems on this board and the "Independents" who feel there should have been a bailout.[:'(]

http://www.weeklystandard.com/weblogs/TWSFP/2008/12/senate_democrats_had_enough_re_1.asp
Senate Democrats Had Enough Republican Votes to Pass the Bailout


Nancy Pelosi says that Senate Republicans were "irresponsible" for opposing the auto bailout, which failed on a cloture vote last night 52 to 35.
[blockquote]

Senate Republicans"™ refusal to support the bipartisan legislation passed by the House and negotiated in good faith with the White House, the Senate and the automakers is irresponsible, especially at a time of economic hardship. The consequences of the Senate Republicans"™ failure to act could be devastating to our economy, detrimental to workers, and destructive to the American automobile industry
[/blockquote]

The problem with Pelosi's statement is that 10 Republican Senators voted with the Democrats last night, which means the Democrats could have reached 60 votes if the entire Democratic caucus voted for the bill.
But eight Democrats bailed on the bailout (Reid, it should be noted, voted against it for procedural reasons, in order to bring it up for a vote again).
Four Democrats voted 'nay': Baucus, Tester, Lincoln, and Reid.
Four Democrats did not vote: Biden, Kennedy, Kerry, and Wyden.
(And, of course, the Democrats would have another member right now if Blagojevich had sold that Senate seat before he was busted.)
Does Pelosi think that these Democrats, who had the ability to pass the bailout, are "irresponsible," too? And, for that matter, why didn't she simply call them "unpatriotic"? Isn't bailing out the auto industry a better indicator of your love of country than bailing out Wall Street?
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[Alsatian]

Fieldmouse: Bravo. Indeed. Democrats are going to face this conundrum again and again. They are going to briddle at the danger of passing measures without substantial Republican support because they are afraid of being tarred with the brush of being (1) wealth redistributors, (2) soft on defense, (3) tax and spend liberals. They make a big show of talking in the press and news media, but when it comes down to pushing major initiatives through on their own, in the face of strong Republican opposition, they are cowards and will not do it. You're going to see this phenomenon again and again, I think. The Republicans are going to yield more power than is thought, not that this gives me a lot of comfort.

[etothepii]

Now that they have close to absolute power, they are going to have to be answerable about the consequences of their policies. Heaven forbid they get their way without Repub. help, and their way sucks!! That would be bad for P.R. Better to fail in a bipartisan way, or not even try at all.

How much do you think they will actually do, or let Obama do during his term?

[biscuit jake]

I really can't see what the bailout would accomplish that Chap 11 Bankruptcy & Reorganization would not do. That would not necessarily put them out of business. And I doubt that it would work any better than the bank bailouts, which as far as I can tell have not succeeded. What the auto companies want to do is keep their upper mgt that has made chronically bad decisions. They would go with Reorg. Good!

[burniegoeasily]

ORIGINAL: biscuit jake

I really can't see what the bailout would accomplish that Chap 11 Bankruptcy & Reorganization would not do. That would not necessarily put them out of business. And I doubt that it would work any better than the bank bailouts, which as far as I can tell have not succeeded. What the auto companies want to do is keep their upper mgt that has made chronically bad decisions. They would go with Reorg. Good!

Chapter 11 was good enough for the airlines. Guess the congress doenst want their union buddies to be left out. So they have to bail out the unions as well.[:@][:'(][:@]

[StruttinGobbler3]

I'm tired of these bailouts period. I just don't believe in expecting the government to carry you through the bad times. I farm and times have been getting rough the last few years with more world market trading, but you don't see me begging for a bailout.

[Alsatian]

ORIGINAL: biscuit jake

I really can't see what the bailout would accomplish that Chap 11 Bankruptcy & Reorganization would not do. That would not necessarily put them out of business. And I doubt that it would work any better than the bank bailouts, which as far as I can tell have not succeeded. What the auto companies want to do is keep their upper mgt that has made chronically bad decisions. They would go with Reorg. Good!

I think the case is OBVIOUS that the auto industry should not be bailed out and that it can EASILY correct itself if natural economic dynamics were allowed to play out . . . but the folks in Washington aren't asking me.

An ESSENTIAL point in understanding the condition of the Big Three US automakers is that if any auto maker fails, one of them will fail first. Ask yourself how the playing field changes for ailing Ford and Chrysler after, for example, GM has failed and bit the dust? I'm guessing the market share of both Ford and Chrysler will significantly increase, which is good for Ford and Chrysler. I'm guessing that some modern automaking plant will go on the selling block at bargain basement prices, allowing both Ford and Chrysler to decommission obsolete plant (think plant located in or near Detroit) and replace with the modern plant acquired for 25 cents on the dollar from defunct GM (think plant located in Texas or other "right to work" states). I'm guessing Ford and Chrysler will obtain the negotiating leverage needed to compell the UAW to redraw their compensation packages. This isn't rocket science. Why don't the media and/or Washington see this?

Isn't this what has happened in the aviation sector? Too many manufacturers of airplanes . . . let the less fit die and be cannibalized by the more fit manufacturers of airplanes. Isn't this what has happened in the commercial airline sector? Too many airline companies . . . let the less fit die and be cannibalized by the more fit airlines. Why is the auto industry different? Didn't the aviation industry contribute significantly to the WW-II and later war efforts (this was a ploy I saw recently to gain sympathy for Detroit -- their plants supported the WW-II war effort)? Isn't the aviation sector a significant driver of technology innovation (semiconductors were pushed through the expensive manufacturing phase up to the mass production phase time and time again by the military to support miniaturization for aviation; aviation electronics has driven much communications innovation; and let's not forget the invention of Tang)?

The "smoking crater" narrative used by the money grabbers to characterize what happens if we don't give money to the Big Three is preposterous. It can most effectively be countered by a fundamental business analysis. Buckle your seat belts and hold on to your hats. This kind of thinking is so radical and fast that it elludes the elite east coast educated media and politicians, so you know it is over-the-top difficult! A mass car market exists in the United States and in the world. That car market is not going away, in fact it is growing larger. Did you lose your hat? Did you get shaken out of your seats? I hope not. I should have asked you all to sign a waiver of personal liability first. It really is that simple. If GM folds, the car market remains and others -- including Ford and Chrysler -- will get to divy that largely unchanged car market among themselves. The vendors who formerly served the OEM GM will continue to serve other OEMs including Ford and Chrysler. The pie hasn't gotten smaller, the number of OEMs has just been reduced by one. No smoking crater, just the usual "creative destruction" of capitalism. Some transient disruptions? No doubt. Some inflexible, maladaptive assembly line workers going to enter a pathetic downward spiral into personal ruin? No doubt. But others will pick themselves up, recover, and thrive. That is the system we have. It is called capitalism. It isn't perfect, but there is not national concensus that it be abandoned. It especially should not be abandoned on the pretext that failing to bail out Detroit means 1/3 of the population of the United States will be dispossessed and booted out into their jalopies to drive to California to become migrant farm laborers. Before we make such national decisions we need to rationally, dispassionately think things through.

But as I say, they aren't asking me. Instead, they proclaim that the sky is falling and the world will come to an end if we don't bail these guys out.

It wouldn't be so bad if they characterized this as a "loan" and surrounded it with the usual accutrements of a loan process -- the credit worthiness of the borrower, the ability of the borrower to pay back the loan with interest, the collateral offered by the borrower -- but the total absence of this portion of the narrative is telling. There isn't a chance in hell of GM paying back any money given to them, and no one is going to waste precious breath (or professional credibility) trying to construct that narrative.

One more thought. I think the question was raised about bailing out the financial community. I'm not any happier about that and would prefer not to give those guys money either. There are some differences, however. The narrative there, again, was that without the bailout the sky would fall. I think there may be some truth in that narrative. Additionally, there was definitely talk of the ability of the borrowers to pay back the money and how the government would recover its money. It is not accurate to characterize that as just $700 B thrown into a suitcase which was hustled away by suited executives into their black limos. First, only about half that money has gone out. Second, it is at least arguable that the government should get most or all of that money back from the finance houses. The reason why I'm not happy about this deal was firstly the general principle that I don't like government mucking around in economic matters and secondly that I don't know enough about the details to feel confident in the mechanisms for recovering the moneys and getting them back into the government bank account. Lots of talk indicated that the money was secured by mortgages which lead back to real properties . . . . but there was also a lot of talk about how the ownership rights of these mortgages was mixed and networked every which way. How do you track back and assert your right to plant your flag on the lawn of property X, take possession, and sell that property with a clear title to recover your investment? But I thought there was a true risk that without doing something there would be a true financial collapse, banking would stop, and that would really leave a "smoking crater" for 95% of US business. US business runs on short term loans. Without a responsive financial system, that would stop. Realistic scenario? I don't know. I couldn't identify the usual holes and illogic in that narrative which I am good at ferreting out.

[Fieldmouse]

Good post Alsatian. What bothers me is that no one has spoken up on the way congress has kicked them in the groin year after year with CAFE standards. Then to add salt into the wound, it's expected Obama will allow the individual states to add in the own tough standards. This is crazy.

I've heard folks complain that the BIG 3 builds cars people don't want. Bull crap. Toyota builds cars people don't want. The Prius isn't a car people want. Why do I make this claim? They sell each car at a loss to comply with CAFE. People get I believe a 5K tax break for buying one. Can't remember if it's a credit or write off. Eitherway it's a break to get people to buy a car they don't want. BMW has been paying the fine for years because the didn't meet CAFE. So they bought the Mini Cooper and now are believed close to meeting those standards.

I say, let them go bankrupt but also force congress to do right thing and eliminate CAFE standards. They don't work and only place hardships on the industry.

[Champlain Islander]

ORIGINAL: burniegoeasily

Chapter 11 was good enough for the airlines. Guess the congress doenst want their union buddies to be left out. So they have to bail out the unions as well.[:@][:'(][:@]

That is the way I see it.