The Auto Industry is Next in Line to Board the Gravy Train

The financial services industry was certainly first in line. And now it seems that Hank Paulson, who was overly eager to help out Wall Street by buying up the bad mortgage assets, found out that things were more complicated than originally thought. So now we are following Britain's Gordon Brown model and injecting capital directly into the financial institutions after all. Doesn't inspire much confidence in a man who was first hailed as a savior of the economy!

As is always the case (and I know this as someone who works for a company that has a large presence in federal contracting), when the government creates a new spending plan, companies will line up to see if they can get a piece of the pie. So it comes as no suprise that the automakers are blaming their imminent demise on the recent economic downturn. What a joke! These companies have been badly run and held hostage by their union obligations for years, and now that the Federal Reserve's bank vault has been thrown open, they want theirs.

But this is a winning issue for Democrats over Republicans on so many levels:

1. On the presidential level, Republicans feel forsaken by the voters in Michigan once again. Obama won not only Michigan but also Ohio, Indiana, and Illinois, the so-called rust belt. Understandably, Republicans in Congress are little interested in helping Michigan's Democratic Gov. Jennifer Granholm, nor Democratic Senators Carl Levin and Debbie Stabenow. Michigan has more Repbublican Congressional Representatives than Democratic and all have fiercely defended Detroit's interests...to Detroit's great detriment! Average fleet mileage standards? SUVs categorized as trucks instead of cars so that they're not part of CAFE standards? So if the Republicans are going to use the lame duck session to make their stand against one of the largest U.S. manufacturers and cede car production to the Japanese, Koreans, and Chinese in the name of allowing the market to determine winners and losers, Democrats win and Republicans will be blamed for killing America's largest manufacturing sector.
   
2. Since President Bush and the Republicans got whupped, they have talked incessantly about going back to their "core principles," whatever that means! I suspect they wish to return to a vision of themselves as fiscally responsible, which might mean blocking any proposed bailout for Detroit on the grounds that the federal government has no business picking winners and losers. The market has rendered its verdict, and now the Republicans seem poised to defend their principles at the expense of the millions of jobs that will be lost. Seems politically disastrous, but the Repubs are suffering a severe identity crisis! But they're probably also hoping to break the backs of the United Auto Workers Union, a Democratic constituency.
   
3. Since Obama wants to help with a bailout, as do the Democrats in the House and the Senate, they will get to look like heroes to their base (unions), even as the Republicans alienate those same folks. Obama may also be able to seize this opportunity to put his health care program in place at one of the largest companies in the United States. One of Detroit's hugest expenses in health care coverage for the workers and retirees. I'm sure that GM would willingly give that obligation over to Obama's health care plan. And there's the foothold we need!

So as far as I'm concerned, Obama and the Dems should seize the opportunity to help Detroit and extract Draconian terms as part of the bargain. Might be the best way for Obama to get going on health care!