Cowardice

The cowardice of politicians in Congress. And, a glorious opportunity for our new president to show us what he is made of.

Suppose you spend $10,000 more than you earn. Every year you do. When you finally run out of money you beg your banker for a loan. He asks where you plan to cut your expenses. ”Maybe we’ll cut out our ice cream desserts.”

This is where the car companies are coming from. They beg for government billions. They don’t plan to change their ways much. And they have a lot of ice cream on their faces.

Plain facts show that car companies must change drastically. And auto workers and their unions must change drastically. They too have ice cream pusses.

UAW workers make $75 or so in wages and benefits. Average American worker makes $25. Average worker at Honda in the U.S. makes $43. At Nissan $42. At Toyota $48.

Detroit cannot get around those nasty facts. Detroit workers and companies made contracts that are sinking their industry. Or, at least, their part of the industry. They pretend this is not so. They pretend they can go on without having to make huge changes. “If you’ll just give us $25 billion we might change a little here and a little there.”



Sorry, guys. You have to get your costs down to the costs your competitors face. And right now. If you do not you will never make enough profits to make the investments you need in research. And in development and new models.

And if you do not slash, truly slash your costs you will simply go bankrupt. The $25 billion will only put off the bankruptcy by a few months. GM is bleeding $5 billion a month and nearly bankrupt. Its share of the $25 billion bailout is about $13 billion. I know the schools in Detroit are bad, but you must have somebody on the payroll who can figure this out.

Faced with this massive crisis, politicians in Congress show cowardice. They dither. 

If they do not rescue Detroit the workers will be mad at them. Not to mention their union. Not to mention lots of other Americans. Yet if they do rescue the car makers and the fix lasts only a few months, they will look like idiots. Well, faced with such a difficult choice, they kick the ball out of bounds and eye the clock.

First, they say the President should solve this. And the Secretary of the Treasury. Then they call for the Federal Reserve to fix this. Anybody but them. They tell the public they do not have enough time to craft the right sort of legislation to solve this. Their session is almost over. Right. If they could lard it up with their porky earmarks they would write it during a coffee break.

This mess has saddled up a white charger. For Barrack Obama to leap upon, both guns blazing. If he chooses to leap and blaze, that is.

If President Bush tells Detroit they have to rip up their old contracts he will be the bad guy. Because he is a Republican. And the UAW votes Democrat. And gives Democrats millions. “Republicans killed Detroit!” will be the slogan for 50 years.

If pols in Congress tell Detroit to burn those old contracts they will be bad guys. Because the UAW has bought their votes. (Let us not pretend here. There is enough pretending going on in Detroit. These birds are bought and sold.)

Ah, but, President Obama could get away with this. He could tell Detroit to get real. Because he is the new guy in the White House, on his honeymoon. And because he is one of them, from their side of the street. When a guy from your side of the street tells it like it is, you can swallow it.

Looks to me like Congress will run out the clock. They will leave this problem for the new president to handle. If he forces Detroit to face the facts he will show us courage. If he lets the workers and management continue pretending, he will show us something else.

From Tom ... as in Morgan.                  

For more columns and for Tom’s radio shows (and to write to Tom): tomasinmorgan.com.

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