White house agrees to use TARP $ for auto bailout

Photo Courtesy of Quality Digest

So it appears the Bush administration has agreed to use some of the $700 billion set aside for the financial sector bailout for the auto industry. More specifically, the government will loan G.M and Chrysler $13.4 billion dollars immediately and another $4 billion in February if necessary. All in all, I'm not viscerally repulsed by this move. I'm glad the Bush administration came to its senses and used some of the TARP money for Detroit, particularly after Senate Republicans voted against bailing out the auto industry last week, in a rather transparent display of their hatred for organized labor. It would have been disastrous if we just did nothing; the collapse of the industry would have led to millions of lost jobs in the most economically depressed region of the country while we're in the midst of a recession.

That being said, the conditions of the agreement are downright awful. According to the Times, in order to qualify for government assistance GM and Chrysler must

reach an agreement with the United Automobile Workers union to cut wages and benefits so they are competitive with those of employees of foreign-based automakers in the United States

Further, if the car companies cannot show they are on the path to profitability within three months, the government (at that point under the Obama administration) has the option of "calling" the loans for "immediate repayment". Thus,

In effect, the White House has required the auto companies to cut the equivalent of $13.5 billion in costs within three months, in order to repay the federal money and receive another infusion of capital

I just can't see how trimming over $13 billion in three much is even possible, though I'm relatively certain where those cuts will come from: plant closures and lost jobs, in addition to the aforementioned wage and benefit cuts. On the bright side, Ron Gettlefinger, president of the UAW is not taking these proposed cuts sitting down. Rather, he is hopeful that the anti-worker terms of the agreement can be adjusted when Obama is in office.

As am I. I know times are tough and I agree that the workers should probably accept some sacrifices in exchange for taxpayer assistance. The terms of this agreement, however, are just plain heartless, particularly since the "overpaid auto workers as source of Detroit's troubles" thesis is basically bogus. I really hope the Obama administration changes the terms of the agreement and takes this as an opportunity to be a little more creative. Chrysler is shutting down all of its plants today and they will remain idle for the foreseeable future. Under the terms of this agreement, in all likelihood, some of these factories will never open again. That sounds like quite a waste to me. Americans may not want cars right now, but we still need things like windmills, solar panels, buses, and trains to get our economy going, as well as modernize and "green" our infrastructure. Instead of leaving these factories idle, couldn't we use them to build some of these things? As many have pointed out before and recently, GM transitioned from building cars to tanks in no time during World War II. I don't see why they can't transition again in the face of a different kind of national crisis. If Detroit's management and investors doesn't like the idea, who cares? We are bailing them out! An auto industry bailout should be about saving jobs and good paying blue collar jobs in particular, not protecting GM/Ford/Chrysler's investors or busting the UAW. Here's to hoping that Obama can turn this bailout into something that actually helps working people. That, of course, would be change we can believe in.

Victory #3!

Photo Courtesy of CBS News

Following the sit-in at the Republic Windows and Doors Factory in Chicago, which was resolved in the workers favor this morning, and the successful unionization, after a 4-year legal battle, of a Wal-Mart store in Saskatchewan, Canada by the United Food and Commercial Workers Union (UFCW), workers at Smithfield Packing Co in Tar Heel, North Carolina have voted to unionize and join the UFCW. Woo Hoo!

Today's victory for the workers in Tar Heel, North Carolina is nothing short of historic. Like the workers at Republic, the workers who voted to join the union at Smithfield are courageous and succeeded against incredibly steep odds. This was the UFCW's third attempt at unionizing one of the largest pork processing facilities in the world, after two failed efforts in the 1990s. UFCW's failed attempts to unionize in the 90s were marred by extensive violations of workers rights by the company which included racial epithets, intimidation, and violence. For more on Smithfield's despicable record of workers' rights abuses, check out this great report by Human Rights Watch. North Carolina is also the most anti-union state in the entire country: less than 4% of workers in North Carolina are union members, compared to a national average of 12.1%.

Also like the successful occupation of Republic Windows and Doors, the victory for Smithfield workers would not have been possible without an extensive solidarity/boycott campaign, which Smithfield unsuccessfully claimed was a form of racketeering. I am proud to say that I played a very, very small part in the Smithfield boycott campaign last summer. Congratulations to the workers and to everyone who contributed to this victory!

Let's face it folks, the revolution is coming. All you fascists are bound to lose!

Victory!

Photo Courtesy of ABC News

Victory for workers at Republic! Amazing what can happen when workers stand up for their rights and their supporters stand in solidarity with them! And thanks to Obama, Chicago, and Illinois for their rhetorical and financial support as well.

In related news, Wal-Mart workers in Saskatchewan, Canada successfully organized a union, and workers at Smithfield meats in Tar Heel, North Carolina are voting today on whether to recognize the UFCW at their 4,600-worker plant. Screw the Republican Scrooges on Capitol Hill! If the UFCW wins the vote tonight, December 11th, 2008 will go down in history as a truly great day for labor!

Oh Republicans...

It appears the Republican caucus in the Senate is willing to kill the American auto industry and with it, some three million jobs in the most economically depressed region of a nation mired in recession, over their hatred of unions. That's right, the Republican party, the same folks who brought you wonderful "free market" policies like the Medicare Modernization Act, or the "Medicare Middleman Multiplication Act" as Paul Krugman calls it, an explosion in no bid contracts for their cronies, and much more, plan to use the force of the federal government not to salvage the auto industry, but to destroy the UAW, or at least its wages and benefits. According to the Detroit Free Press (linked above), Bob Corker (R-TN)

has said automakers and the UAW need to commit to steep cuts in return for aid, namely immediately cutting UAW wages to those at foreign automakers’ plants in the United States and accepting half of the money for the retiree health care trust fund in stock.

Interesting how he claims the industry and the workers need to accept cuts but the actual cuts only apply to the workers. If such cuts aren't written into law, they're threatening to Filibuster the rescue bill that even the Bush administration recognizes is necessary.

Are these people serious? Force workers to accept wage and benefit cuts and restructure (aka downsize)the industry while we're in the midst of a recession? Had these people possibly considered attaching EFCA to the bill to allow unions to organize in the southern, foreign-owned plants and improve their wages? Or pass universal health care to equalize health care costs across the industry? I just can't understand why Congress would possibly legislate wage cuts for people making, not millions of dollars, but just $57,000 a year. Is that really too much to ask? How bout mandating that no one gets paid more than $150k a year at these companies? Or how bout using some of the under-utilized GM, Ford, and Chrysler factories to build things like wind mills or solar panels that we actually need, as suggested by the Auto Workers' Caravan, rather than legislating layoffs and wage and benefit cuts? Nope, none of these ideas enter into the heads of these folks. They only have one overriding belief that guides their policy: legislation must enrich the already rich and further impoverish the working men and women of this nation.

There's much to malign about the Democrats, but times like these make me wish we already had 58-59 dems in the Senate. They may not be great, but at least they're less enamored with inequality. Here's to hoping Republican intransigence doesn't kill the Mid West.

Victory, it seems, for workers in Chicago

Photo Courtesy of AP

As many of you are no doubt aware, employees of Republic Window and Doors have been occupying their closed factory in Chicago since last Friday. As of today, they appear to have achieved a major victory. Before I go into the details of what exactly the workers have achieved, here's some background on the situation.

The workers, who are members of United Electrical, Radio, and Machine Workers (UE) local 1110, were told last Tuesday that the plant will be closing its doors in just three days. In doing so, Republic violated federal law, which requires that employers give their workers 60 days notice prior to mass layoffs. The workers are also entitled to vacation and severance pay, which they have not received. As a result, the workers are occupying the factory until they get the pay they deserve or until the plant resumes production.

At first glance, Republic Windows and Doors comes off looking like a major Scrooge in this situation. However, it's a bit more complicated. According to Republic, they were forced to abruptly halt production because their major financier, Bank of America, closed their main line of credit. This, despite the fact that Bank of America has received over $25 billion dollars in taxpayer loans from the Troubled Assets Relief Program (TARP) Federal bailout, whose express purpose was to jump start lending to the real economy. Upon learning of Bank of America's unconscionable greed, the state of Illinois (before it was revealed that Governor Blagojevich tried to extract bribes in exchange for Obama's now vacant Senate seat) and later, the city of Chicago, began to divest their holdings from the bank. President Elect Obama, in a rare act of transition progressivism, defended the workers and castigated Bank of America's callousness.

Fast forward until today and apparently in response to the actions of the state of Illinois, city of Chicago, and all the bad publicity they've gotten, Bank of America has agreed to lend Republic some money to make things right with their workers. The details of the agreement still need to be worked out and nothing will be approved without a majority vote of the workers occupying the factory. Ideally, BOA will extend Republic a line of credit large enough so they can resume production rather than just pay the workers their severance and back pay. According to Carl Rosen, President of the UE, that's what the workers are really looking for. Plus, it would make economic sense to do so. A major portion of Obama's stimulus package will be dedicated to retrofitting buildings in order to make them more energy efficient. And energy efficient doors and windows are exactly what the workers at Republic Windows and Doors make. According to Thomas Balanoff, president of SEIU Illinois Council and frankly, anyone with half a brain, it doesn't make any sense to close the factory in this context.

When I first heard about the factory occupation, it immediately called to mind memories of the Argentine recovered factory movement(dramatically portrayed by Avi Lewis and Naomi Klein's film, The Take) as well as the 36-37 Flint Sit-Down Strike against GM. Personally, I think if Bank of America refuses to extend a large enough loan to resume production, the workers inside the factory should take control of it and just start running it themselves, as the workers did in Argentina. It would lose them a lot of their moderate supporters, but I think the Federal Government would be still be compelled to use the stimulus money to buy from them. Or more likely, why not just use some of the TARP money to lend directly to Republic Windows and Doors and allow them to start production again and cut the BOA middle man out of the process?

Regardless of the exact details of any eventual agreement between the union, BOA, and Republic, local 1110's factory occupation is truly cause for hope. FDR didn't sign the Wagner Act, require participants in the NIRA to allow unions to organize, create the Works Progress Administration, or pass any of his other progressive reforms just out of the goodness of his own heart. He did these things because public ferment in the form of strikes, unemployment demonstrations, actions against evictions, and other protests forced him to act. LBJ didn't sign the civil rights act because he was such a nice guy, either. The pressure generated by the civil rights movement forced him to do so. Such is the history of our country, of any country for that matter. As Frederick Douglas famously said, "Power concedes nothing without demand". As a result, I congratulate the workers at Republic for their fearless, patriotic actions. Congress may not have had the spine to stand up to the finance industry and force them to use the bailout money to make loans, like Gordon Brown did in Britain, but the workers at Republic were. Hopefully they will inspire other workers around the country facing similar straights to do the mobilize againstt layoffs or any other form of injustice. Actions like these, if they become generalized, have the power to force Barack Obama to live up to his campaign promises and perhaps, go beyond them.

Furthermore, I am hopeful that Obama will continue to make such statements in support of workers fighting for their rights. I agree very much with the folks at Open Left that Obama played a huge role in this just by rhetorically supporting their cause. During the 30s, popular protest forced FDR in a more progressive direction, but according to Melvyn Dubofsky who wrote the great book, The State and Labor in Modern America, the effect went both ways. Not only did the popular protests force FDR's hand, but FDR's legislation and his rhetoric was seen by many workers as a green light to start organizing. In discussions with fellow workers, union supporters often claimed that the President wants you to join the union. In their negotiations with their bosses, workers claimed the President ordered the company to recognize the union. Whether or not these claims were actually true (often they were not), FDR's words and actions emboldened an already angry and mobilized populace. Obama could fill the same role in the coming months.

All of this, of course, depends on whether people like you and me follow in the footsteps of the Republic workers and get out there and make our voices heard. So from my highly influential and not at all hypocritical position as a blogger currently living outside the United States, I say, get out and do something!

More on the auto industry

Robert Weissman over at Znet echoes my call to consider nationalizing the U.S. auto industry. He also shares my belief that the double standard for the auto and finance industries "reflects an anti-union and anti-blue collar animus" among "many policy makers and opinion leaders".

To be completely honest, I would not be upset if we provided the auto industry with a bailout, with firm conditions attached, instead of nationalizing them. What's most important is that we do something to save these companies and thus prevent the enormous economic devastation, on the lines of as many as 3 million jobs lost, which will likely follow in the wake of their collapse. We should not let the ideal become the enemy of the absolutely necessary. However, there are some facts we should consider. G.M is now asking for an $18 billion loan but Michael Moore pointed out yesterday that the total share value of GM is just $6 billion dollars. Arguably, if we were willing to sidestep the prevailing belief among the U.S. elite and likely most of the population that private ownership is innately superior and always preferable to public ownership (a paradigm shift of magnanimous proportions, I admit), we might just realize that nationalizing G.M. is a better deal for taxpayers than a bailout.

If we would at least consider the nationalization proposal, Weissman and I would be happy.

Funny, though sad cartoon

This came to my attention via Dean Baker:
Originally published in the Washington Post