Rescue US autoworkers first

Give them a way to get out of companies due for downsizing.

By The Monitor's Editorial Board

from the December 15, 2008 edition

To rescue 1 million workers in the US auto industry, Washington needs to be creative. It should offer them a way out – not a way to stay put. The Big Three are due to be shrunk or folded, either by bankruptcy or by a string of bailouts. These workers could be first in line for jobs created by new spending on infrastructure or the Obama "green energy" programs.

With little hope of new careers, it's no wonder the members of the United Auto Workers union rejected further concessions last week during negotiations in Congress for a temporary loan of $15 billion.

Better to hold a job that may last only awhile than no job at all.

The UAW would not agree to the goal of matching the lower wages and benefits of foreign automakers in the US by the end of 2009. Without such a sacrifice and similar hits to the Big Three's creditors, managers, and dealers, the industry has little hope of regaining lost market share in the US or even of surviving.

Congress gave up its effort at a deal and adjourned until early January. But the Big Three face a $13 billion bill from some 3,000 suppliers Jan. 2. GM is making contingency plans for bankruptcy. That has pushed the White House to consider using $15 billion left over from the bailout fund for Wall Street to tide over GM and Chrysler so they don't collapse while President Bush is in office.

As Vice-President Dick Cheney said, the GOP should not be known as "the party of Herbert Hoover forever" – or rather, not doing enough to keep the economy from sliding further. The auto industry accounts for about 3 percent of the US economy.

The Bush administration must not be so cynical as to kick this can down the road to the next president without extracting the difficult concessions from all players – and helping autoworkers find new jobs.

The White House knows President-elect Barack Obama plans to "create or save" 2.5 million jobs, mainly by a surge of government investment in such industries as solar, energy conservation, and bio-tech. And he and leaders in Congress plan a giant economic-stimulus package that would give billions to states for spending on projects in the works for roads, bridges, and other infrastructure.

Why not link that job creation to helping Detroit downsize its workforce?

It's time for such fresh thinking. The political atmosphere around this rescue is getting testy. When the Michigan governor claims that a vote against a bailout is "un-American," all sides need new ideas.

Speaker of the House Nancy Pelosi at least had it right in theory about an industry bailout when she said that everybody should get "a haircut."

Tapping the Federal Reserve for money is out. The central bank's brief is to aid the nerve center of capitalism – financial institutions. It cannot get into industrial policy with aid to particular manufacturers, as Fed Chairman Ben Bernanke told Congress last week.

The US doesn't have much of a track record on industrial policy, as Europe and Japan do. It needs to find a way to let go of companies that are not competitive while redirecting their workers into jobs in budding or competitive industries.

Mr. Bush and Mr. Obama just might agree to that for the sake of US autoworkers.