White House, Dems Reach Tentative Auto Bailout Deal

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**Frazzled**

http://www.foxnews.com/politics/2008/12/09/democrats-hopeful-auto-bailout-deal-despite-lingering-challenges/

WASHINGTON -- The White House and Democratic congressional leaders reached a tentative deal on an emergency loan program for the auto industry, FOX News learned on Tuesday.

Both the White House and congressional Democrats were putting the finishing touches on the $15 billion bill late in the evening, but the bill could still face obstacles from congressional Republicans, who have not given their seal of approval.

The House is scheduled to meet at 10 a.m. ET Wednesday, when the bailout bill could come to a vote, but the Majority Leader's office said it is unclear when it may be considered.

The plan creates a government "car czar," to be named by President Bush, to oversee the bailout billions and an auto industry restructuring. The czar would have the ability to yank back the federal funds if carmakers don't do enough to reinvent themselves.

"We've had very productive discussions about legislation consistent with the president's principles," said Joel Kaplan, Bush's domestic policy adviser, emerging from an evening meeting with congressional aides where they were hammering out legislative language.

The White House had been demanding that Democrats scrap language that would force the carmakers to drop lawsuits challenging tough emissions limits in California and other states.

That measure "kills the deal," Dan Meyer, Bush's top lobbyist, said earlier in the evening. It was unclear what side budged to reach an agreement.

Another remaining hang-up was over ensuring that Cerberus, the private equity firm that owns Chrysler LLC, would reimburse the government if the auto company defaulted on its loan, said a congressional negotiator who spoke only on condition of anonymity because he was not authorized to disclose details of the emerging deal.

"There do not appear to me to be differences in principle of a sufficient nature to blow this thing up," Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, told reporters Tuesday afternoon.

Earlier, he privately briefed House Democrats on the deal negotiations and said he expected agreement by day's end.

The core of the bill -- and its aim -- hadn't been in dispute among the White House and Democratic leaders. It would provide emergency loans to two of Detroit's Big Three -- Ford Motor Co. has said it doesn't need an immediate cash transfusion -- and create the presidentially named car czar. The federal overseer would supervise a broad industry restructuring and would be empowered to pull the money back if the carmakers weren't doing enough to ensure their own survival.

All the while, the nation has fallen into recession, Congress and the presidency are both in transition, Wall Street is ricocheting daily and the Federal Reserve and Bush Treasury Department are fighting to steady the reeling financial industry.

A final deal hinged on only a couple of outstanding issues, said Senate Majority Leader Harry Reid, D-Nev.

"We would hope that we could complete work on this Detroit situation tonight or tomorrow," he said on the Senate floor.

Getting 60 votes for an agreement, with many senators expected to be absent for the emergency, postelection debate, could be tricky. The current Congress is ready to depart for the year after this week.

FOX News' Chad Pergram and the Associated Press contributed to this report.

**reds8n**

Well, it's no real surprise is it now ?

**Frazzled**

Thats so true it hurts.

**Da Boss**

So, how's that Communist party coming along?

**sexiest_hero**

15 bill won't save the auto corps, nobody will start buying thier cars and they are gonna fail anyways. It's just a stop-gap to push it off a year or two. That said the only time the dems and repubs come together, all we get is gak anyways.....

**reds8n**

News at 10 on the Beeb last night said that GM is losing $52,000. Every.Minute. !

, I didn't think there was that much money left in America to lose !

**Da Boss**

Woah!
They need some sticky tape for their piggy banks.

**Miguelsan**

News at 9: "Bailout for the big 3 aproved, 150.000 workers will be fired"

The worst part is that they´ll do it to ·reduce" costs, squander the money anyway and blame the unions again.

M.

**Grignard**

Miguelsan wrote:News at 9: "Bailout for the big 3 aproved, 150.000 workers will be fired"

The worst part is that they´ll do it to ·reduce" costs, squander the money anyway and blame the unions again.

M.

Imagine that, blaming the unions. Considering that they share plenty of the blame.

**dogma**

The unions have very little to do with the matter. They have made plenty of concessions of late. The real crux of the issue has to do with the unanticipated price of health care with respect to the benefit agreements that were negotiated during the boom times of the 50's-60's. It was an unfortunate decision that GM made in the past, which has come back to produce unintended consequences.

Consequences that were compounded by poor market research (up until early this year GM was convinced that people wanted more muscle cars), and the credit collapse. That last bit being the really critical one; noting that GM may well have been able to turn it around had their ability to finance purchases not gone by the wayside.

**Illeix**

funny, they always mention that the money is going somewhere but never why...

that image above is so true.

Anyways, the government can't really give people money, it always comes from that somewhere meaning either from money they had just taken from you (taxes) or printing nice fresh bills to cover it, meaning the money they haven't taken yet is worth less (inflation)

I think it's time to call for another revolution...

**Grignard**

dogma wrote:The unions have very little to do with the matter. They have made plenty of concessions of late. The real crux of the issue has to do with the unanticipated price of health care with respect to the benefit agreements that were negotiated during the boom times of the 50's-60's. It was an unfortunate decision that GM made in the past, which has come back to produce unintended consequences.

Consequences that were compounded by poor market research (up until early this year GM was convinced that people wanted more muscle cars), and the credit collapse. That last bit being the really critical one; noting that GM may well have been able to turn it around had their ability to finance purchases not gone by the wayside.

Well, I realize that the 70$ per hour myth is exactly that, but I think it is blatantly obvious now that they're overpaid. Personally, I'm not exactly in tears seeing the American auto worker sweat it a little bit.

**dogma**

Hourly wages for UAW workers at GM factories already are about equal to those paid by Toyota Motor Corp. at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota -- generally viewed as the main competitor of the Detroit Three -- says it pays about $30 per hour. But the unionized factories have far higher benefit costs.

From Yahoo Finance.

GM pays about $76 an hour for its labor, which is inclusive of the benefits paid to retired workers. Toyota pays, if I remember correctly, something like $45 an hour. Now, as far I know, the benefit plans are roughly equivalent in terms of moment to moment coverage. The real difference is that UAW members collect on them for life, so the Big 3 are essentially stuck paying for the obscene medical expenses of all those boomers they put to work in the 50's and 60's. Unfortunately, this isn't an issue which can be really overcome in the short term. The UAW isn't about to let the Big 3 rescind the benefits it is contractually obligated to provide for retirees, and health care costs aren't going to come down without major government intervention. Bankruptcy is an equally trying gambit for the fact that GMAC is a major paper holder that is going to produce a major blip on the financial world's radar if it goes down. Not to mention the ancillary costs of increased unemployment rates.

**Illeix**

Unfortunatly, gov. intervention is what got our economy here in the first place, and it won't get better until they get thier dirty thumbs out of the private sectors pies.

**Grignard**

dogma wrote:
Hourly wages for UAW workers at GM factories already are about equal to those paid by Toyota Motor Corp. at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota -- generally viewed as the main competitor of the Detroit Three -- says it pays about $30 per hour. But the unionized factories have far higher benefit costs.

From Yahoo Finance.

GM pays about $76 an hour for its labor, which is inclusive of the benefits paid to retired workers. Toyota pays, if I remember correctly, something like $45 an hour. Now, as far I know, the benefit plans are roughly equivalent in terms of moment to moment coverage. The real difference is that UAW members collect on them for life, so the Big 3 are essentially stuck paying for the obscene medical expenses of all those boomers they put to work in the 50's and 60's. Unfortunately, this isn't an issue which can be really overcome in the short term. The UAW isn't about to let the Big 3 rescind the benefits it is contractually obligated to provide for retirees, and health care costs aren't going to come down without major government intervention. Bankruptcy is an equally trying gambit for the fact that GMAC is a major paper holder that is going to produce a major blip on the financial world's radar if it goes down. Not to mention the ancillary costs of increased unemployment rates.

That is news to me. My understanding was that UAW members were being paid about 6 USD more per hour. Toyota alone does not constitute "everyone else", so to speak. Union or non union, however you cut it, the cost of personell are enormous for any automaker. I know plenty of college educated people who are making half of the value you quoted, so as far as I'm conerned whether it is the union being unreasonable or unforseen healthcare costs ( Can you prove that those costs weren't anticipated back when the benefits were established? Does it matter? Maybe it is their fault for not anticipating that ) is immaterial, the bottom line is it is an expense that needs to be cut.

**Grignard**

Illeix wrote:Unfortunatly, gov. intervention is what got our economy here in the first place, and it won't get better until they get thier dirty thumbs out of the private sectors pies.

Eh....can you afford to pay for healthcare yourself? I can't.

**dogma**

Grignard wrote:
I know plenty of college educated people who are making half of the value you quoted, so as far as I'm conerned whether it is the union being unreasonable or unforseen healthcare costs ( Can you prove that those costs weren't anticipated back when the benefits were established? Does it matter? Maybe it is their fault for not anticipating that )

As one of those college educated people I can certainly attest that they make more than I do. That said, I've recently become of the mind that the merit of a college education is substantially over-estimated on a regular basis. Not saying that it doesn't have its advantages, or that there aren't a lot of intelligent people attending university, but that far more than ought to are doing so. Sometimes trade school is a legitimately superior option, but it is so heavily stigmatized in many areas of the nation that it is frequently overlooked. Well, that, and the fact that spending money to learn a trade isn't always the easiest thing to do. What do you do if you can't find work in your desired field?

Either way, I think its a little unfair to presume that the Big 3 should have seen health care cost increases coming. Seeing as it increased from $352 per person in 1970 to $5,711 per person in 2003. I'm not sure how that breaks down with respect to inflation, but it is still quite the jump. Found the stats here.

Grignard wrote:
...is immaterial, the bottom line is it is an expense that needs to be cut.

True, but keep this in mind: there is no way on this Earth that a Democratic government is going to allow retired members of the UAW to fall off of health care. If the Big 3 don't pay for it, we will. Not that I'm particularly opposed to that. National health care is one of those things that I would deeply love to see made reality.

**dogma**

Illeix wrote:Unfortunatly, gov. intervention is what got our economy here in the first place, and it won't get better until they get thier dirty thumbs out of the private sectors pies.

That's not even close to true. The immediate cause of the crisis was the Commodity Futures Modernization Act of 2000, which aggressively pulled the government out of the financial sector.

**Illeix**

Grignard wrote:
Eh....can you afford to pay for healthcare yourself? I can't.

Neither can I, at least not as long as the government continues to strangle the natural flow of supply and demand, and competition.

as of now, only big companies can afford to buy health coverage, and at special tax reductions.

If the gov. gets out of it, and gives the same incentives to the public, then competition prospers, prices drop.

If the gov. continues with thier scheme, a monopoly will emerge.
very bad...

**Grignard**

dogma wrote:

As one of those college educated people I can certainly attest that they make more than I do. That said, I've recently become of the mind that the merit of a college education is substantially over-estimated on a regular basis. Not saying that it doesn't have its advantages, or that there aren't a lot of intelligent people attending university, but that far more than ought to are doing so. Sometimes trade school is a legitimately superior option, but it is so heavily stigmatized in many areas of the nation that it is frequently overlooked. Well, that, and the fact that spending money to learn a trade isn't always the easiest thing to do. What do you do if you can't find work in your desired field?

Oh wow, I think I actually agree with part of that. We've decided that everyone in this country should recieve higher education, even if the state has to endorse gambling to pay for it. It might be better if we could somehow make it so that you could live a reasonably comfortable life with a high school diploma. I'm not sure if trade schools are sigmatized or not. Not so much where I live. For that matter, I often think I would be better off driving a truck rather than doing what I do. But lets face it, a trade school is training for a job, it just isn't the same as a four year liberal education.

dogma wrote:

Either way, I think its a little unfair to presume that the Big 3 should have seen health care cost increases coming. Seeing as it increased from $352 per person in 1970 to $5,711 per person in 2003. I'm not sure how that breaks down with respect to inflation, but it is still quite the jump. Found the stats here.

Maybe, maybe not. If they'd have listened to the dystopian fiction writers of the time they would know. If you think about it, it is inevitable. Most of the leap in life expectancy over the past century is the result of advances in public health, which is relatively cheap ( relatively ). Further advances in the quality and quantity of life seem to be getting harder and harder to achieve, which basically translates to more and more money. Doesn't matter if you socialize healthcare or not, it is still going to cost more and more.

dogma wrote:
Grignard wrote:
...is immaterial, the bottom line is it is an expense that needs to be cut.

True, but keep this in mind: there is no way on this Earth that a Democratic government is going to allow retired members of the UAW to fall off of health care. If the Big 3 don't pay for it, we will. Not that I'm particularly opposed to that. National health care is one of those things that I would deeply love to see made reality.

Oh well, I can at least entertain fantasies about that.

**Illeix**

dogma wrote:

That's not even close to true. The immediate cause of the crisis was the Commodity Futures Modernization Act of 2000, which aggressively pulled the government out of the financial sector.

Ok, I forgot about the "Enron loophole" but that only worsened an existing problem, by the gov doing what? Messing with the credit system. Is that right? I apologise if I'm out of line, but that's what I see...

**Grignard**

Illeix wrote:
Grignard wrote:
Eh....can you afford to pay for healthcare yourself? I can't.

Neither can I, at least not as long as the government continues to strangle the natural flow of supply and demand, and competition.

as of now, only big companies can afford to buy health coverage, and at special tax reductions.

If the gov. gets out of it, and gives the same incentives to the public, then competition prospers, prices drop.

If the gov. continues with thier scheme, a monopoly will emerge.
very bad...

I'm not sure you want that. I don't think it will work the way you expect...

One reason is that healthcare is a product that you don't want to use. For instance, you'd be much better off practicing prophylaxis rather than treatment. However, the sort of competition you're talking about won't encourage that sort of healthcare. As is, the US is not very good at promoting preventative health care. I do know something about this as I work in public health.

Another thing is that I wonder if you're not implicitly drawing an analogy with healthcare to other products that might not be accurate. I mean, healthcare is not the same thing as banging out gazillions of, say, doorknobs or auto parts on an assembly line. Also, do you really want people trying to find ways to offer you healthcare that cheaper than the next guy's?

The only way I can see that working is healthcare being divided into tiers, like automobiles tend to be. There are top end performance vehicles that only a few people can afford, luxury cars that people who make good money and make owning that car a goal can afford, and then entry level cars that those of middle income can afford. Then there is a seperate market in used cars for those who can't afford those or who are just frugal ( the smart ones, cars are a horrible waste of money). You would have top end state of the art healthcare for those who were super wealthy, high end healthcare for the upper middle income, average healthcare, and then very basic services for the bottom tier.

That is fine, and would probably work, but just realize what that means for you. As expensive as healthcare is, unless you're in that top 1% or so, you might find the quality of your healthcare reduced.

Also, it could be argued that without some sort of healthcare safety net people would be less likely to take risks, like going to college and earning almost nothing for four or more years so that you can make more later, when they could get sick and lose everything.

Even if you're very wealthy, healthcare is very expensive. It isn't a matter of having a monopoly, it just involves highly trained practitioners using very expensive products that have high development costs and sometimes can't be mass produced to take advantage of scale. A bad illness can break all but the wealthiest of the wealthy.

Let me give you an example: I have a very close family member, a recently retired physician, who is a fairly financially secure individual. Unfortunately, he just lost his leg four or five months ago due to juvenile diabetes ( actually, he hasn't done that bad considering this is the first major issue and he is 62). They have some truly amazing artifical limbs now, but they don't come cheap. He has two, and before insurance they're around 45000$. This is only one thing, this doesn't include the insulin pump ( 10000$ ) and the medications ( I have no idea, but w/o insurance I'm sure it would be over 1000$ per month). Very few people can affford this.

**Illeix**

My sincere condolances to you and your relative, that's a terrible thing to have happened.

But on topic, I'm sure there is a way to make private healthcare work. You would know better than me, but how much do companies actually pay for each employee? How much would it drop if real competition were introduced?
If it was really that expensive, how can companies afford it?
I don't know the answers to those, but I know that a socialist monopoly will only cost more, and likely provide less...

**sebster**

Illeix wrote:Unfortunatly, gov. intervention is what got our economy here in the first place, and it won't get better until they get thier dirty thumbs out of the private sectors pies.

Ah, dude, when icons of the free market like Alan Greenspan are calling it a day on unregulated markets, you might want to pull back on the libertarianism.

And no, what got US car manufacturing here is a few decades of generally poor design making, no workable idea on the competitive advantage of US car manufacturing, car manufacturers making deals with the workforce to cover health care (never realising how expensive it might get). It's all been brought to a head by the recent financial collapse, but its been coming for a long time.

Illeix wrote:Ok, I forgot about the "Enron loophole" but that only worsened an existing problem, by the gov doing what? Messing with the credit system. Is that right? I apologise if I'm out of line, but that's what I see...

Hang on, so government needs to get out of regulating because a while back they caused a lot of trouble when they deregulated a market?

Illeix wrote:My sincere condolances to you and your relative, that's a terrible thing to have happened.

But on topic, I'm sure there is a way to make private healthcare work. You would know better than me, but how much do companies actually pay for each employee? How much would it drop if real competition were introduced?
If it was really that expensive, how can companies afford it?
I don't know the answers to those, but I know that a socialist monopoly will only cost more, and likely provide less...

Except the US pays more per capita than any other country in the world for its healthcare, but only performs averagely in most comparative measures of healthcare (life expectancy, infant mortality, all that stuff). The system you have isn't working, and it isn't working because a very large portion of healthcare costs are in administration, which basically boils down to people being denied healthcare and having to use the courts to get their costs covered.

And I don't think anyone is arguing for a socialist monopoly. Most places around the world have a government base system, which is free and provides a solid level of care. If you want coverage for extra procedures and nicer rooms, you can cover yourself. And not that you're covering yourself, and it isn't something you need. As a result the private insurers have to protect their professional reputations if they want people signing up, and that means they don't deny coverage for pedantic, legalistic reasons. And it means if you get sick there's no risk of being kicked out of your insurance for a technical reason and being forced to mortgage your house.

**sebster**

dogma wrote:True, but keep this in mind: there is no way on this Earth that a Democratic government is going to allow retired members of the UAW to fall off of health care. If the Big 3 don't pay for it, we will. Not that I'm particularly opposed to that. National health care is one of those things that I would deeply love to see made reality.

Corporate support for universal healthcare came back on the table when the Democrats' corporate friends realised how non-competitive employee debts were making the companies, and the biggest of these were the car manufacturers. There were always Hillaries and Obamas out there wanting to run with healthcare reform.

Now we've got a Democrat that just won office after running on healthcare reform. And we've got car manufacturers that need help with their bottom line, and have massive health liabilities. It just seems to me the big, obvious solution is take those debts off of the, and take those folk into public care.

**dogma**

Illeix wrote:
Ok, I forgot about the "Enron loophole" but that only worsened an existing problem, by the gov doing what? Messing with the credit system. Is that right? I apologise if I'm out of line, but that's what I see...

Messing with the credit system? The CFMA was a massive deregulatory bill that essentially made it illegal for the government to oversee the exchange of credit default swaps, which the myriad financial institutions of this nation went on merrily trading so that they would never have to post a year in the red. This current crisis is the natural consequence of an unregulated market in which a series of institutions grow so large that their performance is roughly tacit to the market's performance. And, when they fail by the natural law of the market, they take the entirety of that market with them. Which is unacceptable.