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Republicans subsidize foreign auto makers, but leave Detroit hanging

Sunday, December 14th 2008, 4:00 AM

The group of Republican senators whose procedural votes doomed the auto industry bailout bill perfectly illustrates the narrow, "America Last" politics that is crippling efforts to revive the U.S. economy.

The proposed $14 billion in short-term loans for General Motors and Chrysler were supported by a truckload of industry leaders and economists, along with President Bush, President-elect Barack Obama and majorities in the House and Senate.

All agreed that a loan would be better than bankruptcy, which could put as many as 3 million people (and 40,000 of them in New York alone) out of work.

But a clique of Republican senators blocked the bailout, which required 60 votes rather than a simple majority. And they did it for the worst possible reasons.

Exhibit A is Sen. Richard Shelby of Alabama, an outspoken opponent of the bailout who told Detroit CEOs point-blank - before hearings even began - that he would vote no on a loan.

Shelby, it turns out, is a bought-and-paid-for advocate for non-American carmakers.

Toyota, Honda, Hyundai and Mercedes-Benz all operate in Alabama, a so-called right-to-work state where unions are scarce - but taxpayer help for corporations is not. At a recent press conference, Ron Gettelfinger, president of the United Auto Workers union, ticked off the staggering sums of subsidy money Alabama has given to these foreign companies.

"We have Hyundai Motor Co. that got $252 million in incentives. Toyota there got $29 million in incentives. Honda, $158 million," Gettelfinger said.

Alabama gave Mercedes-Benz the sweetest deal of all: job training, incentives, an agreement to buy 2,500 cars and a parcel of land valued at more than $250 million - the price to Mercedes of building a plant.

"That incentive package totaled somewhere around $175,000 per employee to create those jobs there," Gettelfinger said. "We can offer incentives to our competitors to come here and compete against us, but at the same time we are willing to walk away from an industry that is the backbone of our economy."

That, in a nutshell, is the problem. Nationwide, right-to-work states have poured $3 billion in subsidies into foreign-owned carmakers since 1992, according to the union. And yet Republican senators from states like Alabama, Mississippi, Kentucky, Tennessee and both Carolinas suddenly turned into born-again opponents of giving government dollars to private companies.

The UAW actually gave in last week, agreeing to bring the salaries and benefits of Detroit autoworkers down to the lower level paid by foreign car companies in union-hostile states.

But even that concession wasn't enough for Shelby and the anti-labor senators, who insisted that UAW salaries drop to foreign car company levels within a year.

When the union declined to gut its members' paychecks so quickly - at a time when the economy is in turmoil and people are hurting - the bailout deal collapsed.

Keep all this in mind the next time you hear conservatives carping about how "greedy" unions hindered Detroit's profitability.

A similar blind spot in the debate obscures the free trade pacts that give advantages to foreign carmakers. Current trade rules limit U.S. auto companies to selling 5,000 cars in South Korea - while allowing South Korean giants like Hyundai to sell 600,000 cars here.

Though it looks likely now, we don't know if the White House will order the Treasury Department to lend bank bailout funds to GM and Chrysler until the new Congress convenes next month.

And if the administration does, we don't know if the money will be too little, too late to head off major job losses.

What we do know for sure is that the economy won't recover anytime soon if pols keep subsidizing foreign companies at the expense of American industry.

LINK:Republicans subsidize foreign auto makers, but leave Detroit hanging
 
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