Let's keep the good jobs

by: Jay Stevens

Tue Dec 16, 2008 at 10:19:51 AM MST

Before the congressmen give away our precious tax dollars to keep three automakers afloat, they need to ask themselves why it is OK to help these businesses but not, say, another company like Linens 'n Things or the many other even smaller companies that are going out of business[?]...

I am a baby boomer. I was born early on the cusp of that generational cohort. I have saved diligently, lived frugally and always planned so that when I retired I would have enough funds to live the expected 20-plus years that runs in my family. With the stock market crash, our nest egg - mostly in 401(k)s - shrunk by half. Who, may I ask, is going to bail us out?

Neither my husband nor I work in fields where pensions have ever even been considered, let alone phased out.

Reminds me of the old Russian joke about the farmer who gets a wish from a magic spirit he found in an old bottle. When the spirit asks the farmer what he wants, the farmer goes on and on about what a wonderful cow his neighbor has. "Do you want a cow like your neighbor?" asks the spirit. "No," says the farmer, "I want you to kill my neighbor's cow."

The reason no one will suggest saving "Linens 'n Things" is because it's a chain providing service jobs at low pay, probably without a decent benefits or pension package. These are the kind of jobs that we get when unions are destroyed, smart trade protections are erased, and American workers are forced to compete with underpaid near-slave labor working in appalling conditions, free from inconvenient regulations forcing manufacturers to protect water and air quality. In short, the letter-writer's situation is the direct result of anti-union free market ideology that's ruled the roost for the past 20 or 30 years or so.

The reason some of us advocate saving the auto industry is because, if the industry goes down, the 3 million or so well-paid workers with health care benefits and pensions will suddenly burst onto the job market, driving down wages, increasing the pressure on our health care and social security systems, and taking millions of consumer dollars out of the economy. Not exactly what we need, standing at the cusp of a deep recession. We shouldn't throw these jobs away because they're good: we should save them because they're good. Having a robust middle class is a good thing.

The Montana delegation rejects the auto bailout

by: Jay Stevens

Mon Dec 15, 2008 at 08:14:01 AM MST

"I just think that if we're gonna approach the economic turndown that we have - make no mistake about it, I love cars and I love auto manufacturers - but this has got to be more than a Band-aid approach, going from one industry to another industry, you know? Where does the line stop? There's a lot of businesses here in Montana that are hurting in a big big way that would probably like to have a bailout too."

Dennis Rehberg, on why he voted against the auto bailout:

Republican Representative Denny Rehberg of Montana voted against it, saying the companies in trouble need to look to private capitalists for a bailout, not the government.

"I'm not unsympathetic to the plight and the blight of the situation in the Midwest where most of the manufacturers are. The bottom line for me was, 'Would you buy a car manufactured by Congress?' No, you wouldn't. These companies are bleeding cash, they're piling up liability and all this bill would do is postpone the day of reckoning."

Chris Bowers, on those who voted consisently against bailouts:

Now, I grant that the thirteen Republicans who voted against both bailouts, plus Democrat Jon Tester who also voted against both bailouts, may simply be making a principled stand in opposition to these bridge loans.

It's hard to fault either Tester or Rehberg for their consistent opposition to using federal taxpayer money to bail out failed businesses. (Of course, to be fair to Denny Rehberg, our Representative initially supported the bank bailout bill, but flipped when it became apparent it wasn't all that popular.) Yes, I think it's unwise to deny the money to the auto industry now, on the cusp of a serious recession that would only be exacerbated by the loss of three million jobs and one of the last vestiges of the US manufacturing industry. Still, there's much not to like about the Big Three automakers.

What really irks me are those that voted for the bank bailout, but denied the automakers federal money. Which brings me to...

Max Baucus. Baucus is the odd fish in this vote. Tester's vote is consistent with his attitude towards handouts to big business. Senate Republicans who filibustered the bill did so in an effort to throttle American unions. But in Baucus' case, we don't have any internal memo outlining his political goals on the vote.

Here's what Baucus had to say in explaining why he voted against the auto bailout:

Repeats objection to provision in the Senate's $14 billion auto rescue bill that would reinstate tax loophole for banks in transit agency leaseback deals....Says measure is 'an abusive tax shelter' and would undermine negotiations now underway by the U.S. Internal Revenue Service in related cases.

CNNMoney, explains the loophole:

The provision would spare transit agencies in major cities like Houston, Chicago and Los Angeles from having to pay millions in penalties to banks with whom they entered into the deals. It was added to the auto bill by Senate Banking Committee Chairman Chris Dodd, D-Conn., people familiar with the legislation said, at the behest of transit groups.

Under the tax shelter arrangements, transit agencies agreed to sell assets such as train cars to financial institutions, and lease them back from the firms. The transit agencies received cash upfront, while the banks reaped tax depreciation benefits from owning the equipment.

"This provision aimed at protecting transit agencies really just helps the banks that entered into these sham transactions in their attempts to avoid taxes," Baucus said in a Wednesday statement.

These are the Sale-In-Lease-Out agreements (SILOs) that we talked about, long ago, in context of Babcock & Brown's proposed purchase of Northwestern Energy. B&B, as you may recall, made much of its bread and butter off SILOs -- a kind of tax shelter that monkeys with public utilities. To his credit, Baucus has been working to regulate SILOs for quite some time.

So...is Baucus' opposition to the auto bailout marred by his years-long opposition to SILOs? (He is, after all, the chair of the Senate Tax and Finance committee.) Or was it a snub of the US manufacturing industry and unions? I have to think the former -- not because Max has a long-abiding love for unions, or because he's not capable of putting the interests of financial institutions above everday Americans -- but because I think Max really loves the day-in and day-out politicking over the minutiae of US tax law.

Tester, Baucus vote against auto bailout

by: Jay Stevens

Fri Dec 12, 2008 at 08:37:04 AM MST

Tester, at least, is consistent. You can't say the same for Senator Baucus, who was one of the leaders of the Wall Street bailout.