The Auto Bailout: Save Jobs and Benefits and Restructure the Auto Industry

The Committees of Correspondence for Democracy and Socialism makes the following sensible proposals about the proposed bailout of the auto giants:
The unfolding crisis of capitalism is fraught with pain and suffering for working people. Job losses, declining wages, plant closings, shuttered small businesses, plummeting government resources for public services and physical infrastructure, all remind us of the Great Depression of the 1930s.

The first eight years of the 21st century have been marked with the "normal" economic crisis of capitalism: over-production and declining rates of profit. The crisis has been deepened by eight years of war and the largest military spending since World War II. Government polices of craven tax cuts and shrinkage of government services have led to a dramatic redistribution of wealth from the many to the few.

Key sectors of the US economy are in financial crisis. First, banking and investment houses, stock and bond markets, and various new financial networks designed to increase the riches of the wealthy began to collapse.

Now, CEOs from General Motors, Ford, and Chrysler claim that their companies are near financial collapse. Congress voted a blanket $700 billion bailout to the financial sector in October. Auto executives have just completed the first round of their appeal to Congress for an additional $25 billion to save the auto industry from collapse.

The American people are faced with a contradiction. Capitalism which is based on the exploitation of the working class, demands that the working class bail it out. Yet, if the working class says "no bailout" to key sectors of the capitalist system, they will suffer the most.

Arguments from right wing circles are that UAW wages, claimed to be $75 an hour, are the problem. There is no truth in this assertion, as the UAW itself explains that huge concessions on wages and benefits have reduced the autoworkers" share of the value they create to the same level (or less) in comparison with the U.S. non-union auto worker sector (Toyota, Honda, Nissan, etc.). This can only lead to further erosion of wages and benefits as workers in the non-union sector are forced to accept a new round of the downward wage spiral.

Anti-union company campaigns have defeated several UAW attempts to organize the non-union auto assembly plants. Outsourcing of jobs to non-union plants, increased productivity and moving production to other countries has reduced active UAW membership from 1.5 million in 1979 to 460,000 in 2007. The "jobs bank" that provided a measure of job security for laid off autoworkers was negotiated in the mid-1980s in lieu of wage increases and other benefits. Now the UAW is faced with mounting pressure to give it up.

It cannot be denied that if Congress refuses to act in support of some kind of bridge loan and allows the auto companies go bankrupt, there will be catastrophic pain and suffering far beyond the UAW membership. United Auto Worker (UAW) president, Ron Gettelfinger, estimates a loss of 3 million jobs, substantial cuts in pension and health benefits for 1 million UAW retirees and their dependents, and increased drains on public services at the same time as the tax base declines.

In testimony Nov. 19th before the House Committee on Financial Services, UAW President Gettelfinger called for a $25 billion loan "conditioned on stringent limits relating to executive compensation, as well as provisions granting the federal government an equity stake in the auto companies in order to protect the investment by taxpayers."

The Committees of Correspondence for Democracy and Socialism (CCDS) agrees with the UAW, and adds the following for consideration:

The loan guarantees must be coupled with requirements that the industry immediately
a. Pursue the production of new energy efficient, environmentally friendly low-cost automobiles;
b. Promote the development of a single payer health care system (HR 676) to guarantee health care for all, regardless of employment;
c. End the outsourcing of production of new vehicles to non-union plants;
d. End the drive to cut UAW negotiated wages and benefits and support the drive for unionization and livable wages for all workers in the industry;
e. Guarantee current and retirement benefits;
f. Radically reconfigure CEO salaries to the levels of CEOs in other auto companies;
g. End the threat of bankruptcy proceedings, particularly as they might relate to breaking union contracts.
Additionally, we call on Congress and the White House to move aggressively to take over idle auto production facilities and utilize them for an expanded public transportation authority for building high speed rail and other mass transit systems.

Lastly, but importantly, the workers who make the cars have poured their skills, their knowledge, their sweat and their hopes for the future into the auto industry. Their experiences make them best able to counter the greed and incompetence of the industry's owners and CEOs who have brought the auto business to its current disastrous condition. The auto industry should be restructured to give its workers controlling equity and a strong democratic voice in meeting the enormous challenges that it faces.
Should it transpire that bankruptcy is to be the fate of the big three, it's worth keeping in mind that bankruptcy needn't be equal to shutting down the industry. The typical corporate bankruptcy is a structural reorganization that, in this instance, could include the imposition of government approved management and the suspension of certain financial obligations, such as dividends. If it is decided that the industry must receive public assistance, how about this?: the government takes over management of the companies' pension plans and guarantees the benefits -- if we're going bailout anyone, let's make it working people -- and offers former and current auto workers complete health care coverage until the time, supposedly near at hand, when health care is provided as a right to all Americans.

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