ECONOMY-US: Carmaker Rescue Could Cost Workers

[Omaha Steve]

http://www.ipsnews.net/news.asp?idnews=45207

By Bankole Thompson

DETROIT, Michigan, Dec 23 (IPS) - After debating whether it was wise for the Republican administration to let the U.S. automotive industry collapse under its watch, Pres. George W. Bush, who leaves office next January with a battered legacy marked by an unpopular war in Iraq that has consumed billions of tax dollars and an economic meltdown at home, finally came to the aid of General Motors and Chrysler with a 17.4-billion-dollar rescue package.

The Centre for Automotive Research (CAR) issued a report in the midst of the Congressional debate on the auto bailout about how serious it could be if the government allows GM, Chrysler and Ford to fail or go bankrupt.

"Our model estimates that a complete shutdown of Detroit Three U.S. production would have a major impact on the U.S. economy in terms of lost wages, reductions in social security receipts, personal income taxes paid, and an increase in transfer payments," said Sean McAlinden, CAR's chief economist who directed the study.

"The government stands to lose 60 billion dollars in the first year alone, and the three-year total is well over 156 billion," he said.

Bush stepped in with an aid plan for the cash-strapped carmakers Dec. 19, marking the end of an anxious week for the industry. He said that 13.4 billion dollars will be disbursed this month to GM and Chrysler.

But the aid package aimed at stabilising the operations of the auto industry, keeping the lights on and paying its workers for the next three months came with some heavy strings attached.

Evidently playing to the gallery of Republican members of Congress who wanted the United Auto Workers (UAW) contract with the carmakers reopened for negotiations, Bush said one of the conditions for the bridge loans would be a more competitive labour contract between the UAW and the carmakers.

For the UAW, that would mean more wage cuts in a hard-pressed economy, on top of the existing concessions it members have made in the last three years.

FULL story at link.

[ixion]

1. the monied class profits, the workers pay the bill

t'was ever thus, I'm sad to say. :(