Monday, March 30, 2009

Question for the White House: Are We Going to Change Trade Policy in 60 Days?

Political cover. The words leave a real bad taste in your mouth. Check what the analysts in Michigan are saying this morning about the move by the Obama WH to oust Wagoner and take a hard line on the auto companies. The spin is not pretty, and so far seems to be ignoring some of the underlying problems that have put us in this position in the first place.

Rick Haglund puts everyone's initial knee-jerk reaction right in the opening paragraph, followed by a quote from Dave Cole:

General Motors Corp. Chairman Rick Wagoner's surprise resignation was prompted by an Obama administration looking for political cover in its unpopular bailout of Detroit's automakers, analysts say.


"I do think they need some political cover because of the political unpopularity of the loans," David Cole, chairman of the Ann Arbor-based Center for Automotive Research said about Wagoner's apparent forced resignation by President Barack Obama's automotive task force.

Tom Walsh draws the comparison as well; the fallout from AIG leading to the need for a scapegoat.

Obama and Treasury Secretary Timothy Geithner appeared to be caught somewhat flat-footed by the outpouring of outrage about the bonuses of AIG executives. So even though Wagoner was working for nothing this year, Wagoner is partly a victim of populist rage at the nation’s CEO class.

It almost goes without saying that the Detroit News would use this to attack Obama, but since it's really not much different from the rest...

Obama has been banged around the last couple of weeks because of the bonus scandal at AIG. His administration, with the help of Congress, botched the aid package to the failed insurance giant, allowing the indefensible bonuses to be paid and triggering public outrage that is increasingly focused on the White House.

Dumping Wagoner lets Obama deflect attention away from Wall Street, where his Treasury Department is still moving through quicksand, and turn it on Detroit.

And even those hippies at the Freep aren't happy and posit that maybe government "crossed the line" with this move, but they hit on something that is being overlooked in the hulabaloo this morning, and has long been a battle cry in this state - the lack of federal government help in trade policies and other incentives that would create a level playing field for our workers and manufacturers.

Banks, mortgage companies and other bailout recipients aren’t being subjected to government meddling, or even much oversight. Why are GM and Chrysler being treated differently?


Moreover, the government’s track record setting policy that affects the auto industry is atrocious. Car companies have been flogged for not producing enough small, efficient vehicles, but the government eschews a national gas tax that would keep demand for such vehicles high. The companies have been derided for exorbitant labor costs, but in too many instances, government trade policy doesn’t help them by holding other countries to decent labor standards.

A visibly bummed-out Gov. Granholm has to deal with attack dog Matt Lauer, who has taken on the voice of those short-sighted people who question the need to save American manufacturing, and are somehow demanding instant turn around for this industry in the worst economic downturn since the Depression. She runs through all the industries that will be affected by a collapse of the auto companies; glass, steel, rubber, electronics - 3.5 million jobs altogether by some estimates, all still on the line, all will take a major hit, which in turn would ripple through an already compromised national economy.

"And while we are investing in a loan, let's make sure we bring manufacturing back to this country. If the American taxpayers are going to be helping with a loan to finance this, well, let's create jobs here."

Yes, let's do that. Some sort of indication from the WH that manufacturing is valued would be nice at this point, because so far the spin has created a martyr in Wagoner, and has simply exacerbated the feeling that inequality exists between the big money banking interests and the rest of us.

It's hard to see how 60 days will make any difference - it's going to be a year at least, maybe even longer, before any tangible results are seen from these companies, or even in the national ecomony for that matter. So, why prolong the agony? Perhaps it is to force these "bondholders" to come to the table in an all or nothing gamble; labor already has made numerous concessions to achieve parity, the suppliers are hanging on by a thread as it is, who is left to pony up at this point?

And the crucial question is, will we see some change in trade policy, and support in other areas such as health care costs, etc, from the federal government that could help bring about the success that the WH is demanding? If not, those underlying problems will still exist, and the feds are simply asking the impossible out of these companies.

So, do we have a partner in the White House or not? Follow up moves that show there will be real help for the industry, not just loans to tide them over, will go a long way towards not only knocking down the spin that we are hearing now, but to keep American manufacturing a healthy and viable part of our national economy.