Big 3 Bailout Still Contentious

The proposed Congressional bailout of Detroit's Big 3 Automakers is proving to be fraught with landmines of opposing opinion. In today's New York Times, Republican Sen. Mitch McConnell says that the proposed bailout is "deeply flawed":

“I want to support a bill that revives this industry,” Mr. McConnell said on the Senate floor. “The auto industry is vitally important to our nation’s economy, and it is vitally important to my home state of Kentucky.”

But he said the proposal being discussed by the White House and Democratic Congressional leaders was “deeply flawed” because it would not do enough to spur management reform and cut labor costs. With those weaknesses, the proposed rescue plan might mean that taxpayers would be asked “to shell out billions more a few years or even a few months from now,” Mr. McConnell said.

Over on Huffington Post Steven Clemmons points out that the current bill won't prevent automakers from outsourcing jobs:

"[T]here is NOTHING in the current outlines of the auto bailout package that requires the auto industry to keep jobs in the U.S. This money can go to help them manage their facilities abroad -- in lower wage countries -- while facilities continue to shut down in the U.S. with jobs shifted overseas.

In fact, despite some minor verbal, non-binding assurances from the auto chiefs that American taxpayer funds would not be applied to offshoring activities, there are no deals, no guarantees at all -- and if faced with a much higher, less efficient production base in the U.S. compared to cheaper platforms elsewhere -- this bailout money could in fact be financing a new major offshoring trend."

Paul Krugman, Nobel-prize-winning economist weighed in during his acceptance speech, saying: ""the concentration of the industry around Detroit would disappear." And Flint, Mich. native Michael Moore points out in an open letter to Congress that the government could buy GM outright for $3 billion. And then there's the angle that Salon gave for why the South opposes the bailout: because of "the New South's emergence as an industrial playground for foreign manufacturers," especially foreign car manufacturers.

Still it looks as though the industry bailout could be approved this week--without strategic management reform, cost-cutting initiatives, guarantees for keeping jobs in the U.S., or a clear, long-term plan to move away from inefficient, polluting transportation technology. Whether you think the bailout is a good idea or a bad one, it seems unlikely that the current plan is covering all the bases it needs to.