ONLY ONE-IN-FOUR CHANCE OF AVOIDING DETROIT 3 BANKRUPTCY

[Get the latest “Truth With Speedzzter” here]

In the wake of the legislative branch’s abject failure to hog-tie the United Auto Workers union and pass necessary bridge loans for the Detroit 3, the U.S. Treasury Department is busy working on a TARP-based interim Detroit 3 aid package.It’s shaping up to be a rehash of the plan that passed the U.S. House, including a “Car Czar” with the power to force bankruptcy.

In other words, “meet the new boss . . . same as the old boss.”

The emerging Bush plan does what the U.A.W.’s Ron Gettelfinger and his strike-happy cronies anticipated – it merely passes the ball to the union-beholden OBAMAcrats.

According to Bloomberg,

“The likeliest U.S. aid package will be loans and a so- called prepackaged bankruptcy to get the automakers through to 2009, Moody’s Investors Service said in a note today. There’s only a one-in-four probability the U.S. will bail out the automakers with no bankruptcy, analyst J. Bruce Clark said.”

Treasury Secretary Henry Paulsen – apparently no fan of using any TARP money to help the Detroit 3 weather the financial and regulatory hurricane created by previous federal policies and market tampering – uses the “long-term viability” code wording for coerced U.A.W. give-backs:

“The terms would be very critical, and we would have to assure ourselves that this was a step on the path to long-term viability.”

Of course an Obama-controlled Treasury Department would have virtually no force to make the U.A.W. accept across-the-board, market-based wages and benefits by early 2009, if ever. Yet under the emerging Bush plan, the Treasury Department would function as the de facto “Car Czar” and could (theoretically) force bankruptcy if the participating members of the Detroit 3 failed to demonstrate “long-term viability” by late March 2009.

In practical terms, however, the Bush plan would be a “toothless tiger.”

Why?

In short, because of Barack Obama and his fealty to organized labor.

Most certainly, Ron Gettelfinger and other union hacks would pressure the OBAMAcrats against forcing bankruptcy (pre-packaged or otherwise) without substantial guarantees of a wage and benefit premium for pre-existing U.A.W. members and/or swift passage of the anti-secret ballot “card check” legislation.

Sensing this, the politicians beholden to non-union Southern “invader” auto plant interests continue to campaign vigorously against any help for the Detroit 3.

One of the latest to join the Richard Shelby-ite “just say no” chorus is South Carolina Governor Mark Sanford: Sanford wrote President Bush yesterday to “not to consider the bank bailout fund for automakers because it would open the ‘floodgates’ for other troubled industries.”

“We are at a tipping point in moving from a market-based economy to a politically based economy,” Sanford said.

Sanford’s state is host to a B.M.W. “invader” assembly plant that was built with SUBSTANTIAL public aid:

In 1992 South Carolina ushered in the new wave of investment by foreign carmakers in the South by offering BMW a package that was ultimately worth an estimated $150 million. A decade later, the state put up an additional $80 million in infrastructure aid when BMW decided to expand its operations in the state.

Sanford and the Shelby-ites also wholly ignore the pervasive federal role in weakening the Detroit 3 through decades of wrong-headed anti-trust, trade, labor, energy, tax, and foreign policies and anti-market-based regulation. To suggest that the Detroit 3's problems are solely “market-based” is ludicrous, if not empty-headed. There has been no true “free market” in light vehicles for decades.

Sanford and the Shelby-ites also ignore the critical importance of the Detroit 3 to America’s basic industrial capacity. They ignore the virtual impossibility of recreating any of the Detroit 3 in any reasonable period of time should they be liquidated. They ignore the virtual certainty of double-digit unemployment and a economic depression should the Detroit 3 fail.

Instead, Sanford and the Shelby-ites maneuver their political rhetoric not for level-headed, principled policy reasons, but for political and parochial gains. They are not looking out for our national interest. They are no better than the greedy pirates at the U.A.W. in developing a solution for a crisis of political creation.

The drums of Chapter 11 continue to sound. But the emerging question – assuming that the Bush Administration staves off the immediate, forced bankruptcy threat – is: Will the OBAMAcrats get tough with the U.A.W. and/or force the Detroit 3 into bankruptcy to address the wage and benefit disparity problem?

Don’t count on it.