James Moore Posted December 11, 2008 | 06:15 PM (EST)
"Home folks think I'm big in Detroit city, From the letters that I write they think I'm fine, But by day I make the cars, by night I make the bars, If only they could read between the lines."
- Bobby Bare, Detroit City
Every August, shining vehicles from the glory days of Detroit mysteriously appear on a specified weekend and roll up and down Woodward Avenue, the city's main local artery. Collectors and restorers of classic cars bring out their 55 Chevy's and Buick Dynaflows and original Ford Thunderbirds and parade them in an automotive celebration known as The Dream Cruise. The music of Motown fills the air as people indulge in the nostalgia of when Detroit and its cars were king. Lost prosperity is remembered, quality is celebrated, and the reflections in the chrome and buffed-out paint jobs are often of someone who once worked an assembly line.
Detroit has prompted a different sort of parade in Washington these days. Hypocrisy and contradiction are strutting the halls of Congress with the same style that drivers display during The Dream Cruise. Elected and appointed officials are traveling to and from their bailout appointments in big, black SUVs, which, in Washington, is an expression of importance. Of course, when they exit their outsized V-8s with the windows tinted dark to suggest an even greater significance of the passenger, the member of congress hustles off to a microphone to complain about Detroit's production of SUVs.
They want answers from carmakers and they want them now. How will the industry work itself out of its present financial mess? What will taxpayers get in return for the estimated $15 billion rescue plan? How fast can the money be repaid? What concessions are you willing to make if we give you these funds? Answer or you don't get the money.
Of course, nobody asked any such questions when Wall Street came calling. What was there - $750 billion in blank checks for AIG and anyone who could afford a $3000 suit? All they had to do was show up and say their institution was going under and it foretold a great fiscal tragedy for America. Ben the Billpayer gave away taxpayer money as if it were Halloween candy and investment bankers were children leaning on the doorbell.
We still don't really know what we are getting out of the Wall Street bailout. The pitch to taxpayers was that credit had frozen up and no one was lending and small businesses were endangered. Listen to the news and there isn't any indication that the credit markets have unfrozen in any meaningful fashion. But the money is still getting stuffed into banks and Wall Street institutions while politicians act as if it were going to help homeowners facing foreclosure. It ain't.
Maybe the Manhattan hotshots did a better job of dropping campaign cash than did the Detroit City executives. Perhaps, that's why they were never questioned about their bailout the way Detroit is being cross-examined. Carmakers, too, have done a fairly good job of spreading cash around Washington, however. Mileage standards keep getting pushed back and there are all kinds of tax breaks for alternative fuel vehicles that don't do anything more than complicate food costs and production and increase CO2 emissions. But Detroit would not have kept making those gas-guzzling SUVs and Ford F-150 pickups if American consumers were not snapping them up with great enthusiasm.
Was Detroit supposed to anticipate $150 barrel oil any more than Wall Street was expected to know they were playing a funny money game with credit derivative swaps and collateralized debt obligations? Detroit's lack of vision is less of a crime than a financial institution selling unsecured debt like an addicted, delusional gambler convinced the next roll of dice is the big moment.
Why one set of standards for Detroit and another for Wall Street? The answer is in the Senate where Republicans are not going to support their president's carmaker rescue plan without concessions from the unions. Our entire economic problem, of course, was caused by the unions. The wages they earned allowed them to live middle class lives and buy the products they built. We can't have that and the Republicans in the senate see this bailout as a chance to break the back of the union.
According to Sen. Jim Demint, a Republican from South Carolina, "It's the unions that have brought them to the brink." Demint and four other Republicans called the auto bailout a "travesty." It would not be, though, if the unions conceded wage and benefit cuts, reductions in retiree health care obligations, and agreed to elimination of the Jobs Bank Program, which protected automotive worker employment.
No such demands are being made of Wall Street, though; dollared-up big dawgs are getting bonuses and Ben the Billpayer keeps writing checks with our tax money. But everybody knows Wall Street is important.
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