Obama's auto bailout:
destroying the workers to help
resurrect the auto capitalists

(Presentation at the Detroit Workers' Voice Discussion Group meeting
of June 14, 2009)

Right-wing opposition to bailout
Workers devastated by Obama plan
The UAW leaders drive another nail in the union's coffin
What can be done?

. The hated Bush administration is gone and the Obama administration is putting its stamp everywhere. Obama inherited an economy in shambles. Years of wild-profiteering, aided by deregulation of the corporations by Bush, the stooge of Big Oil, and before that Clinton, led to a big economic fiasco. It cannot be said that Obama caused the present economic crisis. But he is no innocent bystander here, either. Obama's economic policy is basically a continuation of the free-market policies that have dominated US politics since the Reagan administration. He, just as much as Bush, is a tool of the capitalists. Yes, he is "cool" and Bush was a buffoon; yes, Obama sounds a lot more sympathetic to the working masses; yes, Obama has even offered a few token measures of relief for the masses. But overall, the Obama administration is subservient to the rich and fears getting in the way of big business. He has stocked his administration with Wall Street sharks, the very ones who've driven the economy over the cliff, and given them a free hand to bail out the corporations. And these bailouts are being paid for by the working masses. We've seen this in the bank bailouts. We can see it in his health care policy which aims to keep the profit-hungry insurance companies in the drivers seat. We can see it in his plans for the environment, which are based on the notion that if the capitalists can buy and sell rights to pollute among one another, the environment will be saved.

. The auto bailout is a stark example of the fate of the masses under the Obama recovery program. The auto crisis, and the devastation of the auto workers began long before Obama came on the scene. But Obama's solution is not to reverse the suffering of the auto workers, but to squeeze the last ounce out of them. Indeed, in some talks Obama admits that the present generation of auto workers will just have to accept getting wiped out. But, he adds, they should be heartened by the notion that they are (allegedly) creating new competitive auto companies for the future. And so the administration has moved forward, pouring tens of billions of dollars into the auto companies, stage-managing the bankruptcies and restructuring of GM and Chrysler, and, in the process, driving tens of thousands more auto workers into the unemployment lines and driving down the conditions of the remaining workers to that of non-union sweatshops.

Right-wing opposition to bailout

. In a moment we will get into the nuts and bolts of the Obama administration's policy. But first, we would be remiss if we failed to note that there is another wing of the ruling capitalist class that criticizes the bailout. This right-wing opposition, including the top Republicans, criticize it not because it hurts the workers, but because it isn't harsh enough against them. They criticize it because they believe that the free market should be left to destroy the masses and even whole sections of the capitalists themselves. Any government interference in this process, it frets, is "socialism", though real socialism, where the workers rule, has nothing in common with the pro-capitalist bailouts of the Obama administration.

. Here are some examples of the right-wing ravings against Obama's program.

. Republican National Committee Chair Michael Steele whines that the GM bailout is "nothing more than a power grab of a private company and another handout to the union cronies who helped bankroll his [Obama's] presidential campaign."

. Former Republican Speaker of the House Newt Gingrich writes "the Obama administration has trampled on the rule of law. It is using the taxpayers' money to pay back a political group [i.e., the UAW] for its political contribution."

. Conservative columnist David Brooks isn't against the bailout per se, but is bent out of shape because the bailout will allegedly prevent "thinking obsessively about profitability", because GM will "have to meet the administration's environmental goals" and because the government will protect GM and the UAW from competition.

. So what angers the right-wing is that the UAW members haven't been devastated enough by Obama's plan, that even puny environmental measures should be scrapped, less they interfere with profits, and that if only the capitalists can operate without any regulation, all will be well. They simply ignore that it wasn't government interference that led to the collapse of the Detroit auto companies, but their good old free market. It was the auto executives themselves that ran their companies into the ground, not the government. The recent economic downturn that helped create a downturn for the world auto industry wasn't from government interference in the market, but the crazed speculation of the big financiers, freed from regulation.

. One other thing the conservative critics cry about is how badly the debt holders were treated. First of all, the debt holders are the big banks and financial funds that helped ruin the economy. They don't produce cars or anything, but simply speculate on the financial woes in auto. Really, they deserve nothing, but in fact they are getting a good deal. The present debt holders only got 29 cents for each dollar of debt we hear. But actually a number of them didn't pay a dollar, but only 43 cents on the dollar when they purchased this debt. So they would be getting 70% of their loans back. Oh, the conservative wail, we had a legal contract that says we should get paid back 100%. But these are the same dogs demanding the UAW rip up its contract again and again to pay them off.

. Now for all their bluster, it's notable that where there are auto plants, local Republicans are forced to take a much kinder attitude to the bailouts. They don't want to be seen as the ones responsible for letting plants and communities collapse because they know they likely won't return to Washington come the next election. So local Rep. Thad McCotter, e.g., is critical of the Republican leadership's attacks on the bailout.

. In fact, one of the main critics of the bailout, Sen. Corker of Tennessee. campaigned for government aid to an auto plant there.

Workers devastated by Obama plan

. When the bailout plans were first floated, they were supposed to avoid the ruin caused by bankruptcy and save a lot of jobs. But, with government prodding, both GM and Chrysler are now in bankruptcy proceedings. And plant closing and job losses are huge. Over $50 billion has been handed over from taxes to the auto companies, but no jobs are saved. 21,000 jobs are being eliminated in the next couple of years. In Michigan alone, 7 plants are being closed.

. Here's what Obama says about this:

"We saw 400,000 jobs lost in the auto industry before this restructuring even began. More jobs will be lost. More plants will close. But I want you to know that what you're doing is making a sacrifice for the next generation so that your children and all of our children can grow up in an America that still makes things."

. This is capitalist bullshit pure and simple. We are cutting jobs, but you workers should be happy to be ruined. For if only you allow yourself to be driven into the ground, your children will watch America's capitalists flourish in the future. And what sort of future will this be? Well besides the fact that there won't be many jobs, the Obama administration is committed to keeping the remaining auto workers driven down to the low wage, low benefit status of various non-union operations. In the last auto contracts the wages of new workers were slashed to half the previous level and various benefits were lost. But Obama insisted that there should be still more sacrifice as a condition of the bailout. Among other things:

. The bailout is so miserable, that even the Democratic congressman Dennis Kucinich, who is sympathetic to Obama, had to admit that the bailout is like smothering a hospital patient with a pillow.

. At the same time, the Obama administration is making a big show about the aid it will send to communities and workers devastated by the policies of the auto capitalists and themselves. For example, Biden just showed up in Michigan, posing with Governor Granholm, and promising $2 billion in aid. What is the $2 billion for however? Will it go to keep various auto workers working? No. Will it increase unemployment relief? After all, 70,000 workers have recently exhausted their unemployment benefits. No. Will it help finance the collapsing retiree health benefits? No. The aid will be bonds that help local governments borrow money that they will use for such thing as job training, which would be nice if there were any jobs, or any jobs that had good pay/benefits. And private businesses can use this program to help enrich themselves, too.

The UAW leaders drive another nail in the union's coffin

. The bailout concessions are not only a product of the auto companies, and the corporate parties, the Democrats and Republicans. The UAW has been a partner in the continuing onslaught against auto workers. UAW president Ron Gettelfinger says, in an op-ed piece in the Detroit News of June 3, that the bailout concessions are a great victory. Talking about the deal with Chrysler, he boasts that it "will save the companies billions of dollars", and Chrysler will emerge from this with reduced debts. He forgets to mention that these billions saved and reduced debts come from slaughtering the workforce, that the closing and sale of Chrysler plants will go to pay off the big banks and equity firms who tried to turn a fast buck speculating on Chryslers debt, and that even if the auto companies survive, their future workers will make poverty wages. And the UAW, which in the now-distant past had a militant reputation, will give up the right to strike, and in so doing, further insure that the few UAW workers left will be no better off than their non-union brethren.

. Of course, the right-wing critics of the bailout, in their upside-down view of the world, complain that the union made out great. Look, they say, the UAW will now own 55% of Chrysler stock under the bailout. They consider this a great payoff to the UAW for helping get Obama elected. But this deal is a joke. The UAW-run retiree fund will hold 55% of Chrysler shares. But this simply means the union traded a company promise to put money into this fund for a pile of worthless stock. Nor will 55% ownership mean anything in terms of running the company. The UAW will only get one seat on the 9-member board of directors. And all the stock they own is non-voting stock.

. The UAW has not won a thing. Instead they have helped drive workers into the ground. For 30 years they have said that concessions will save jobs. Instead they lost over two-thirds of their membership. And now they are guaranteeing the auto companies that their workers will be no better off than non-union workers. In the end, all the UAW leaders have done is drive another nail in the union's coffin.

What can be done?

. With the capitalists, the government and the union leaders aligned against them, workers in the auto industry face grim times. This does not mean that struggle is futile, however. Just the opposite. It means that a struggle is needed to rescue the workers from being ruined. This will not be easy, because the workers are mainly unorganized as the union is a tool of management, not the rank and file. The painful process of reestablishing fighting organizations among the auto workers is on the order of the day. There are some examples showing that this is possible already, such as the rank-and-file group, Soldiers of Solidarity.

. The workers must build up their own fighting ability and raise their own demands. They must bring pressure to see that the billions spent on bailouts go to help them, not the auto execs and the bankers. They must call for serious relief measures for the unemployed, not the pathetic unemployment system of today, which doesn't cover a lot of workers, and pays way too little for way too short a time. They must demand decent jobs, whether they be in the auto plants or elsewhere. And of course this would not help not just auto workers but all workers suffering under the economic collapse. And this should not be a cause of auto workers alone, but all workers. Of course, these are only some possible demands. Once the rank and file starts to get organized, the discussion of what demands are best would advance as part of this process.


. Finally, a brief comment on the issue of socialism. The right-wing says Obama's plan is socialism because there's government intervention in the economy. After all, doesn't Marxist socialism involve ending private ownership of the economy? Yes, it does. But of course the Obama bailout doesn't end private ownership of the economy, it rescues it from the disasters it created. It's a program to funnel more money from the masses to the greedy private capitalists. It's a program run by former Wall St. executives.

. Marxist socialism begins with the working class taking power. It involves the step-wise takeover of private enterprises and placing them under the control of the workers, both at the factory level and through national bodies chosen by the workers.

. Obama's response has nothing in common with real socialism. But the present crisis does show that capitalism is bankrupt and the need for real socialism. Capitalism involves each capitalist trying to enrich themselves by crushing the workers and poor. It means the economy operates in anarchy, inevitably giving rise to one crisis after another. Look at auto. For decades the crisis has been brewing. Even before the recent meltdown, there was a crisis of overproduction there. Each company fought to capture the market by driving down its workforce, moving plants to low-wage regions, etc. This created joblessness and poverty which has fed the current crisis. The auto companies were driven to increase productivity, each hoping to capture more of the market for themselves at the expense of their rivals. All this led to a shakeout in auto where, for example, the US companies have lost their former unrivaled dominance. It's dog vs. dog; it's anarchy where one company advances by destroying others. The companies also rely heavily on loans, to keep retooling their plants with the lastest job-destroying technology, and to operate in general. So when the financial system went haywire, they were unable to get credit to continue as usual. Capitalist anarchy of production has now led to collapse in auto. And, so despite their proclamations for free enterprise, the auto companies now call for government intervention to prevent their demise.

. While the present intervention is to save capital, the situation does show that the capitalist system deserves to die. What justification can capitalism have when the titans of capitalist industry cannot even save their own companies, at least without massive handouts? What needed is a system where anarchy of production is replaced by an economy that is planned and where the needs of the masses are the priority. This can only happen if the workers take power and place the economic resources under the collective control. Only then will real comprehensive planning be possible, planning that isn't for profit, but to insure that the needs of the working people are met. <>

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Last modified on December 23, 2009.
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