Dems Gain Nationally:


No Spin Answer said...

“If Americans like what the unions did to Detroit’s economy, they’ll love what the unions will do to the country,” said Richard Berman, executive director of the Employee Freedom Action Committee. “The unions have played a significant role in nearly bankrupting the Big Three automakers with untenable inefficiencies which have put tens of thousands out of work. With the Employee ‘Forced’ Choice Act, unions are poised to do the same to millions of jobs across the country.”

NO UAW Bailout! said...

No UAW Bailout

Carmakers: Why not let the Big Three just file Chapter 11? It's not a problem-free solution, but it beats using taxpayer money to prop up a failing union. Maybe that's why Democrats seem to dismiss it out of hand.

Detroit is in nose dive, no doubt about that. So is a $50 billion government bailout the answer? President-elect Barack Obama thinks so, and House Speaker Nancy Pelosi points in the same direction with her call for extending "emergency and limited financial assistance" under the $700 billion bailout plan enacted last month. Democrats clearly want something big and something soon for the Big Three.

We agree that the automakers can't go on much longer burning cash and piling up an Everest of debt. They're close to the breaking point. But there's a system in place for dealing with crises such as this, even at the scale of massive corporations. It's called bankruptcy, and it should not be written off as unthinkable.

Filing for Chapter 11 protection under bankruptcy law is the normal way a company stays in business when facing an unmanageable financial situation. It keeps creditors at bay while the company reorganizes under court supervision and settles its debts. In recent years it has served as a refuge for major airlines (Delta and United) which, you may notice, continued to fly while in Chapter 11 and, post-bankruptcy, fly today.

Bankruptcy protection also frees companies from union contracts. Could this be why it seems to have been taken off the table as an option, at least among Democrats? We can only surmise, but it's clear that a bankruptcy process would be rough going for the United Auto Workers.

The Big Three's high labor expenses would no doubt need a trim. During the last round of contract talks in 2007, the average hourly costs were over $70 at all three of the domestic automakers, compared to about $48 for Toyota.
Detroit has made progress since then in dealing with one of its crucial labor issues, the funding of health care for retirees, but its unionized plants still put it at a disadvantage to rivals such as Toyota, Nissan, BMW and Honda, which run lower-cost, nonunion operations.

The success of those foreign transplants has led to a steady drain of autoworkers from both the Big Three and the UAW. The union's membership has fallen from a high of about 1.5 million in 1979 to 465,000 as of 2007 — the first time since World War II that it has stood under a half million. It would no doubt fall further if Detroit goes through the type of reorganization typical of Chapter 11.

Saving a shrinking union is the worst reason to bail out Detroit with taxpayer money. Unfortunately, it may be one of the strongest, politically. That's why the public needs to be enormously skeptical when it hears that bankruptcy for the Big Three would be a catastrophe for much of the U.S. economy.

There are some legitimate caveats against standard-issue bankruptcy as a way to handle Detroit's crisis. The automakers' obligations may be too large for any private parties to extend them debtor-in-possession financing while they're in Chapter 11. Also, they have a valid concern that customers might not want to buy a car from bankrupt companies.

But even if some federal loans or loan guarantees can't be avoided, Washington needs to make Detroit's experience as close to Chapter 11 as possible. Some suggestions: Zero out the equity investors (who've lost almost everything anyway), replace management (without golden parachutes), shut down surplus dealerships, and force the UAW to face the fact that its good old days are gone forever.

In the end, the American automakers may finally be fit to take on their more nimble global rivals.

Anonymous said...

Unions at work..A true story.

"The Rubber Room"

According to the Daily News, at any given time in New York City an average of 700 teachers are being paid not to teach (they instead report to “rubber rooms”) while the district goes through the hoops (imposed by the union contract and by law) needed to pursue discipline or termination.

A city teacher in New York that ends up being fired will have spent an average of 19 months in the disciplinary process.

The Daily News reported that the New York City school district spends more than $65 million annually paying teachers accused of wrongdoing, in addition to the cost of hiring substitutes.

$65 million annually out of taxpayers pockets.

Shame on the teachers union.

Anonymous said...

I commend Tony Palmeri for attempting to make some cost cutting amendments to the 2009 City Budget. Unfortunately, he didn’t obtain the votes to put his plan into action. I surely hope those people who did not vote with Mr. Palmeri know that the voting public was watching, and the result of their actions may jeopardize any re-election hopes they might have.

I am also disappointed in Mr. Rohloffs action and position. As a new employee, he already has shown signs of keeping his kingdom status quo with no real attempt to reign in excess spending. One classic example is the “re-organization” of the Media Services and Purchasing Departments. Most re-organization efforts attempt of lower costs, Mr. Rohloffs misguided attempt actually increased costs to the tune of $800.00.

Mr’ Rohloff is at this stage, a very large disappointment.

Anonymous said...

This is an example of partly why we are in the poor economic shape we find ourselves in........

The heart-wrenching picture on the front page of Thursday’s Buffalo News of the long line of people waiting to be fed tells many stories and prompts a modest plea or two.

In the near term, everything must be done to ensure that government provides people’s most basic needs. One doubts, however, that the out-of-town dignitaries celebrating the opening of the Erie Canal Harbor took time to visit any of these charity kitchens.

If they had, their brief encounter with quiet desperation just might have prompted a sliver of doubt in some of the Democratic notables about the pillar of New York’s economy.

That pillar, since the Taylor Law fell on the state in 1967, is that public employee unions call the tune on all policy issues in Albany.

The current evidence of union muscle is its thwarting of Gov. David A. Paterson’s efforts to cap the property tax.

The Taylor Law, and its amendments by rule, guarantee not only bargaining rights to public employees, but virtually assure that there will be no cutbacks in employer net pay, or benefits, or pensions that private-sector workers are experiencing all over the nation.

It makes difficult, if not impossible, any government economies by privatizing services.

The law guarantees that via compulsory deductions, public unions assemble powerful war chests that give them in this state unchallenged sway in elections.

These union treasuries also come into play when districts for the State Senate and Assembly are redrawn to guarantee the permanent incumbency that has reduced our Legislature to a national joke, and a bad one at that.

The same day that News reporter Tom Buckham chronicled life in Buffalo’s soup kitchens, a counterpoint sounded in far off Virginia.

Gov. Tim Kaine announced that for the third year in a row, Virginia led the nation in moving its welfare clients into private jobs, and also leads the country in job retention by former welfare clients.

Virginia is meeting economic hardship as it usually does by cutting back on non-emergency government payrolls and exercising fearsome restraint on taxes, despite liberal Democrat Kaine. In New York, according to a national survey, taxes are going up another $1.5 billion and there will be no cuts in the state’s bloated public sector. Guess why.

Unions in Virginia, public and private, do not have exclusive bargaining powers and therefore lack the stifling political clout they have amassed in New York.

As a result, Virginia sales taxes are three to four points lower than in New York, real property taxes are a fourth of New York’s and the income tax is about half of the vampire state’s.

In New York, prospective investors, outside the custodial class, are just not going to pay the freight that public employees devour, particularly upstate.

By contrast, there are private jobs in the Commonwealth. In May, its unemployment rate, despite a continuing surge of population, was 3.8 percent. New York’s, despite the exodus of upstate families, was officially listed at 5.2 percent, not counting New Yorkers who stopped looking long ago.

At the end of these bread lines there is a message: Something has to sharply curtail the power of New York’s public unions, or the taxes they generate will eat up what little remains of private-sector jobs and produce longer lines of hungry people.

Right now, this core objective is not in our economic language, even in the dispatches of the New York State Business Council, or the business advocacy group Unshackle Upstate. They’re not talking growth and job opportunities.

The groups’ initiatives just move chess pieces around on a broken game board, timidly nibbling at the edges of the hemisphere’s second-last, government-controlled economy, after Cuba.