Vol. 72/No. 39      October 6, 2008

The auto barons first requested $50 billion, but lowered that figure in hopes of getting approval by the end of September. Last December, Congress authorized $25 billion in government-supported loans to the auto giants, but the money was never appropriated. The stocks of all three companies have been downgraded to junk-bond status.

“Fifty billion dollars is a drop in the bucket compared to the total cost to the government if one of these companies goes under,” an auto analyst for Global Insight in Troy, Michigan, told the St. Louis Post-Dispatch in arguing for the bailout.

The last major government bailout for U.S. auto companies was 30 years ago when Washington granted $1.5 billion in loans to Chrysler to stave off bankruptcy.

GM, Ford, and Chrysler have lost more than $58 billion over the past two years, with GM alone losing $51 billion over the last three years. Over the first eight months of 2008, sales of automobiles in the United States continued to decline. GM sales were down 18 percent, Ford’s declined 16 percent, and Chrysler was down 24 percent. Sales of foreign autos also declined, although not as much. In August, U.S. yearly sales for Toyota dropped 8 percent.

In a drive to reverse their declining profits, the auto bosses have deepened their assault on auto workers and their union. They have driven through layoffs and plant closings. Membership of the United Auto Workers union has shrunk to one-third of the 1.5 million members it had in 1979. In 2006, GM had 113,000 hourly employees; that is now down to about 55,000.

The concession contract in effect at GM, Ford, and Chrysler since last year institutes a permanent two-tier wage system, with many new hires starting at half the pay of current employees. Retirees are no longer covered by company health insurance, and their benefits are dependent on a trust fund invested in the stock market.

Democratic Party presidential candidate Barack Obama supports providing a full $50 billion to the auto barons. Republican Party presidential candidate John McCain also backs a government loan. In an op-ed in the Detroit Free Press McCain wrote that just as the government had stepped in to help Wall Street it should help “our automakers.” Speaking to assembly workers at a GM plant September 18, McCain said, “We are not going to leave the workers here in Michigan hung out to dry while we give billions in taxpayer dollars to Wall Street.”

Roger Calero, Socialist Workers Party candidate for president, says working people need to advance a program that is in our interests. “The labor movement should fight for no wage cuts, no layoffs, and for a shorter workweek with no cut in pay to spread the available work around to all who need it,” he said. “If the bosses in the auto industry, or from any other, can’t pay union-scale wages with medical and pension benefits, and provide safe working conditions, then their plants should be nationalized under workers control.”
 
 
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U.S. gov’t prepares major bank bailout
New cuts in social services for workers  
 
 
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