Media miss roadkill in auto bailouts
Long-term impact overlooked
With the fate of some 3 million auto-dependent jobs at stake (Economic Policy Institute) and GM and Chrysler tottering at the brink following the Wall Street meltdown late last year, even archconservatives Dick Cheney and William Kristol cautioned fellow rightists that GOP resistance to government assistance could result in political suicide.
Kristol warned "Senate Republicans now run the risk of being portrayed as Marie Antoinettes with Southern accents." (New York Times, 12/15/08). With GOP senators like Mitch McConnell (Ky.), Bob Corker (Tenn.), and Richard Shelby (Ala.) boasting numerous foreign-owned (and heavily-subsidized) non-union plants in their home states, much of the public perceived them as utterly indifferent to the fate of primarily Midwestern workers and cities that were already experiencing severe unemployment and social decay.
But similarly, the major media, in commentary and coverage stretching from last November to the Obama administration granting $30 billion in new loans to the restructured corporations in June, displayed little more concern for the fate of autoworkers, their living standards, or their communities.
Vastly inflating autoworker compensation to "$73 an hour" outlets ranging from the generally liberal MSNBC, New York Times (Andrew Ross Sorkin, 11/18 /08) and centrist CNN's Wolf Blitzer (12/4/08) and rightwing Fox TV (12/02/08 and 2/25/09) heaped blame upon UAW members' allegedly excessive pay and benefits for the decline of GM and Chrysler. But labor costs for active workers were actually composed of $26 to $28 per hour in pay, as much as $10 in vacation and overtime pay, and about $14 to $17 in benefits, with total labor costs actually accounting for 10% or less of total production costs (D. Leonhardt, NYT 12/10/08). However, the breath-taking claim of $73 an hour tended to capture attention and gain credibility through sheer repetition. For example, the fact that some foreign-owned plants approached (and even exceeded) total UAW pay and benefit levels got little attention (Detroit News).
The genuinely significant factor in US automakers' financial troubles has been the absence of a single-payer health care system in the US. "Health care at General Motors puts the company at a $5 billion disadvantage against Toyota, which spends $1,400 less on health care per vehicle," said former GM CEO Rick Wagoner (Reuters, 3/30/09), but this inspired little media discussion with the debate already centered on wages and benefits. But nearly absent in coverage and commentary was the recent history of important wage, benefit, and retiree-health concessions by the UAW.
The corporate media largely framed the debate over federal loans around the need for scrupulously minimizing government intervention, extracting concessions from the United Auto Workers, whose wages and benefits were frequently blamed for the auto firms' plight, and radically downsizing GM and Chrysler to restore profitability with maximum haste. Barely entering the media discourse were how the "bailouts" of GM and Chrysler would impact the supply of high-wage jobs during the midst of a severe recession, the fate of dozens of Midwestern towns heavily dependent upon automating, or the chance to re-orient America's auto-making capacity toward "green" production of environmentally-sustainable mass transit as well as fuel-efficient vehicles.
For example, in the eyes of New York Times editorialists, Obama needed to narrowly focus on just two priorities: "President Obama owes American taxpayers and voters a candid and detailed explanation of the government's goals and the levers it intends to use to achieve them. He should make clear that the overarching objectives are to create a profitable company that makes cars that people want to buy, and that are more fuel-efficient" (6/1/09). The Times emphatically rejected any notion that Obama and his Task Force should use public investment to pursue any other social aims: "The decisions of GM's new managers should not become entangled with the government's other policy priorities — such as maximizing employment in the United States or reducing job losses in Michigan."
To a remarkable extent, this was precisely the game plan followed by the 21-member Automotive Task Force appointed by Obama, which included virtually no one with experience in manufacturing. Some commentators, like Jesse Jackson (Chicago Sun-Times, 6/9/09), Derrick Z. Jackson (Boston Globe, 5/19/09) and Michael Moore (HuffingtonPost, 6/1/09) had envisioned the crisis at GM and Chrysler as an opportunity to link Obama's aim of stimulating the economy with enhanced spending power for workers with building a green economy, by converting some auto factories to the production of high-speed rail vehicles and other non-gasoline powered transportation equipment. But dominated as it was by ex-Wall Street heavyweights like Steven Rattner (net worth: $188 million to $688 million, Wall Street Journal, 5/28/09) and chief economic advisor Lawrence Summers, the Task Force instead treated the problem as a pair of straightforward corporate "turnarounds."
These could be achieved by standard business-school techniques of drastic cost-cutting, closing plants, and shearing the workforce. In line with this thinking, the Task Force's guidelines for the two firms never included any requirement about locating production in the US, according to a source close to the group's proceedings.
Obama, meanwhile, remained under constant editorial bombardment over swapping government loans for temporarily holding substantial shares of GM and Chrysler stock. Editorials warned about creating "Government Motors" (Mobile, Ala., Register, 4/2/09), "nationalizing" the auto firms (Bemidji, Minn., Register, 4/1/09) or even enacting "fascism" (John Fund, WSJ, 4/1/09 and Mobile Register, 4/2/09). Even supposedly "liberal" media, like the Washington Post, were editorially preoccupied with obtaining wage concessions from the UAW more rapidly: "The current collective bargaining agreement calls for the Big Three's labor costs to match those of US-based foreign automakers a year from now." The union needs to help make that happen sooner." (12/4/08)
The Post (5/14/09) also demanded that hedge-fund operators be given more stock relative to the health fund for retired autoworkers, despite the fact that those benefits represented long-deferred wages and that the government remain unresponsive to the concerns of UAW members and retirees. As a result, Obama felt repeatedly called upon to reassure elite sectors of his audience that the government's goal is "to get GM back on its feet, take a hands-off approach, and get out quickly."
"What we are not doing — what I have no interest in doing — is running GM," Obama added. "GM will be run by a private board of directors and management team with a track record in American manufacturing that reflects a commitment to innovation and quality. They — and not the government — will call the shots and make the decisions about how to turn this company around."
In the media framing of the bailouts, the paramount concern of the nation was keeping government intervention within conventional constraints despite the unconventional circumstances.
As a result, the disquieting consequences of the bailouts were barely acknowledged in major outlets' news coverage or editorials. Among the central elements of this vitally-important story that were largely neglected:
BLOW TO INDUSTRIAL BASE: By imposing vast reductions in workforce and capacity at GM and Chrysler, the bailouts will result in accelerated shrinkage of more of America's productive base during harshest economic downturn in 80 years.
But most mainstream commentary overlooked the massive human costs in the form of massive job reductions (21,000 to 23,000 at GM, at least 35% of the current workforce, and about 10,000 at Chrysler), plant closings (16 for GM, 8 for Chrysler), massive concessions for retirees' health benefits, shutdowns of some 1,900 dealerships, and devastating blows to the economic pillars of about two dozen Midwestern cities.
However, in a set of poignant articles, New York Times reporters painted moving depictions of the devastating results of past plant closings and looming layoffs for workers in cities like Flint, Mich. (4/22/09), which is about to undergo a "planned shrinkage" of its territory due to a loss of 40% of its population over the past two decades. Times reporters also depicted miserable conditions in Pontiac, Mich. (3/5/09), Anderson, Ind. (3/5/09) and Janesville, Wis. (2/13/09), where the majority of discarded autoworkers and their families have no viable prospects for escaping the ranks of the working poor. The Times also covered the bleak prospects for African-American workers (12/29/08), for whom the auto industry and UAW representation were crucial steps into the middle class.
Nonetheless, ignoring the implications of its own news coverage, the Times editorialists cheered on as the Task Force and the two corporations developed increasingly draconian plans for cutting their workforces, outsourcing more work overseas, and extracting more concessions from active and retired autoworkers.
The Obama Administration out-did itself in trying to meet the demands of the Times and other elite forces seeking to use the bail-out as a lever to wrench concessions from the workers. As Laurence Shoup has pointed out in Z (Jan.,2010 at http://www.zcommunications.org/contents/77683/print),
"In its press release about the auto bailout, the Obama administration said: "In virtually every respect, the concessions that the UAW agreed to are more aggressive than what the Bush Administration originally demanded in its loan agreement with GM."
DOUBLE STANDARD: Barely noticed in the major media (excepting MSNBC's Rachel Maddow Show and some opinion pieces) was the double standard evident in the close scrutiny of roughly $92.7 billion in loans to the automakers) while the flow of $12.3 trillion in various federal agencies' support of the financial industry (calculations by former Goldman Sachs managing director Nomi Prins, contained in her forthcoming book It Takes A Pillage) apparently is unaccountable. Once the initial $800 billion was appropriated by Congress and the Bush administration last fall to prop up the crashing financial industry, the continuing flow of funds to banks and insurers via less-visible federal channels (Federal Reserve, Treasury Dept. FDIC, etc) failed to activate ongoing coverage or to elicit comment on the radically different standards for protecting white-collar and blue-collar jobs.
STILL SAME MODEL: While scaled back, GM and Chrysler have been re-launched with the same business model stressing relocation of production to low-wage nations like Mexico and China and an almost exclusive focus on producing gas-using vehicles. GM's latest plans call for a doubling of the vehicles it will import from overseas factories, from 372,000 to 737,000, in the next four years. (The Nation, 5/ 8 /09).
As Nation journalist William Greider pointed out, "The business plan the federal government is advancing for GM follows the free-trade model created by Robert Rubin and other Clintonistas during the 1990s. Do whatever you can to help US multinationals succeed in the global trading system and assume this represents the national interest — never mind the damaging consequences for US production and value-added jobs. That is how America became a debtor nation with its steadily weakening industrial base and stagnant wages."
The increased reliance on offshore plants is the equivalent of the output of four assembly plants. The UAW and Steelworkers' protests in May succeeded in forcing GM to promise against more imports from China, but it remains to be seen how that pledge by GM will be enforced.
In a perspective that was barely voiced during the bailout debate in the major media, Jesse Jackson argued, "Already, we've seen plans by Chrysler and GM in which they intend to expand production abroad, while eliminating high-production US plants at home. We did not provide taxpayer money to save the brand General Motors. We provided it to save highly skilled US jobs, US manufacturing capacity, and begin to rebuild an American middle class sinking under the failure of conservative economics." (Chicago Sun-Times, 6/9/09)
Roger Bybee is a Milwaukee-based writer and activist with a blog at zmag.org/zspace/rogerdbybee. Email firstname.lastname@example.org