www.multinationalmonitor.org<\/a>. <\/p>\nRough Transcript: <\/strong><\/p>\nSonali Kolhatkar: <\/strong>First, explain why there\u2019s a difference in how President Obama is handling banks and the insurance company A.I.G. versus the auto companies. Both of these are industries that are failing and are getting federal help. So why this strong demand to have a proper plan and to financially restructure with the auto industry? <\/p>\nRobert Weissman:<\/strong> There\u2019s a story that you can tell which is the one the administration apparently likes which is that the financial system is so central to the working of the over all economy. So systemically important. Not just that the financial institutions are systemically important to the rest of the financial system, but the financial system over all is systemically important to the working of the economy. That you have to figure out a way to keep it viable, plowing ahead and supported however. And the auto industry, while it\u2019s very important, isn\u2019t so central to the economy. So that\u2019s a story. I think that that story is totally one hundred percent implausible and wrong and not an explanation for why there\u2019s the differential treatment. A different story is that, Detroit, while once dominant in Washington, has seen its political power end as its economic power has fallen. So as its market share has declined, so has its market share of political power. It spent less money in Washington, less influential, less involved with the think tanks, less involved in shaping ideas. By contrast, Wall Street has invested five billion dollars in Washington\u2019s political process over the last ten years, it\u2019s massively involved in the business of ideas in Washington, sends its people to staff the treasury department, people at the treasury understand the way Wall Street works, think like Wall Street thinks, put themselves in the shoes of Wall Street and they\u2019re getting much more sympathetic treatment as a result. I think that\u2019s the only realistic explanation for what\u2019s going on.<\/p>\nSK<\/strong>: And there\u2019s another difference: the auto industry employees millions of unionized workers.<\/p>\nRW<\/strong>: Yeah, I think that\u2019s right. So the guys in the treasury department can imagine themselves in the shoes of the Walstreet Executives, they can\u2019t imagine themselves in the shoes of the auto industry executives. But it\u2019s beyond the INAUDIBLE of auto workers. <\/p>\nSK<\/strong>: So what do you think of this action by the President? That he\u2019s demanding this restructuring. He\u2019s taking a very active role. But he is also suggesting short term bankruptcy as a way for these companies to get out of the situation they\u2019re in. First, just on its own, is that a good idea?<\/p>\nRW<\/strong>: Well on the bankruptcy issue, I\u2019m pretty skeptical. They think that they can manage a bankruptcy with guarantees to consumers that they\u2019re won\u2019t be too much harm done to the underlying brand. I think that\u2019s a pretty big risk. And undesirable. Now we also don\u2019t know if they\u2019re actually serious about pushing bankruptcy or if they just need to seem serious about pushing bankruptcy to force changes at GM and Chrysler.<\/p>\nSK<\/strong>: So what sorts of changes could these two companies do? GM\u2019s been given two months, Chrysler only one month to make a deal with Fiat, as I mentioned. What would be adequate first from the President\u2019s perspective and second from the prospective from really having a long term stability? Those two may coincide, but they may not.<\/p>\nRW<\/strong>: Yeah, that\u2019s right. There are two primary goals and I think that the material that is out from the Obama Administration suggests their emphasis is on market viability while they\u2019re also paying attention to economic sustainability. I think the public interest is in the reverse. You can\u2019t have companies continue if they\u2019re not ultimately going to be viable, but the most important thing is trying to do a climate change and its relation to the auto industry. What they are saying is that the plan from General Motors does not see the company hitting a break even point within a five year window. And even with all the various cost cuts that they propose. And so from the point of view of the Administration, they\u2019re not cutting enough, and something else has to be done. So they\u2019re pushing them to make additional cuts. They want more concessions from the workers, I think it\u2019s deeply problematic. They want clear concessions from GM\u2019s creditors, which makes sense. They want a better indication of how GM is going to shed different product lines and deal with its dealers which probably makes sense. In the case of Chrysler, they\u2019ve made the determination the company is not going to be viable on its own and they basically have to hook up with Fiat in the next thirty days or call it quits. <\/p>\nSK<\/strong>: Now you said more concessions from workers, let\u2019s talk a little bit about that. The recent controversy that blew up last week over the bonuses paid to AIG executives, brought attention in terms of hearings in Congress and some people were comparing that to how UAW workers, United Auto Workers, who represent many auto workers in Detroit, how these workers were treated in contrast. It\u2019s interesting reading that ABC news is reporting that Rick Wagner, the CEO who was essentially forced out by the Obama administration, is walking out with a twenty million dollar retirement package, which of course, even though he is being told he was responsible and is being pushed out. He faces a very comfortable future whereas auto workers are being asked to make even more concessions.<\/p>\nRW<\/strong>: Well, for Wagner, I think that\u2019s breaking news. It\u2019s a little bit unclear. Because there are also reports that they want to keep him on his current salary, which is a dollar a year. To avoid paying him the severance pay. We\u2019ll see how that plays out. That was quite an attractive approach, I thought. I thought it was very good that they removed the management at GM. They told the CEO Rick Wagner he\u2019s got to go. It\u2019s again, as you\u2019re pointing out, a contrast very starkly to the INAUDIBLE treatment for the financial sector. But there is a more serious issue that you\u2019re raising with the treatment of the AIG bonuses versus the line workers represented by the United Auto Workers at General Motors and Chrysler. The out of the box line from the administration and why they couldn\u2019t deal with the bonus problem was that contracts have to be respected. Now here we\u2019re talking about the Administration forcing the renegotiation of already renegotiated, concessional contracts with the auto workers. Really, if they are at all serious about trying to cut costs from the workers\u2019 side, they\u2019re talking about going against a deeply set of expectations from workers that have existed for decades about the kind of healthcare coverage they\u2019re going to get from their employers and into retirement. So to a much more severe INAUDIBLE of people who are much less well positioned than was ever contemplated at AIG. <\/p>\nSK<\/strong>: What specifically could these companies do to restructure themselves financially not just in terms of creating products that are more sensitive to climate change, better hybrid cars, more fuel efficient cars, but also financially restructuring in terms of the CEO\u2019s versus the workers. There was a conversation around health care because the number of workers that these companies employee and the fact that there is a legitimate drain on the resources of these companies because of the fact that the government does not pay for healthcare. Can you comment on that and what the Obama Administration could do to alleviate that? <\/p>\nRW<\/strong>: Well, it is true that GM and Chrysler as well as Ford have significant, what are called, legacy costs, as different from the legacy assets of the financial industry, which are the health care monies owed to retired workers. So they\u2019re paying for health care for workers who\u2019ve retired after thirty years of service to the company. Health care is obviously extremely expensive. Those are employees who are expensive to insure because they\u2019re older. If there was a government insurance program, single payer, medicare for all, they would come off of the books of GM and Chrysler and Ford and be part of the over all national system and there would be no disadvantage that these companies have as against the Japanese manufacturers and others who do not have those kinds of costs. The Japanese manufacturers of course, although they do have substantial manufacturing capacity now in the United States, are relatively new with their factories that don\u2019t have these older retired workers that they\u2019re paying for. Of course they don\u2019t have unionized workers that they\u2019re responsible for. But it should be said that there\u2019s a massive exaggeration at the costs of employees on the over all cross structure of the auto industry. The wages and benefits for existing employees is less than ten percent of the cost of a car. So no matter what kind of concessions they make, that\u2019s not going to get costs down and more over, cross is not the ultimate problem. It\u2019s not the primary problem facing the auto industry right now. The primary problem is that demand is falling off a cliff. That has nothing to do with the auto industry, however incompetent GM may have been and even has been. That\u2019s completely beyond their control.<\/p>\nSK<\/strong>: Just that the economies failing, people have less cash to spare and are fearful of spending any that they do have. <\/p>\nRW<\/strong>: Yeah, the over all demand for cars has dropped by a third or forty percent in the last year. So no industry can deal with that, in the short term. And there is probably some extent to which the financial industry is directly responsible for that because it is harder for people to get car loans right now, although I think much more serious is the over all collapse of the economy.<\/p>\nSK<\/strong>: Robert, let\u2019s talk a little bit about how this news of the Obama Administration\u2019s role in the auto industry is being met or how it\u2019s being critiqued by mainstream media and conservative media in particular. There\u2019s always the spectre of socialism, we\u2019ve discussed it on this program quite a bit. Now there\u2019s a fear because of the active role the Obama Administration has been taking that the government wants to nationalize the industry. How legitimate are those fears? <\/p>\nRW<\/strong>: It\u2019s hard to know how to answer such a silly premise now. The government is dominant in the national economy. The giant financial companies exist only outside of bankruptcy only because of this massive infusion from the federal government. All kinds of hitting guarantees, including more than 250 billion dollars guaranteed directly at Citigroup. The federal reserve pumping in several trillion dollars into financial institutions in different markets. So the government is keeping the economy afloat right now. And that\u2019s just how it is. And the criticism or these kinds of silly remarks are coming about in the case of General Motors only because the government is doing what it should be doing in the financial sector. Which is to say, if the taxpayers are going to be putting all this money on the line, they ought to be demanding some quick proquos and they ought to be demanding some kind of accountability. And they ought to be demanding changes to alter the way firms operate so that they\u2019re viable going into the future. <\/p>\nSK<\/strong>: I want to play an excerpt of a discussion on Fox News Americas Newsroom just yesterday about the GM CEO being forced to resign: <\/p>\nFox news<\/strong>: The government is going to tell you who you can fire, how much you can pay them, the perks that they can receive, their business practices, and basically what product you can put out. History. Sounds like oversight. A hundred percent of the way. When you think about the white house sending its own team to Detroit\u2014these companies are not going to make a move, unless the government gives them a thumbs up. The government now controls the car industry in the United States. <\/p>\nSK<\/strong>: Robert Weissman, your comments. <\/p>\nRW<\/strong>: Well, the alternative to the government exercising some control and offering some money so the government goes into bankruptcy. So not only is that a worse option for the companies, what happens in bankruptcy? A bankruptcy judge controls the company that makes the decisions of what they can do. So there\u2019s no escape. I mean if you\u2019re a big company and you mess up so badly that you are no longer solvent unless you are Wall Street and have ability to extract massive amounts of cash from the federal government with no quid pro quo, you\u2019re going to lose control of the government. Either in the form of the type of government we\u2019re seeing now in the executive branch or government oversight that you\u2019re going to get in the face of bankruptcy. <\/p>\nSK<\/strong>: So Robert, finally, on the one hand it seems as though, these auto industries, very crucial to the American economy, if you\u2019re looking specifically at jobs and decent jobs, but on the other hand, the demand has fallen from using the premise of how a company would operate in this capitalist system, this would mean ordinarily a downsizing. What do you recommend needs to happen both from a perspective of what governments should do and from the perspective of how the economy needs to survive and how this industry itself needs to survive. What do you think needs to be the best case scenario from the perspective of jobs, the products being produced and taxpayers\u2019 money that is going to bail these companies out? <\/p>\nRW<\/strong>: I think that\u2019s exactly the right question. To its credit, it\u2019s a question the Obama Administration is asking with this industry that it\u2019s not asking with Wall Street. It is not necessarily obvious for people who are living on the East or West coast, how central the auto industry is to the over all national economy and just crucial to communities throughout the U.S. So the industry, I do believe, really needs to be saved. Everything has to be done to legitimate the lay offs, some of which are going to be inevitable. But to keep the industry as viable as possible. Now, going forward, we know what we need from our transportation sector. We\u2019re going to need transformative technologies. Transitioning with hybrid cars. And much more fuel efficient cars. But going to carbon free cars in the near term future. We need much more investment in public transit. And I believe that the government ought to be saying, those are the plans we want to see coming from you. We want to see how you\u2019re going to respond to those over arching social needs. And that is our priority demand from you. You have to do that. You have to do it in an efficient way. But we\u2019re not going to ask you to show returns or return to viability measured as profitability in the course of one, two, or three years. We want to see a plan for massive new investment in capitol, infrastructure, and in design so that we got a sustainable transportation sector going forward and we got an industry that\u2019s able to supply the transportation needs of the country in the decades ahead. <\/p>\nSpecial Thanks to Celina for transcribing this interview<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"| the entire program In speaking to reporters yesterday at the White House, President Barack Obama announced the need for immediate restructuring to save the American auto industry. The President\u2019s statements came a day after he asked General Motors Chief Executive Officer Rick Wagoner to resign. After the auto corporation led by Wagoner failed to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[2,11],"tags":[],"class_list":["post-6801","post","type-post","status-publish","format-standard","hentry","category-daily-program","category-transcripts"],"_links":{"self":[{"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/posts\/6801","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/comments?post=6801"}],"version-history":[{"count":0,"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/posts\/6801\/revisions"}],"wp:attachment":[{"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/media?parent=6801"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/categories?post=6801"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/uprisingradio.org\/home\/wp-json\/wp\/v2\/tags?post=6801"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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