05 Dec Congressional resistance on automakers' bailout shows why Midwest must hang together
Madison, Wis. – Call me paranoid, parochial or both, but it’s hard for me to overcome the feeling that the bicoastal interests that dominate Capitol Hill are once again ganging up on the Midwest.
This useful scapegoat this time is the Detroit-based auto industry, which admittedly has made more than its share of blunders over time and is now rattling a tin cup at the doors of the House and Senate. Everyone from Hollywood leftie Michael Moore to hard-core Orange County conservatives are once again slashing the tires of the Big Three (General Motors, Ford, and Chrysler) now that a bail-out plan for the troubled industry is nearing a vote.
Fair enough: Detroit messed up. Management stuck with making SUVs, the United Auto Workers insisted on protecting costly jobs and benefits, and there was even a sense of arrogance about it all as Honda, Toyota, and other global competitors continued to innovate.
But is the American auto industry somehow a less sympathetic figure than the American financial industry, where hubris and even deceit apparently knew no bounds? Of course, not, but the Wall Street crowd somehow wrangled its bail-out with blessings of Congress.
Here’s one theory: The gold coasts are fairly oblivious to the economic problems of the Midwest, and they have the votes to back up their indifference.
Federal aid per capita is one useful indicator of how well (or not) the region fares in the halls of Congress. In 2006, according to Governing.com’s Sourcebook, none of the top 12 recipients of federal aid on a per capita basis were Midwestern states – even when the region is defined to include the Dakotas on the west and Missouri on the south. Looking just at the “Big Ten Conference” Midwestern states, all but Iowa and Ohio were in the bottom half of the 50 states, and even those two states barely cracked into the top half.
There may be all sorts of reasons why the Midwest doesn’t gets it share of federal aid, not the least of which is that the region often sees its competitors as being across the next border rather than on the East or West coasts – or half a world away. But there’s also a gnawing sense that Wall Street has access where Machinery Row doesn’t.
“You can tell that the Wall Street financial community is totally integrated into the government,” said James Haney, president of Wisconsin Manufacturers and Commerce, the state’s largest business organization. “It’s sort of a revolving door. Wall Street doesn’t have to go hat in hand to Washington – the government goes to them.”
Again, the U.S. auto industry and its unions have brought much of the current crisis upon themselves. And there’s also a decent argument to be made that a free market would eventually sort winners from losers, albeit at a painful price.
But a time when the UAW appears to have stepped forward with real concessions and the Big Three have suggested they will shrink everything from the number of plants to the average size of their cars to the number of models (112 under 15 brands) they market, why is the congressional reception still like a greasy mechanic just sat down at the dinner table?
It’s a time for the Midwestern members of Congress to stick together. Not that every House member has an assembly plant in his or her backyard, but each one has a manufacturing base that may be tied to the auto industry to some degree, or to American manufacturing expertise in general. For national security reasons if nothing else, there are reasons for concern if that base erodes beyond repair.
The Big Three automakers have asked for $34 billion in emergency loans; the financial industry sought and received $700 billion that will go far beyond loans. It goes to show that even paranoids sometimes have real concerns.
Recent columns by Tom Still
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