Car Talk

by Sarah Binder on December 11, 2008 · 2 comments

in Legislative Politics

Gentlemen [sic], start your engines! It’s time to take out those congressional bailout vote models. As a bill to rescue the nation’s domestic automobile industry sputters across Capitol Hill this week, let’s make a pit stop and peek under the hood of the House coalition. Who pushed that speedily-crafted legislative jalopy over the finish line?

Similar to the $700 billion bailout package enacted this past October (as Mark Spindel and I blogged about here and here), Democrats provided the majority of the yea votes—but depended on Republicans to secure final passage (237-170). The vote fell largely, though not strictly, along party lines: Over ninety percent of Democrats voted yea; over eighty percent of Republicans, nay. The twenty Democratic defectors all hailed from the right of the Democratic Caucus, with the exception of two California liberals joining their more conservative colleagues. Three-fifths of the Democratic defectors also bailed on the October bailout bill—giving them bragging rights as the low scorers on our sure-to-grow Bailout Propensity Index.

And which Republicans were most likely to support pumping emergency loans into the Big Three? Location, location, location. All of the eight Michigan Republicans who participated in the vote supported the bailout. Indeed, Republicans from Rustbelt states were disproportionately (though not surprisingly) more likely to vote with the auto manufacturers, even controlling for ideological predispositions. Republican moderates were also more likely to cross the double yellow line to vote with the Democrats, just as they were for the Wall Street bailout package in October. Granted, Republicans from Rustbelt states tend to be more moderate than their Republican colleagues. But both ideology and geography tend to matter in driving GOP support. Finally, even after controlling for policy views and constituency forces, retiring Republicans were more likely to vote with Motown. Single-minded seekers of re-election can quickly become single-minded seekers of saving their 401K’s.

What lesson should the Big Three draw from the House vote as they seek roughly a dozen GOP votes to break Senator Richard Shelby’s promised Senate filibuster? Fill your tanks and buckle up for a bumpy ride. The geographic concentration of the domestic auto industry in the Rustbelt radically limits the industry’s voting power in the Senate. Nor has the spread of foreign automakers in search of lower labor costs into the South helped the Big Three’s cause, as southern senators—already ideologically predisposed to shun direct government support for the auto industry—seem unswayed by the potential for a heavily-unionized domestic industry in the Midwest to go bankrupt. And unfortunate for the Big Three, few of the remaining Senate GOP moderates yet appear to be on board for the bailout package.

In short, the search for Republican votes is running out of gas, portending ill for the immediate future of the Big Three. Unfortunately for the local and regional economies that now depend on the continued existence of a domestic auto industry, there do not seem to be any good detours available for avoiding a long drive into and out of bankruptcy court. And unfortunately for the rest of us, a failure of the bailout bill will likely have severe consequences for the health and stability of an already tanked economy. More than the Big Three will likely stall out if and when the Senate defeats the bailout.

{ 2 comments }

Robert L. www.neolibertarian.com December 11, 2008 at 8:56 pm

First off, this is not the bail out: this is a down payment on the bail out until the “big 3″ hit the new congress up for huge sums in 2009.

Second it is not about a domestic auto industry: it is about Chrysler, Ford, GM, and the UAW. The Big 3 are global companies and many of their competitors make cars in the US and thus support the same suppliers, or same types of suppliers, as the Big 3. If Chrysler was still Daimler Chrysler do you think any of the pro-bail out people would say, “No money for Chrysler, they’re not domestic?” No.

The definition of “domestic” or “American” auto industry for this debate is “a company unionized by the UAW” which gets to the core of the bailout: it is a mechanism for avoiding urgently needed change, not a vehicle for change.

The entire intent of the bail out is to enable the big 3 and the UAW to continue business as usual. It has to be for business as usual because the Big 3 have not had the time to even begin to plan to operate differently, even if they had any ability to do so. The kabuki sham we are seeing about “new” plans is absurd.

Third, the government and the courts can use mediators and expediters to speed up bankruptcy proceedings by orders of magnitude. It isn’t common, but it can be done.

Barry December 12, 2008 at 9:22 am

” It has to be for business as usual because the Big 3 have not had the time to even begin to plan to operate differently, even if they had any ability to do so. ”

Congress supported the Wall St bailout, after ~1 week (IIRC) from the first request by Paulson. There was no time for Congress to write a good bill, and certainly no time for Wall St to get its act together, assuming that it wanted to.

But Congress gave them 2/3 of a trillion $, with jack sh*t for authorization.

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