In this week's column, he zeroes in on why Congress gave $700 billion to Wall St. without much of a fight but raised a ruckus over giving $14 billion -- or 2% of the Wall St. bailout -- to the Big 3 automakers and the UAW.
Millions for AIG Executives, Not One Cent for Autoworkers: Congress signed off on a $700 billion financial-markets bailout without even knowing how the money would be used. Yet Congress has argued and argued about $14 billion to keep the Big Three automakers in business. Why was the huge number approved easily while the smaller number is resisted? Because the smaller number can be understood! Few people in Congress comprehend what AIG does or what credit-swap derivatives are, so when these subjects come up, eyes glaze over. (It might be that the people who run the financial sector are bluffing and don't understand what they are doing either, but that's another matter.) In contrast, everyone drives a car, has opinions about cars, and has opinions about $50-an-hour wages. Plus, the political ramifications of an auto bailout are much more clear than of a financial bailout. Thus the small number gets more attention than the large number -- classic government misplaced priorities.
For its part, the UAW could not have acted more arrogant. Union leadership wants typical Americans who earn less than $50 an hour taxed so that most UAW members give up nothing. Around the country, employees are accepting fewer hours or benefits to keep their companies going until the recession ends -- but not the UAW; it demands federally subsidized exemption from the laws of economics! The UAW talks as if it's still 1966, the Big Three has dominant market share and unlimited money, and it's just a matter of demand and management gives in. Plus low-quality assembly-line work is one of the reasons Detroit got into its present mess. Non-UAW autoworkers in Toyota and Honda plants in the United States, who earn roughly the same $50 an hour in wages and benefits, build great-quality cars that make their firms successful. The UAW won't take responsibility for its share of the Detroit decline; with UAW leadership it's always "we're victims, we're not responsible." Nobody, it seems, caused the decline of Detroit. Blame space aliens!
Meanwhile, Congress is shocked to learn that the executive pay limits in the Wall Street and banking-industry bailout package are toothless. Who's to blame? Congress. It was the members of Congress who voted for a bailout package whose executive pay "limits" were unenforceable, plainly intended solely as a PR exercise. Yet Congress did nothing. Now it turns out AIG is paying top executives up to $4 million each in taxpayer money as "retention bonuses," justified on the transparently fake claim that otherwise they will jump to other lucrative offers. The financial industry just experienced widespread layoffs, there are no other lucrative offers! But what is Congress doing? Nothing! Not even rushing to amend the legislation to prevent further abuses. Congress is in the situation Congress likes best: Members of the House and Senate can complain nonstop while taking no responsibility for anything and wasting large amounts of other people's money.