Auto bailout

Auto industry: labour costs 10% or $1.7B, must cut worker salaries to receive $17B bailout.
Financial industry: labour costs 90% or $490B, can have $700B bailout no strings attached.

Bush Loans $17 Billion to the Auto Industry

President Bush brought down the wrath of a large piece of the Republican Party on himself for giving the big three car manufacturers a $17 billion stopgap loan. The loan has a condition in it that members of the United Auto Workers union give back wage and benefits that bring them into line with what the Japanese companies pay at their plants in the South. The Republicans objection is that this condition is not written into law and Barack Obama could easily eliminate it after January 20th.

It is increasingly clear that what southern Republicans really want is to break the back of the UAW (which habitually supports the Democratic Party). Thus while demanding lower wages and benefits as part of the $17 billion loan to the auto industry (where labor costs are 10% of total expenditures) is crucial to them, they didn't make a peep about lowering salaries as part of the $700 billion bailout of the banking industry (where labor costs are 70% of the total). In other words, the $1.7 billion worth of labor costs in the (unionized) auto industry is a big deal but the $490 billion worth of labor costs in the (nonunionized) financial industry is a nonissue.

-- Andrew Tanenbaum