Obama's First Nightmare

If I were a political cartoonist (do they still exist, anyway), I’d be drawing a big US SUV (with luggage stacked precariously on the roof, labeled "Debts", "Pensions" "Legacies" "Health Care") sinking and stuck in a huge mudhole (labeled "The Economy"). The GM CEO behind the wheel, while in the back seat trapped UAW workers scream, "Help?!" and the US taxpayer stands at the rear, scratching his head in confusion. The driver yells "Push!" but the taxpayer looks helplessly at the quagmire. Someone (a Democrat) whispers to the taxpayer: "Tell him to let us drive." A Republican, driving a new Japanese car nearby, shouts: "Let it sink". Obama is nearby, rolling up his sleeves, pushed by a mob of "Liberals", but cautious about getting his shoes muddy.

All the talk during the election about saving the middle class is about to get a test. Not with a tax cut but with a fight to the death over the very concept of powerful and influential trade unions. The strongest union in the country, the United Auto Workers, the union most responsible for the creation of the American middle class in the second half of the 20th century, is in a fight for its very life. And it is a very scary trap being set by Republicans for President Obama.

The hysteria over whether the government should save the U.S. auto industry from bankruptcy boils down to a Republican effort to exact the last item on Reagan’s and Gingrich’s wish list from the 1980's and 1990's. That is, the final elimination of big labor unions as a major force in American business.

The UAW fully organized in the 1930's with the support of FDR’s administration in the midst of The Great Depression. The industry didn’t become healthy until it began to get huge government contracts to make the weapons that won World War II. After the war, the industry re-tooled and by the 1950's boom was ready to shift into overdrive. The union won contracts that created the lifestyle that we still associate with the idea of "middle class".

The ability to buy and own cars, build and buy suburban homes and appliances, send children to colleges to become creators and managers of businesses, teachers, doctors, scientists; create new technologies in engineering, plastics, all derived from the powerhouse auto industry that drove the economy. Our computer industry was hatched in the garages of suburban middle class American homes.

Beginning in the 1960's, the US auto industry began to get flabby, smug, self-satisfied. It failed to respond adequately to challenges from the re-emerging European (VW, Mercedes) and modern post-war Japanese auto industry, which had turned from producing fighter planes like the Zero to innovative car designs.

U.S. firms, through lazy mismanagement and lack of foresight, smugly continued its ruinous path, relying on their long established brands to keep them afloat, even as they consistently lost market share. They used their lobbying clout to oppose regulation for emissions, safety, reliability, gas consumption, rather than accepting the trend and planning for it with any entrepreneurial enthusiasm as their competitors did. As long as gas prices stayed low, many consumers continued to feed their egos.

The auto unions too were late to recognize the climate change in the industry, clinging for far too long of their tradition of antagonism to management. The hostility was justified by decades of hide-the-ball negotiating over profit margins, executive salaries, and was exacerbated by the institutional memory of union leaders, whose political power within the Democratic party made them complicit.

In the last twenty years, Japanese auto companies have built plants in many Southern states, building Toyotas, Hondas and Nissans because those states promised low taxes and more importatly, "right-to-work" laws, meaning no union shops. The companies pay lower wages, provide minimal benefits of health care, severance, and pensions, by comparison with the US company plants in the North, giving them a clear competitive edge.

Republican politicians in these Southern states vehemently oppose helping the US Big Three with anything but the forms for bankruptcy filing. Bankruptcy would mean reorganization, and that would mean dumping the union contracts if — and it’s a big if — the companies were able to survive bankruptcy, which might soil the brands irrevocably.

If they didn’t suvive, that would be okay, too, for Southern Republicans. It would mean a flow of skilled auto labor to the south, reduced competition for the foreign owned companies based in the South, and a new form of slavery for workers with no meaningful unions to turn to.

During the campaign there was some talk about card checks. This is a technique which unions have used to organize and gain recognition. If the union can get an employer to agree to remain neutral, employees can signify their desire for union representation by presenting union cards at an open meeting. Once a majority is reached, the union is recognized as a bargaining agent for the plant. The unions need it because employees are afraid to vote for the union over the opposition of employers and once seeing their co-workers going along, will join.

Republicans violently oppose the idea, and the Chamber of Commerce, Heritage Foundation, and other conservative ideologues have proposed laws to ban card check. Ted Kennedy has proposed legislation legitimizing it. Whether it will pass in the new Congress, even with strong Democratic and presidential support, is questionable because this is one bill that will yield the loudest and longest filibuster the Southern senators can muster since the Civil Rights Acts of the 1960's.

This is the trap being set for President Obama. Will he risk his prestige at the start of his administration by backing the unions and the industry? If he fails to save the industry and a deep recession or a depression results — that is the armageddon predicted if Ford, G.M. and Chrysler go under – 3 to 4 million jobs at risk (1 in 10 workers reliant on the US auto industry) — his administration will be doomed. If he tries and loses, he will also be blamed. And if he wins support to bail out the companies and they still go under ...?

Obama already has been tossed into a deep mudhole by Bush’s policies. They stuck him in two expensive and unwinnable yet unending wars, an economy that has not yet hit bottom, and budget deficits that will damage his hopes for progressive and expensive programs for health care, energy, and environment.

Now, progressives who theorize that this election proved that they have emerged from a long winter of despair, will have their first test, and maybe will commit suicide as they did when Bill Clinton was elected in 1992 and they prematurely pressured him with gays in the military and health care. His failures and temporizing led to defeat just two years later and for the rest of his presidency he threaded his way through mines from the left and right.

Obama declared a hope for a holistic approach to governing. He argued that his programs for health care reform, energy independence, and greening were all interconnected with each other and with the economy and national security. That’s why he consistently deflected challenges about adjusting priorities. Whether he can sell that vision and make it work as the vehicle continues to sink deeper into the mud is a real question.

There is a faint glimmer of hope. If the companies can hold out for a while longer, Obama might propose universal health care that might eventually remove those devastating costs from the backs of the auto industry, pus a program of tax incentives (such as credits for buying back and scrapping gas guzzlers for energy efficient vehicles), all of which might make a "bridge loan" to keep the US companies afloat more palatable.