I don't think any automaker should get a taxpayer loan without addressing their executive pay

[bigtree]

The U.S. government isn't a bank and this isn't just a 'bridge loan' the automakers are asking for, it's a bailout which should be met with a commitment by these companies to reorganize their operations to assure that the government 'investment' is a sound one.

The most glaring aspect of these major industries which are crying poor is their insistence on maintaining the outrageous pay and benefits that their CEO's and top management have been advantaged with. It's an outrageous expectation for Americans struggling with their own finances, often living from paycheck to paycheck, to dole out their hard-earned contributions to folks who turn around and feather their own golden parachutes as they bail out on the companies they helped run into the ground.

I guess I don't really expect the privileged class of legislators to consider that these executives should be made to struggle like the rest of us who have had to invest our last dime into our own enterprises. But, it's something that I believe we should demand from them as they bend to the requests of their wealthy industry peers.

[we can do it]

1. Ok - But Its OK To Hand the Money To Banks Without the Same Criteria

I agree there should be conditions, but to single them out and cost millios their jobs and pensions just does not make sense either.

[bigtree]

2. well, I certainly don't think that was 'OK'

Where's the guarantee ANY jobs will be saved, outside of the CEO's?

[phantom power]

3. There's a good argument to be made for equity purchase.

If the govt is going to put up that much money, they get equity in the company. That gives them direct input into company decisions. Another avenue is requiring some kind of business plan to be submitted. I don't know how it could be enforced, however.

[bigtree]

4. I think they should be required to at least show how the jobs will be preserved

. . . that supporters of the bailout are citing as the impetus for the 'loan.'

[phantom power]

6. I get the impression that Congress is trying to do that with these hearings...

(is "hearing" the right word?)

At any rate, the other impression I'm getting is that the auto CEOs are not being very convincing. It's actually quite disheartening. They literally don't seem to know what to do. Another poster remarked that they simply appear to be unqualified for their positions. Our mighty captains of industry.

I think a bailout is the right thing to try, since losing that many jobs will be very damaging. But given the apparent absence of a plan going forward, I think it's a very credible possibility that we give them the money and one or more of them die regardless.

[bigtree]

8. Well. I do remember the relative success of the K-Car

. . . so I'm optimistic that there can be a productive benefit from a government handout to automakers who are positioned to make the restructuring changes needed to respond to the changing auto market's response to the call and need for more fuel-efficient vehicles.

But, I'm outraged at the prospect that there might be resources skimmed off of the top as we pony up, like with the banks and their seeding of the golden parachutes after they got flush with public money.

[Kokonoe]

5. The U.S. government isn't a bank-so it can do what it wants.

:puke: :puke: :puke: :puke: I'm done with you brainwashed.
I will fight another day.

[bigtree]

7. Government should be responsive and responsible.

It's our responsibility to make certain they do the responsible thing with OUR hard-earned contributions.

And, "brainwashed?" I certainly know my own mind on this. How do folks expect their own patter to be respected as they disparage and devalue the sincerity of others'?

[Kokonoe]

16. Oh, hi bigtree. I mean msm efforts to fool us

Auto workers pay more in taxes each year than the amount they need to borrow to stay alive.

[bigtree]

17. I couldn't imagine . . .

I've got this bad cold and couldn't focus enough to know what you meant.This place makes me so (uncharacteristically) defensive. I think it's because I care so much about the folks here and what they think. Sorry for the misunderstanding and for being so rude . . . You make a fine point.

[PVnRT]

9. Barney Frank was on NPR this morning talking about this

In the bill he's written, dividends would be stopped and there would be no bonuses allowed for anyone making over $200,000 a year, in addition to federal oversight.

[bigtree]

10. I heard him

He's the best hope in the House

[Ganja Ninja]

11. And they better make damn sure that the money spent is spent on American plants in America.

Knowing these assholes as I do they will try to spend the money on Canadian or Mexican plants or even to bailout one of their foreign subsidiaries.

[bigtree]

12. that's an excellent point

agreed

[Romulox]

27. FYI: Foreign banks are getting Wall Street bailout money. nt

[dmallind]

13. Agreed, but symbolic only

GM's CEO makes $2.2M in salary and $3.5M in bonuses etc.

Even if there are 100 executives making the same (which of course there isn't) that's $570M. A nice chunk of change, but one that is less than 8% of their pension costs every year, less than 1% of their total retirement liabilitis, and would afford a pay raise of $3.80 an hour if ONLY given to US Union workers (would be about $1 an hour for all employees globally)

GM has COGS of $166B annually for their cars. They spend only $14.5B on ALL SGA (overhead) expenses. They can't cut executive pay, or marketing, or perks, or fatcat middle management salaries, and get out of this. 90% of the costs are directly related to production - be that in materials or pay or benefits. You can't NOT cut those and get out of this.

Does executive pay need to be cut? Yep. Especially if they produce bad results.

Does it make a difference to tehir ability to survive or restructure successfully? A very very very trivial one. When you have 266000 employees, 75000 of them union employees in the US, you could get rid of everyobdy on the exempt payroll making over $60K a year or sitting in a chair all day and still have no chance. Any survival plan must center on healthcare, payroll, and retirement benefits or GM is dead. Do I want it that way? Not at all, but it takes only a cursory look at the annual report to see where the money goes, and while a lot goes to executive pay from the POV of an individual outsider who sees 5.7M a year as a staggering payday, it's not even a drop in the bucket in a company that size.

[bigtree]

14. of course, you're right

. . . but, it's important 'symbolism,' especially in the face of demands that struggling workers suffer pay and benefit cuts. It's outrageous that the rank-and-file are the first ones to be asked to sacrifice with so much of a nod to forcing the executives to do the same.

[AngryOldDem]

15. No INDUSTRY should get a taxpayer loan without addressing their executive pay.

Cutting at the top is where to start.

It was telling at this morning's hearing that when the question was asked how many of these auto CEOs flew commercial into D.C. instead of taking their corporate jets -- nobody raised his hand. Then when the question was asked about how many would be willing to forego their corp. jets to help their companies financially -- again, silence.

It enrages me that, in essence, a handful of greedy people have driven this economy to ruin. Make. Them. Pay. First. Then I'll consider giving them my hard-earned tax dollars.

[bigtree]

26. if we look at GM's CEO compensation

GM CEO's compensation jumped 64 percent in 2007

General Motors Corp Chief Executive Rick Wagoner's salary and other compensation rose 64 percent in 2007 to about $15.7 million, mainly due to option grants, according to a proxy filed on Friday.

The GM compensation committee cited significant progress over the past few years in reducing the automaker's health care cost burden, increasing growth internationally and improvements in its cars and trucks in the 2007 awards to executives.

Wagoner's compensation rose from about $9.57 million in 2006. The figure was arrived at based on Wagoner's salary, all other compensation and the basis of annual grants.

GM paid Wagoner a salary of $1.6 million in 2007, along with $1.8 million in non-equity incentive compensation and nearly $700,000 for other compensation that includes insurance benefits, security, aircraft expenses and other factors.

GM, which reported a record $39 billion net loss in 2007, released the figures in a proxy statement on Friday afternoon that was filed with the U.S. Securities and Exchange Commission.

http://www.reuters.com/article/businessNews/idUSN2534738420080425

[LSK]

18. how much money will 1 million unemployeed take in unemployment insurance

and medicaid.

How much lost tax revenue would one of the biggest employers going under create???

How much lost income tax would there be with 1 million newly unemployed workers???

But you are too stingy for a measly $25 billion, which is about 2.5 months in Iraq.

Maybe you need to rethink this a little????????

[bigtree]

20. rethink what? demanding that the companies expect the same sacrifices from executives

. . . that folks want forced on workers?

Why should I rethink that? As far as I can see, the money is going to go to these companies with absolutely NO guarantee or assurance that ANY jobs will be saved. This is the same sort of nonsense argument that had us handing over billions to the Bush administration to 'ease credit' and stabilize the market' without ANY assurance that any of the money would even go where it should or be used to achieve ANY of the goals expressed outside of lining the executive's pockets. What a crock to suggest that an attempt to hold the auto executives accountable is some attack on the workers. Show me where the money is going. I would suggest that, at least at this moment, we're about to be rolled by industry again without ANY assurance that one worker will be advantaged by the government giveaway. The talk right now is that workers are to be squeezed even further. LITTLE talk is forthcoming from the majority of supporters of this action about confronting the executives.

[LSK]

22. the money is going towards continued operations

That were halted from the credit crunch.

I THOUGHT that these companies were already making moves towards more fuel efficient cars, but most people CHOOSE to ignore facts like GM is making a lot of hybrids now, is planning to sell an electric car very soon, the Ford Escape Hybrid has been on the market for many years now, etc etc etc.

Do you think the credit crisis did not exist at all???? If it did, wouldnt GM fall victim to it like other companies????

[bigtree]

24. the 40k car or the 75k one?

Those aren't going to attract the attention of the majority of car buyers in this market.

Again, there is no assurance or guarantee that this money will rescue the industry workers. It's a crap shoot . . . probably the only thing Washington can do, but highly speculative and unlikely to be anything more than a perpetual bridge' with more loans forthcoming if government expects to prop up the industry. Might as well divide that money among the workers as much as the industry is going to recover from it.

[suston96]

19. It worked at least once before........Google: Chrysler loan 1980

From my own Journal:

How about guaranteeing loans (as has been done before - Chrysler 1980) that must be paid back with interest within a specified time limit.

And with certain other conditions - including producing cars with alternative fuel use.

I doubt if the car companies want a handout from the taxpayers. Not a single penny from the taxpayers has to change hands. Banks and other credit institutions will do it all. The taxpayers -the government - will simply guarantee the loans, and as Chrysler did in 1983 the auto companies will pay back the loans with interest - 335 million of which went to the US Treasury in 1983. And BTW, Chrysler paid the loan back early.

[bigtree]

21. the K-Cars

a relative success, you are correct.

What happened to the last $25 billion we gave the industry to retool?

[donco6]

23. Here's what *I* have to do when I get a federal grant:

First, the grant comes with specific "no supplanting" language - and we have to prove it. We have to be able to show that the grant money is going for programs that provide additional services, not just toward funding programs we would have paid for with our own funds in the absence of the federal money.

Second, I have to be audited every single year by an outside auditor. They test no only the actual expenditures and revenues, but the program fidelity - are we doing what we said we would do?

Third, I have to file reports out the ass. Most grants specifically FORBID spending the money on salaries. The funds have to be handled through a separate fund (fund accounting - unheard of in the private sector, evidently). The fund documentation cannot show any expenditures toward salaries.

Fourth, the grants are reimbursement-only. I have to front the expenditures, then request reimbursement from the feds.

Why can't they do things the way we lowly, no-nothing school districts have to?

[bigtree]

25. seriously

that's obvious to me. What happens in Congress is that the issue is hyped as a choice between providing a no-strings bailout or nothing at all. That's just sophistry. As we saw in the bank bailout, the money is going into a hole unless there are restrictions and some guidance on where it should be spent.

[suston96]

28. One more thing about bankruptcy and possible shutdown of auto companies....

How many millions of lost jobs are we talking about? I heard figures between 3 million and 15 million, considering trickle down to car parts and accessories.

Lost wages would cause real hardship as those workers try to live off unemployment. And what about the lost payroll tax income to the Treasury? Social Security and Medicare taxes and the like?

Too many people are not thinking this out.

[Greyhound]

29. Wasn't it FDR that brought the "dollar a year men" into his cabinet?

Seems like this kind of symbol would be appropriate here. None of these guys have any financial needs and it would at least lend the appearance of conviction.