For Ensign, no auto bailout unless labor costs are slashed

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BLOOMBERG NEWS

John Ensign of Nevada, flanked by fellow Republican senators, speaks at a news conference Wednesday in Washington, D.C.

Thu, Dec 11, 2008 (2 a.m.)

As a conservative in one of rural Nevada’s most conservative counties, auto dealer Don Lindberg is not a bailout kind of guy.

But as he watches Congress debate whether to rescue the Big Three automakers, the owner of Wild West Motors in Yerington thinks some sort of aid should be extended. He has laid off five of his 30 employees in the small farming town of 2,500.

“I’m normally not inclined to be a backer of bailouts — I’m more conservative than that,” Lindberg said by phone Wednesday. But this time it’s different. “There’s too many jobs at stake.”

Nevada’s Sen. John Ensign is leading GOP efforts to block the bailout bill from passing in the Senate, vowing to personally halt the $15 billion plan unless it is altered to require GM, Ford and Chrysler to change their ways.

As Ensign sees it, the root of the problem with the Big Three lies in the labor contracts that prevent the companies from being competitive with the foreign companies that build cars in the United States with nonunion labor.

Ensign repeatedly points to the $70 hourly labor costs at the Big Three, compared with $30 paid by companies that do not use unionized labor.

If the car companies are not forced to restructure, preferably through bankruptcy court, where a judge would have the power to renegotiate wages and pensions, the “taxpayers’ money will be wasted,” Ensign said.

“It’s like a spending addict you’re going to loan money to,” Ensign said. “You’re not requiring the spending addict to address their problems.”

Experts say as many as

3 million industry-related jobs nationwide are jeopardized by the looming bankruptcies.

The ripple effect could be significant for a tourist economy such as Nevada’s, suffering from low visitor traffic and gaming revenue.

Democrats and the Bush administration have joined forces to support the bill. The House passed a bailout bill 237-170 Wednesday night. Rep. Shelley Berkley, D-Las Vegas, voted yes, as did outgoing Rep. Jon Porter of Henderson. Rep. Dean Heller, R-Carson City, voted no.

In the Senate, Republicans are wary. Ensign led his party’s internal policy debate Wednesday. Although much of the discussion revolves around whether the government should meddle in private industry and whether Detroit should be forced to build greener cars, the underlying conversation is about the future strength of organized labor.

After years of decline, labor is on the resurgence with a Democratic-controlled Congress and President-elect Barack Obama winning the White House with union backing.

Unions are pressing Congress to take up legislation in 2009 that would make it easier to organize workplaces — a bill Ensign and business allies are fighting.

David Madland, director of the American Worker Project at the Center for American Progress, a liberal think tank founded by John Podesta, the former Clinton administration official now heading Obama’s transition team, sees the auto bailout debate as a preview to the union battles ahead.

“You’re starting to see the first stages of the fight for the future of unions right here,” Madland said Wednesday. “This is the first volley of what the fight ... might look like.”

Madland said history shows workers would likely see wages and benefits cut if the companies are forced into bankruptcy court.

The auto bailout debate “has been hijacked by the untrue vitriol of conservative ideologues pushing their preexisting political agenda to attack workers and their unions,” Madland wrote on the center’s Web site.

He further argues that the gap between union and nonunion labor costs are not as great as Ensign and others say. Scholars at the conservative Heritage Foundation, however, back up Ensign’s numbers.

Madland said in an interview that nobody likes to see government interference, but “there’s a lot of blame to go around.”

“To put all the blame on the unions strikes me as just incredible political opportunism,” he added. “And it’s an incredible double standard when you look at how other companies have been treated in this financial crisis.”

Ensign is among those who voted to rescue Wall Street in October with the $700 billion bailout.

But Ensign said Wednesday that propping up the nation’s financial system is a far cry from saving battered automakers.

Wall Street helps the entire economy function, Republicans said. The bailout “was to keep us from falling into the abyss,” Ensign said.

“That was different from going sector by sector choosing winners and losers. Are we going to literally bail out the hotel industry? The airline industry?”

In Yerington, Lindberg has been watching some of the debate from afar, and blogging about it when he’s not selling cars.

The auto dealer agrees with a lot of what Ensign is saying — that the companies need a massive restructuring to rein in executive pay and union contracts and to become more competitive with new cars.

He supports Ensign’s delay tactic if it yields a better bill — much as the Wall Street bailout was delayed as Congress made changes.

“If it’s just to block the Democrats, it’s wrong. If it’s to make it better like the earlier one, it’s right,” Lindberg said.

“I don’t think Ensign wants to put people out of work.”

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