Barny Frank and the Unions

NPR had an article today with Barney Frank, the congressmen from New York about a bailout of GM. He is in favor of giving GM $25 billion. Normally, I would find this kind of thing run-of-the-mill but he made the clear point that he favored this because it protects the union employee contracts. In the spirit of the title of this blog, that really is a point of distinction. I was surprised that he would put that out there. I would expect him to make all kinds of other arguments about the viability of GM and it's important role in our economy which are all relevant but sort of beat around the bush and don't name the winners and losers. The NPR folks didn't seem to pick up on this point of distinction which isn't surprising because the press seems to usually miss these things because they have a script of questions to ask.

The opposition to a bailout want to let GM go into bankruptcy. The argument goes that GM has structural costs like too many dealerships and 'contracts' that they can't change. But, by going into bankruptcy, everything is on the table including union contracts. I haven't heard any of the pro bailout pundits mention tearing up union contracts. Of course they wouldn't because that would be controversial. Their rhetoric is so much more effective if they stick to platitudes.

However you feel about the issue, it is great to once and a while hear someone cut to the heart of the matter. The press has been reporting that the democrats favor the bailout and the republicans don't but until this article, it wasn't at all clear why. Now, it's clear as day. Democrats favor unions and republicans don't. The question that I would expect NPR to ask is whether Frank thought that keeping uncompetative union salaries was in the interest of the country. Given that salaries are lower in domestic auto plants that employee non-union employees, isn't the payroll a big reason why GM is not competative.