McConnell's Brilliant Maneuvering on the Senate Auto Maker Bailout Bill

A little over a week ago, I wrote this post regarding the politics of the then-evolving Congressional bailout of the US-owned auto industry.

In it, I predicted,

"Look for Eric Cantor and Paul Ryan to brace House Minority Leader John Boehner, forcing him to withhold support for any Democratic bailout of the Detroit auto makers which does not first require their filing Chapter 11. Look for Senate Minority Leader Mitch McConnell to do the same, while President Bush cites Republican Congressional preference for a bill that includes that requirement.

Bush, Boehner and McConnell, standing in front of the White House, will make an effective team as the President gives his full support to the Republican leaders' version of a bill to help auto workers, via a DIP loan to those auto makers which file for bankruptcy, while steadfastly refusing to engage in corporate welfare and government picking winners and losers in the free market."

I wasn't exactly on target. Bush, sadly, has begun to listen to the wrong people, fail to shame Wagoner for waiting too long to file for bankruptcy, and worry too much about his economic legacy.

Senate Minority Leader Mitch McConnell, however, performed brilliantly. As this weekend's Wall Street Journal noted,

"In the Senate's Thursday night automobile showdown, the United Auto Workers said "No thanks" to a bailout with strings attached. Most Senate Republicans took them at their word and voted to block the bill. But within hours, President Bush blinked and Treasury is now scrambling to use money from the Troubled Asset Relief Program, or TARP. Who'd have thought Mr. Bush would want to join the long line of Detroit executives in caving to the UAW?

Senate Republicans had more gumption. Led by Tennessee Senator Bob Corker, they asked the auto workers to show they were serious about making Detroit competitive again. In exchange for a lifeline from Washington, Mr. Corker wanted the union to set a "date certain" in 2009 for lowering the Detroit Three's hourly labor costs to the average of foreign-owned auto makers in the U.S. He also wanted creditors to bring down Detroit's total debt by two-thirds through an equity swap, making sure debtholders share the cost of restructuring.

The union's counteroffer was that it would bring down labor costs in 2011, when its current contracts run out. Maybe we missed something, but we thought GM and Chrysler were facing bankruptcy now, not in three years. As Minority Leader Mitch McConnell said on the Senate floor, that sounds like "taxpayer money today for reforms that may or may not come tomorrow."

Thursday's showdown marked an important political moment for the Republican Party. By refusing to write a blank check to Detroit, Senate Republicans have started to reclaim some credibility on fiscal policy and the role of government in the economy. They did so standing up to a Republican President who doesn't want any more bad headlines, as well as to Democrats who will blame the GOP if the auto makers collapse."

By tapping Corker to lead a spirited, well-intentioned effort to save American taxpayers from a hopeless attempt to 'rescue' already-failed companies, McConnell has positioned his party in the Senate to reclaim the mantle of fiscal rectitude, and regain serious numbers of seats, come 2010.

Americans, by a wide margin, have been polling in opposition to this bailout, because they understand that they are being asked to pay for the excessive pension benefits of union retirees, as well as the excessive current wages of union employees of GM, Ford and Chrysler.