international

Republicans see veto of auto bailout as first step toward restoring economic reputation

America's Big Three carmakers - Chrysler, Ford and GM - are facing very difficult economic times.  Sixteen million cars were sold in 2007 but that already below-average number has sunk to ten million this year.  Without a bailout Chrysler and GM may go under and the consequences for the many businesses in the supply chain could also be disastrous.  That is the argument for the bailout and why President Bush is now considering using a portion of the already-agreed financial bailout to help the car companies.

The special bailout was scuppered on Thursday, however, by Republican lawmakers who worry that the bailout culture is becoming a monster (whole nations are next in the queue) and that union power needs to be checked.  Key conservative commentators compare the unionised car industry with the much more successful car manufacturers of the 'right-to-work' states (although Jonathan Rauch makes the case that GM is far from a hopeless case, noting that it is finally producing better cars and has cut employment by 40% since 2004.)

The Unions, increasingly confident of more power with the Democrats controlling the White House and both halves of Congress, discovered the limits to that power when Republican Senators made it clear that they would not support a "bailout without strings".  Republican Senator Bob Corker from Tennessee insisted upon a "date certain" in 2009, by which time the hourly labour costs of those working for America's Big Three car makers would be reduced to the average of foreign-owned car companies operating in the USA.  The United Auto Workers (UAW) offered to look at wage costs but not until 2011.  Republican Senator Mitch McConnell replied that that sounded like "taxpayer money today for reforms that may or may not come tomorrow."

The Wall Street Journal sees Thursday as an important milestone for the Republicans:

"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. They also stood up for the right reasons. No bailout will ever restore the car companies to profitability without a restructuring. Yet an explicit UAW goal is to use the bailout to avoid any such thing. The union and their Democratic protectors want to avoid the discipline that a bankruptcy could impose under Chapter 11. A government-directed salvation would also give environmentalists huge leverage over the cars Detroit builds, a power they and Democrats have wanted for decades."

US Republicans debate their attitude to size and scope of government

US Republicans - or, perhaps, I should be writing US conservatives - have been debating their attitude to the size and scope of government.

Bill Kristol kicked things off in his weekly New York Times column.  He argued that recent Republican Presidents hadn't succeeded in delivering small government and he notes that Jeb Bush - now openly considering a run for the US Senate - may be billing himself as a small government conservative but his record as Florida's Governor was mixed:

"Jeb Bush was a successful and popular conservative governor of Florida, with tax cuts, policy reforms and privatizations of government services to show for his time in office. Still, in his two terms state spending increased over 50 percent — a rate faster than inflation plus population growth. It turns out, in the real world of Republican governance, that there aren’t a whole lot of small-government Republicans."

Ross Douthat - at Atlantic.com - would like readers to think of small government conservatism as more of an attitude than a pure position and he contends that the attitude hasn't done too badly:

"Around the time that Buckley founded National Review, the federal government's share of GDP had been rising steadily for more than thirty years, from 3 percent in 1925 to 18.8 percent in 1962. In the Sixties and early Seventies, it seemed extremely plausible that the United States was a glide path to European-style social democracy. Then came the conservative ascendancy - and thirty years later, in 2001, government's share of GDP stood at ... 18.4 percent of GDP. (It's inched up somewhat, of course, under George W. Bush.) Now obviously there are a variety of reasons why the size of government stopped rising after the Seventies, but far from least among them is the influence that Buckley-style small-government conservatism has wielded over public policy lo these many years. (And remember that he promised to stop history, not to roll it back.)"