March 8 (Bloomberg) -- Republican lawmakers said Congress should stop providing General Motors Corp. with federal aid and let the company file for bankruptcy if necessary.
“The best thing that could probably happen to General Motors, in my view, is they go into Chapter 11,” Senator John McCain said on the “Fox News Sunday” program today.
The automaker could reorganize and renegotiate its labor contracts to come out “stronger, better, leaner,” McCain, from Arizona, said.
GM is cutting executive pay and will eliminate 47,000 jobs this year as part of a restructuring required to keep $13.4 billion in U.S. loans. GM’s Chief Executive Officer Rick Wagoner is seeking to persuade the U.S. Treasury to lend the carmaker as much as $16.6 billion more to survive.
The largest U.S. automaker has lost $82 billion since its last annual profit in 2004 and has been fending off speculation about bankruptcy for more than two years.
U.S. auto sales plunged 18 percent to a 16-year low in 2008, affecting GM, Ford Motor Co. and Chrysler LLC.
Senator Richard Shelby, the top ranking Republican on the Banking Committee, said on ABC’s “This Week” program that “subsidization of anything for very long never works.”
“The automobile business -- those companies, Chrysler, Ford and General Motors -- they’re in deep trouble,” Shelby, of Alabama, said. “I’ve suggested they go into Chapter 11. That’s where they belong. And they could. . And they could reorganize.”
Canadian Auto Union Agrees to Freeze Wages in GM Deal
The Canadian Auto Workers union said it reached a tentative agreement with General Motors Corp. to freeze wages and pensions until 2012 and force workers and retirees to pay a monthly health-care fee in an effort to reduce the automaker’s costs.
“We are optimistic the CAW did what was necessary to protect the interests of our members, our communities and ensure that we maintain our Canadian advantage for future investments,” CAW President Ken Lewenza said today at a press conference in Toronto. “It’s painful.”
General Motors, surviving on $13.4 billion in U.S. aid, was working with the union on ways to find savings by month’s end as governments in the U.S. and Canada study plans for further assistance. Canada, which has about 20 percent of North American production, is seeking to maintain its market share.
“The agreement marks a positive further step in GM Canada’s restructuring plan,” the company said in an e-mailed statement today. “We compliment the CAW for their leadership to share sacrifices in these extremely challenging economic times.”
Industry Minister Tony Clement made concessions by the union a condition for government help, which may total as much as C$7 billion ($5.4 billion) for GM alone. The union in turn made the agreement contingent on government aid, Lewenza said.
GM's failure could trigger round of massive layoffs and hurt companies that supply and manufacture parts, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank in New York.
In all, GM's bankruptcy could lop off 4 percentage points from the U.S. gross domestic product, of which two-thirds is driven by consumer spending, LaVorgna said.
Didn't McCain vote for the 750 billion dollar bank bailouts ?
Funny he has no problem giving out 750 billion to banks ,but he wants to break the unions that don't support republicans
For the record I think GM should go into bankruptcy,no bailing out banks,car companies or anybody else.I think those fucking unions needs to be broken as well.I'm just pointing out McCain's hypocrisy
Didn't McCain vote for the 750 billion dollar bank bailouts ?
Funny he has no problem giving out 750 billion to banks ,but he wants to break the unions that don't support republicans
For the record I think GM should go into bankruptcy,no bailing out banks,car companies or anybody else.I think those fucking unions needs to be broken as well,I'm just pointing out McCain's hypocrisy
Very true. We need a third party. These two are failures and full of it.
