Big Three bailout stalls
Congress can’t reach deal; White House unlikely to act for nowStaff, wire report
WASHINGTON - A Democratic Congress, unwilling or unable to approve a $25 billion bailout for Detroit's Big Three, appears ready to punt the automakers' fate to a lame-duck Republican president.
Caught in the middle of a who-blinks-first standoff are legions of manufacturing firms and auto dealers - and millions of Americans' jobs - after Senate Democrats canceled a showdown vote that had been expected Thursday. President George W. Bush has ''no appetite'' to act on his own.
U.S. auto companies employ nearly a quarter-million workers, and more than 730,000 other people have jobs producing the materials and parts that go into cars. About 1 million on top of that work in dealerships nationwide. If just one of the auto giants were to go belly up, some estimates put U.S. job losses next year as high as 2.5 million.
''If GM is telling us the truth, they go into bankruptcy and you see a cascade like you have never seen,'' said Sen. George V. Voinovich, R-Ohio, who was working on one rescue plan Wednesday. ''If people want to go home and not do anything, I think that they're going to have that on their hands.'' Ohio has major auto plants and the automakers employ thousands in the state.
Dave Green, president of the 1,100 worker United Auto Workers Local 1714 of the Lordstown Metal Center plant, called lawmakers' inaction ''obviously disappointing. We were really hoping Congress would have passed some sort of bridge loan.
''The whole mess has been a political agenda for special interests on both sides,'' he said. ''It'd be nice if they'd set politics aside and help the manufacturing base.''
The situation is most serious for GM, Green added, because it's the largest and ''probably most vulnerable.''
The Lordstown Complex, which employs about 4,800 hourly and salaried workers, is suffering from slow sales of its Chevrolet Cobalt and Pontiac G5 small cars. About 1,100 hourly and salaried workers are scheduled to be indefinitely laid off Jan. 9 as the complex cuts production.
Among area lawmakers adding their weight to the loan, Rep. Charlie Wilson, D-St. Clairsville, said he joined 24 other members of Congress in a letter to the Senate and the House to express their strong support for Congress and the administration to assist the auto industry before the end of the year.
''I'm pleased that the chairmen of GM, Chrysler and Ford attended the hearing in the House Financial Services Committee today,'' Wilson said. "It was important to hear from them how critical they believe federal help is at this time.
''We can't let the auto industry fail. Working families across Ohio and our country depend on it; our economy depends on it.''
The other representatives from Ohio who signed the letter were Timothy J. Ryan, D-Niles; Dennis J. Kucinich, D-Cleveland; Betty Sutton, D-Akron; and Marcy Kaptur, D-Toledo.
The automakers - hobbled by lackluster sales and choked credit - are burning through money at an alarming and accelerating rate: about $18 billion in the last quarter alone. General Motors Corp. has said it could collapse within weeks, and there are indications that Chrysler LLC might not be far behind. Ford Motor Co. has said it could get through the end of 2008, but it's unclear how much longer.
For now, however, with the federal emergency loan plan stalled in the Senate, lawmakers in both parties are engaged in a high-stakes game of chicken, positioning themselves to blame each other for the failure.
Senate Majority Leader Harry Reid, D-Nev., scrapped plans Wednesday for a vote on a bill to carve $25 billion in new auto industry loans out of the $700 billion Wall Street rescue fund.
It's really up to Bush's team to act, he said.
''I don't believe we need the legislation,'' Reid said. Treasury Secretary Henry Paulson can tap the financial industry bailout money to help auto companies, Reid said, but ''he just doesn't want to do it.''
Not our responsibility, countered the White House.
''If Congress leaves for a two-month vacation without having addressed this important issue ... then the Congress will bear responsibility for anything that happens in the next couple of months during their long vacation,'' said Dana Perino, the White House press secretary.
She said there was ''no appetite'' in the administration for using the financial industry bailout money to help auto companies.
The White House and congressional Republicans instead called on Democrats to sign on to a GOP plan to divert a $25 billion loan program created by Congress in September - designed to help the companies develop more fuel-efficient vehicles - to meet the auto giants' immediate financial needs.
Voinovich and Sen. Kit Bond, R-Mo., along with Democratic Sen. Carl Levin of Michigan, were at work on that measure Wednesday, trying to placate skeptical Democrats by including a guarantee that the fuel-efficiency loan fund would ultimately be replenished.
''It is the only proposal now being considered that has a chance of actually becoming law,'' said Republican leader Mitch McConnell of Kentucky.
If an acceptable deal emerges, Reid said it could be passed as part of a measure to extend jobless aid to unemployed workers whose benefits have run out. A vote on that bill is likely on Thursday. Negotiators were discussing a scaled-down aid package of $5 billion to $8 billion to help the automakers survive through year's end.
But there was little sign that Democratic leaders would go along.
''We have to face reality,'' Reid said.
They are vehemently opposed to letting the car companies tap the fuel-efficiency money - set aside to help switch to vehicles that burn less gasoline - for short-term cash-flow needs.
All of which leaves the Big Three bracing for a bleak winter without government help.
GM CEO Rick Wagoner told a House committee Wednesday that the downfall of his industry would ripple through communities around the nation. Pressed by lawmakers, Wagoner wouldn't say precisely when GM would run out of money without a government lifeline, but he disclosed that the company now was burning through $5 billion a month.
Still, with the $25 billion emergency package, ''we think we have a good shot to make it through this,'' Wagoner said.
Many lawmakers in both parties are now openly discussing whether bankruptcy might be a better option for auto firms they regard as lumbering industrial dinosaurs that have done too little to adjust their products and work forces for the 21st century.
The carmakers argue that bankruptcy would devastate their companies, but proponents say it would give them a chance to reorganize and emerge stronger and more competitive.
It's unclear, though, whether Democrats controlling Congress are willing to risk being blamed for letting one of the Big Three - symbols of the nation's once-mighty manufacturing sector - go under.
Bailout-shy lawmakers got an earful from jittery constituents last month when the House let an early version of the Wall Street rescue fail, sending the Dow Jones industrials tumbling and erasing more than a trillion dollars in retirement savings and other investments. Congress took a deep breath and reconsidered, passing the plan a few days later.
Faced with a similar collapse in the auto industry, the Bush administration might yet decide to step in to help the auto companies, or the Federal Reserve could step in - though both have steadfastly refused to do so.
If not, lawmakers have left themselves a contingency plan: Come back to Washington in December for yet another postelection session where they might be able to strike the deal that now seems beyond reach.
Democratic leaders are planning to gather for an economic conference the week of Dec. 8, noted House Majority Leader Steny H. Hoyer, D-Md.
''That is available,'' Hoyer said this week. ''The year has not ended.''
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pahootaman
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11-20-08 1:40 PM
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HOW DARE YOU BEERSLAVE SAY YOUR COLLEGE EDUCATED. WHAT, DO YOU THINK YOUR BETTER THAN US? just kidding. He's totally correct though, I had to move after college because, well, it's pretty much Lordstown or Delphi, and they don't need political scientists. I would of loved to stay in Warrn though, that's my home and old stomping grounds. Even with all the bad news floating around these days, I still miss it.
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Billdog
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11-20-08 1:31 PM
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semomof2 nobody wants to see your husband loose his job. We are at a vary difficult time in the history of this country and it all goes back to corprate greed. If CEO's would not have been paid in the fashion they have been for the past 20-30 years they would have taken a stack in keeping their business' solvent. These are the people that need no bonus' for a job poorly done. These are the people that should be fired if a loan comes to the auto makers. Why would any Board of Directors (BOD) reward such poor performance? If that is how I did my job, I would have been gone long ago. Without the worker the business' cannot produce, this is where bonuses should have been going all along.
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Billdog
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11-20-08 1:21 PM
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The big three only support the working class and feed the majority of other business'. Banks and Wall St. are the people with money and that seems to be all that our government is concerned with anymore. Enough people get unemployed and the tax base that their saleries comes from will dry up. When this happens then non of them will want to be in politics anymore and that will be the end of The United States of America. Call your state officals and let them know that a recess without resilution is unexceptable.
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jstfacts
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11-20-08 1:06 PM
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If I am not mistaken, the Big Three are asking for an emergency "Loan". To be repaid with interest. Something any one of us would do this evening if our furnace quit working and we did not want to freeze...we might choose to go to Sears or Lowes and get a new furnace. If we do not have cash, we borrow the money in the form of store credit or a credit card. We then repay that loan with interest.....Let us not get bogged down in why the furnace broke, maybe we did not change the filter, maybe we did not have it checked regularly. Stick to the facts, we need a loan and we will repay it with interest...Just the facts!
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semomof2
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11-20-08 12:45 PM
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"Beer Slave": Just for the record my husband has a business degree. He worked for 15 years in the IT field making 70k per year with health benefits, 401k, and pension, but lost his job due to a "mass layoff" along with other employees on February 1. He was a hard worker and the CTO tried to pursuade the CEO to save his job due to his excellent dedication to the company but performance had nothing to do with it. The company brought in bean counters who said x number of employees had to go and they told the CEO who to cut based on numbers alone. Had the company offered my husband the option to make concessions, he would have gladly accepted. He has been very proactive in his search for a new job even looking across the county uprooting our young elementary children, but there is nothing out there!! He paid his dues for 15 years and is now starting all over again.
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Handala
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11-20-08 12:10 PM
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In the 60s the Government decided to SAVE the Rail Road industry and we see how that worked!No more Pullman Standard,Greenville Steel Car,General American Transport etc.!In the 80s Chrysler was SAVED and then became "Damlier"!Bush (W), imposed an illegal tariff on imported Steel to sure up domestic steel.Steel producers responded by tripling their prices and when the tariff was dropped they sold out to foreign Companies!Hmm? "Insanity:Doing the same thing over and over again and expecting different results." Albert Einstien
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BeerSlave
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11-20-08 12:09 PM
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semomof2, I too have a college education, but guess what? I don’t work on an assembly line. A big misconception among Americans is that if you spend money and time at a university in order to obtain a degree, that you are then somehow ‘entitled’ to a career making $40,000+ sitting in a plush office somewhere… guess what?? That ain’t the way it works… You have to be super pro-active in your job search, be willing to make concessions, possibly move or commute miles away… Also be ready to pay your dues… nobody makes $50k coming out of college with no work experience in your choice of study…. Unless you are an engineer… or Timmy Ryan!! haha What is your husband’s degree in?? And please don’t say ‘Rec & Leisure’ studies…
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semomof2
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11-20-08 11:37 AM
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My husband makes peanuts at Lordstown. He works his college educated butt off on the assembly line with two 23 minute breaks in an 8 hour shift- this includes lunch and bathroom breaks. He doesn't have the luxury to sit around at work and chat or get a cup of coffee when he feels like it. Guess what he makes???? $14.00 per hour. Oh yeah, he also does not have health benefits - we pay for them ourselves out of pocket (which is not cheap!!)
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Sassysue
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11-20-08 11:01 AM
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This country survived the closing of steel mills (many many of them) with no bailout! This is insane that all taxpayers have to pay for the mismanagment and high wages that caused this mess. Please let me know who at Lordstown GM makes peanuts.
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semomof2
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11-20-08 10:50 AM
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SassySue: Who is going to suffer the consequences at GM???? The big wigs who make millions or the assembly line worker who makes peanuts???? The executives will take their cash and retire on a tropical island or move onto the next company! The little guys and the community is who will suffer with the failure of GM!!!!!!
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semomof2
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11-20-08 10:47 AM
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I don't want the government to just hand over billions to the auto industry without any "strings" attached! GM needs guidance to restructure their company - and going bankrupt isn't the answer. It will not only hurt current workers and have a trickle down effect on the whole economy - those who worked their butts off for 30 years and were promised retirement and even paid into it will lose everything! By the way, there have been MANY, MANY posts over the past few weeks praising the failure of GM!!!!
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Sassysue
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11-20-08 10:43 AM
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When you all mismanage your money do you get a government bailout? Sure dont, you work it out or go bankrupt. I'm hoping the bailout fails to get the needed votes. CONSEQUENCES..Something that logically or naturally follows from an action or condition.
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cortlandmom
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11-20-08 10:39 AM
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I think it is funny that Bush is willing to sign a bill to extend unemployment benefits just days after unemployment said they may run out of money by the end of the year. With no money to pay benefits, whats the use. Why not help the 100s of 1000s of people who may not have anything not to mention what if 3 million more apply for benefits. Where is this money coming from?
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SpeakTheTruth
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11-20-08 10:30 AM
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I don't think we're saying we're happy the bailout is going to fail or that it shouldn't happen. My point, at least, is that there need to be some strings attached to the money we're giving them. It's ridiculous for a CEO to be making millions and millions when a company doesn't have enough cash to cover its operating expenses. It just doesn't make good business sense. And if we are simply giving them money to continue operating as-is, these companies are going to find themselves in the same situation down the road. And personally, I don't want my tax dollars funding his exhorbitant salary. I'd rather the government put some regulations on how this money should be spent.
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cortlandmom
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11-20-08 10:23 AM
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Everyone agrees that something needs to be done but are going about it the wrong way. You cannot bandaid a gushing open wound without starting at the top and working your way down. Giving them the money to keep on paying for the high salaries and bonuses will not help anyone. When they filed bankruptcy, the management and CEOs still asked the judge to ok their yearly bonuses. What is up with that?!?!?!?! If you want to help the 3 million workers that could be affected show some consideration for them and show them you care. No man or women is worth that kind of salary and to stand in front of congress after getting off of a private jet to state their their case that they care and want to help the union is wrong. Help starts with them.
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hstottle
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11-20-08 10:09 AM
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The U.S. government give millions and even billions of our tax dollars to any country in the world that ask for it,how come nobody ******* about that. Let a company right here in this country ask for help and you people think the world going to end. It is going to end for alot of people if the government doesn't do anything. It will be a sad day in this country if the auto companies go under.The government needs to put quotas back on thing coming into this country, autos, steel, everything. Also if a company moves to another country to get cheaper labor, then let that company sell its products in that country,(NOT HERE) keep their products out. CONGRESS GET OFF YOU BUTTS, OK TIM RYAN DO SOMETHING.
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semomof2
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11-20-08 9:39 AM
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It was said that not only will the whole plant idle, it will return with only one shift. Better hope you have some serious seniority if you plan of having a job at Lordstown. For all of you who are thrilled about the bailout failing so far, just wait until GM goes under. This whole valley(and beyond)will be affected by the closing. If you think because you are not a GM employee, you won't be hurt - wake up. Businesses that support the plant with parts etc., will lay off or close. With all of these people out of work more businesses will follow without the support of these out of work employees-let's not forget the doctors and hospitals who will also be hurting because no one will have any elective procedures and won't have the money to pay their current bills, foreclosures will be even higher, tons of people will be forced to relocate out of state taking with them tax dollars necessary to support your local law enforcement. If you think crime is bad now just wait.
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SPANKY72
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11-20-08 9:36 AM
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ITS THERE FAULT,QUIT PAYING ALL THESE CEOS TOP DOLLAR,PUT IT BACK INTO THEIR COMPANY,SO IF WE GO BAIL THEM OUT NOW,WHAT ABOUT NEXT YEAR WHEN NOBODY IS STILL BUYING CARS BECAUSE THERE ARE NO JOBS BECAUSE THERE SHIPPED ALL OVER SEAS.THATS WHAT WE NEED TO CONCENTRATE ON BRINGING JOBS BACKTO OUR COUNTRY & QUIT BAILING THESE COMPANIES OUT THAT PUT THEMSELF THERE.FOR PAYING THEM CEOS ALL THAT MONEY FOR WHAT WHO NEEDS THAT MUCH A YEAR.
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zipcityboy
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11-20-08 9:29 AM
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autoworkerwife: shutdown of Lordstown until March?! When does the massive march on Washington begin?
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SpeakTheTruth
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11-20-08 9:13 AM
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Why does the Tribune edit everything? It took out the word S*U*C*K. And it obviously cut off the word "ticket" in my original post. Guess I was too long winded.
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SpeakTheTruth
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11-20-08 9:10 AM
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Did anyone happen to see clips from the CEOs of the Big Three before Congress? When pressed as to whether or not they each would be willing to work for less, only Chrysler's CEO said yes. He said he'd be willing to work for $1, while Wagoner pointed out that his salary had already been halved (going from $9 million or so to $4.5 million or so) and Mullaly simply said he thought he was good where he's at -- having earned $9.3 million last year. It was also pointed out that at least two of the CEOs had traveled to Washington, D.C. in private jets -- and Congress asked why they couldn't at least "jetpool." Can you blame the government for at least questioning the need and intended use of our money? I applaud them for that. Yes, we need to do something to avoid all these jobs being lost, but "The Big Three" can't just run off with our money while their CEOs are making in surplus of $9 million a year and traveling around on private jets.*****it up and buy a plane ticke
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pahootaman
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11-20-08 9:09 AM
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did you see how much Wagoner was yesterday on the eveing news. When asked why he didn't fly commerical he just said "we needed to get here to Washington and there was no other way". Is that because he doesn't want to be seen in one of his companies crappy cars? Naaa, it just never occured to him that jet setting in luxury would be seen as smug and back handed to his cause.
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NEWS777
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11-20-08 9:01 AM
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What got me was the CEO's flying in on their private planes to ask for bailout money...crazy. Shows me that the management and CEOs still don't get it.
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NEWS777
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11-20-08 9:00 AM
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It's a sad situtation but, I don't think they are going to get the money. And if they do it will be very little. They certainly didn't help out the steel industry when it fell apart here. I think at least 1 will go bankrupt. It will make the stock for the other 2 stronger and they will have to fight the storm. We can't bale out every biz that is failing. McCain said this to an autoworker when he visited. He said that car manufacturing was in trouble and the workers should be paid to be retrained for another industry. The worker said McCain "scared" him so his vote was for Obama. Well..look..McCain told the truth and was right. Something they didn't want to hear.
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cortlandmom
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11-20-08 8:55 AM
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WCI Steel has already laid off until the first of the year and told them they only have enough orders to work 1 week a month for the first 6 months of the year and after that they are not sure. Everyone is hurting. There is no way the government can bail out every business in trouble today. That would be ridiculous. The CEO and management need to make concessions if they care that much about the workers. The taxpayers are taped out and cannot even help our own school districts with levies. Everyone is hurting. Merry Christmas to all.............
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