With the approval of a federal bankruptcy court, the Hostess company, maker of one of the most popular snack foods in America, will liquidate its holdings, throwing upwards of 18,000 employees out of work. As Barack Obama prepares his second term agenda, does he have the political skill to save those jobs by moving a Twinkie bail-out bill through Congress?
Don’t scoff. For the last year all the candidates seeking the presidential nomination clearly endorsed the belief that government had an obligation to foster conditions which would promote the creation of jobs. They now have a chance to put their words into action and save the jobs of 18,000 Hostess workers.
Through cooperation between Congress and the president, we saved financially-deteriorating banks four years ago. The same coalition saved the auto industry shortly thereafter. At stake were millions of jobs and the survival of specific corporations.
The numbers were staggering, both in the jobs that were threatened if the businesses failed and the amount of money the government put up to save them. Their failure threatened the entire economy and we were told frequently that we couldn’t let them collapse. They were “too big to fail.”
But Hostess isn’t General Motors or Bank of America. The liquidation of Hostess doesn’t endanger the economy. Only 18,000 workers will be affected. Is Hostess “too small to save?”
The president has deemed it desirable to give half billion dollar government guaranteed loans to embryonic companies in industries, such as solar power, that he deems important to America’s future. Far too many of them have gone bankrupt, with the loss of taxpayer money.
Why not offer a government guaranteed loan to keep Hostess in business? The popularity of Twinkies alone would assure a grassroots, nationwide base that would cause Tea Party, Greens and politicians from both old parties to support the proposal. There wouldn’t be any Occupy Twinkies protest movement. In fact, if Obama does it right, the left as well as
the right would welcome a Twinkies bail-out.
Here’s the way to do it. Let the unions involved with the production and distribution of Hostess products buy the company with a guaranteed loan from Uncle Sam. Two billion dollars should be enough to take over all the company’s plants and other assets. The unions would have to put up their pension funds as collateral. Conduct a nationwide advertising campaign, in the manner the states encourage lottery sales, urging Twinkie fans to buy the product. Never mind the health hazard involved in devouring Twinkies. The public hasn’t cared up until now anyway.
If it fails, much of the loan loss will be recovered by the sale of the assets. Any loss will be a piddling amount in terms of the trillions in the national debt.
The risk of failure is worth it. Thousands of families will have a chance to stay where they are. The loss of 18,000 jobs would have meant their dislocation. Many of them would have had to move, sell their homes - if they can - and disrupt the lives of their kids. If Hostess sells its assets, chances are most of the 18,000 would not be offered jobs at the companies taking over production of Hostess products. Factories would be shut, towns would suffer. On a small scale, the recession of 2007 would be played out again in select communities around America.
Does the president have the courage to call for such a plan? His failure to enlarge on the bank and auto bail-outs led to the prolongation of the Great Recession. He says he now has a mandate. Let him prove it. No jobs are “too small to save.”
Ralph E. Shaffer is professor emeritus of history, at Cal Poly Pomona, and an occasional contributor for Stephens Media newspapers. Norma Jeanne Strobel is a retired professor at Santa Ana College.