Should we bail out US automakers?

November 20, 3:41 AMProgressive Politics ExaminerKaren Harper

Previous Next

7 comments Print Email RSS Subscribe

Subscribe

Get alerts when there is a new article from the Progressive Politics Examiner. Read Examiner.com's terms of use.

Email Address   Include other special offers from Examiner.com Terms of Use

It has been only weeks since our government leaders told us in very pursuasive terms that we needed to bail out Wall Street banks.  At the time, we were told by government leaders on both sides of the aisle that the future of our economy was at stake.  We were told that without the bailout, we wouldn't be able to get loans for cars, or be able to buy homes or other big purchase items. 

Since the agreement was made to give the money to failing banks, we've been told that money from the $700 billion has gone to investors in the form of dividends, and other questionable payoffs while very little of it has gone to aid in lending to Americans seeking loans for automobiles, etc.

It's hard to know exactly what is going on with the bailout money or what Treasury Secretary Hank Paulson will do with the rest of it though  Paulson released a press statement on the Financial Rescue Package on November 12 indicating that the bailout has already done a lot to help. In the statement he said that since October,  the economic situation has changed and so the plans for the bailout money have changed as well. 

Many of us are skeptical about the benefits of the $700 billion package and what it will be used for.

Now the nation's three leading auto makers are asking us to bail them out as well.  Yesterday, corporate dogs from the big 3 Michigan automakers arrived in Washington aboard 3 different corporate jets at a cost of $20,000 each to ask for $25 billion.  They say they will "streamline" their industry, cutting costs and turn their respective businesses around if Washington agrees to hand over $25 billion to them.  The automakers claimed that it is the global economical crisis that has caused their impending demise.  But many in the senate disagree and Christopher Dodd chastised them for driving the market to drive fuel inefficient cars.

Perhaps the first thing they should do, should they get the government handout, is agree to work for two years at union wages instead of the CEO wages they've enjoyed while they've run the industry into the ground.  

Ashton Kutcher, a guest on Bill Maher, voiced the concerns that many of us have been having.  Like me, he thinks the people in charge of the industry, the corporate CEOs should be the first to take a pay cut.  He is against the bailout and suggested that the oil companies should bail out the auto industry after saying that the big 3 automakers have had a long allegiance to the oil companies.  

I have mixed feelings about the proposed auto industry bailout.  First, I've seen nothing from the bank bail out that assures me that the money will be spent well.  Why would automakers fare better?

On the other hand, the millions of people who would be out of work should the automakers go under would put a huge burden on our economy.  

Senator Richard Shelby (R) of Alabama  says we should let the auto giants go under, that they can go into bankruptcy and restructure and start over.  On the face of it, that sounds reasonable.  

But would GM survive bankruptcy?  It's not that simple.  Who will loan money to a post-bankrupt GM?  Who will buy a car from a post-bankrupt restructured GM?  I'm not convinced that any of the US automakers would survive bankruptcy.

Another point to consider is how an American institution like GM or Ford going belly-up would effect Americans' confidence in the economy.  If GM or Ford can go under, who can't?  It would serve to discourage potential investors.

If our government leaders decide to give the bailout to automakers, what assurance do we have that the money won't simply line the coffers of CEOs who think nothing of spending $20,000 each to fly private jets to Washington?  Will there be transparency in the exchange of money?  

I want to hear more  than vague assurances from the CEOs of a failing auto industry that a $25 billion handout will turn them around.  I want oversight.  I want promises.  I want to see the plans.  I want it in writing.  

As I said before, I have mixed feelings about the proposed automaker bailout.  I don't know what the right thing to do is.  I'm not sure anybody really knows what would be best.  What do you think?