Democratic congressional leaders urged Treasury Secretary Henry Paulson to use the $700 billion rescue bill passed last month to provide temporary aid to the U.S. auto industry.
House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid sent a letter to Paulson today saying the rescue bill gives him “broad discretion to purchase, or make commitments to purchase, financial instruments you determine necessary to restore financial-market stability.”
Pelosi was among the lawmakers who met two days ago with the chief executives of General Motors Corp., Ford Motor Co. and Chrysler LLC. The three companies are seeking $50 billion in federal loans to help them weather the worst auto market in 25 years, according to a person familiar with the matter.
No, no, no, a thousand times no.
Elections have consequences. **shakes head**
I thought the Democrats were the party of the little guy. And yet they want to pour money into the inflated bureaucracy that is GM, Ford and Chrysler.
Oh, wait, Washington D.C. is just one inflated bureaucracy, so, of course they would want to help a brother in trouble.
If we have a free market, it should be allowed to work, free of government interference. Let the chips fall and when it all sorts out, we’ll be stronger in the end.
This rush to socialism is not going to work.
[blockquote]This rush to socialism is not going to work. [/blockquote]
That depends on the definition of “work.” If you mean that it will strengthen the economy and make America more competitive, it will surely not “work.” If you mean that it will further centralize political power in the hands of the Central State, then it will be an absolute success.
Pelosi and Reid want it because that is what the United Auto Workers’ Union wants and the union is asking for its payback for its political support.
If it were a major non-union corporation, they would not be so supportive of aid to the corporation.
Okay, I think that the Dem’s need some lessons in economics. On the one hand, they loudly proclaim that we must “end our dependence on foreign oil” and call for a reduction in driving and gas guzzlers. Some car companies make a strong effort to design and market fuel efficient vehicles and in doing so, become strong market forces. Other car companies decide to focus on the (then) high profit, gas guzzling SUV and truck market, and in doing so, get into deep economic trouble.
In the marketplace, I think that the Dem’s should be saying “Good, the automakers who are trying to reduce fuel consumption are being rewarded, while those who didn’t care about reducing fuel consumption are being punished.” But no. The Dem’s want to bail out the bad automakers, and socialize the losses these automakers incurred due to their earlier foolish decisions.
Just like the Wall Street bailout. When will the politicians realize that economic losses resulting from bad decisions are not necessarily a “bad” thing? It is idiocy to privatize profits stemming from bad-for-the-country decisions, and then socialize the losses when the consequences of these bad decisions come home to roost.
[blockquote]Pelosi and Reid want it because that is what the United Auto Workers’ Union wants and the union is asking for its payback for its political support. [/blockquote]
Precisely. They’ve pumped the Big Three for every dime they had, now they’re aiming for the taxpayers.
[url=http://www.dilbert.com/strips/comic/2008-11-08/]Dilbert gets it[/url]
I think what has happened to the big three is sad, but some of what has occurred is their own responsibility (we could debate how much). I struggle to have confidence that if they get government help they will do the radical retooling and restructuring needed for them to compete in the 21st century.
[blockquote]I struggle to have confidence that if they get government help they will do the radical retooling and restructuring needed for them to compete in the 21st century. [/blockquote]
You are wise to be skeptical, Dr. Harmon, because the very thing they need to jettison to even think about being more competitive is the very thing that the “progressives” think is an absolute must-have for a society that follows a social-justice model: Health care for life (and it’s not just the union retirees that get it, either).
Government help will only prolong the inevitable.
It’s not really hard. Make good, reliable cars that people want and and afford. Voila, you have a successful company.
Fail to do that and put your hand out for a gift from the government.
That is precisely what the free market is not.
Any bailout should be in the form of tax credits to consumers who purchase energy-efficient vehicles such as hybrids, plug-ins, etc. The higher the better, and in time to impact the 2008 tax returns. American automakers that decide to make these cars will benefit. Those that don’t will be punished by the market.
The savings in fuel consumption will offset the tax credits and provide jobs for those companies with their priorities in the right place.
After WWII, Mr Deming went to Detroit with his 14 principles to reorganize the auto industry – he was rejected – a strategic mistake. He then went to Japan and assisted them in rebuilding their industry. The Japanese took to his principles like a duck to water. The auto industry is fine, but its Toyota, Honda, Nissan, and BMW made in the USA by non-union workers. GM, Ford, and Chrysler and the UAW should file for bankruptcy, be sold to Toyota, Honda, etc., gut their mangaement and start fresh.
The road to solvency begins with a reduction in their labor and retiree costs and bankruptcy is the way to get there. Of course, that’s a disaster for the unionites thus the squeals from Comrades Pelosi and Reed…..
Agree with #12 and #13. Americans are still building cars, but they’re doing it under better management. In very many cases the loss of American manufacturing jobs can be charged to the management mindset rather than “cheap foreign labor.” It’s the mindset which makes cheap foreign labor look good rather than reforming the processes and strategies of the company at home. It doesn’t have to be this way, and we shouldn’t reward the companies which have so badly mismanaged resources for so long.
I think GM and Ford build inferior products but there might be important defense reasons, for example, to keep them viable. I am not sure the customer finds value, however, in paying for pension schemes of employees long retired when that cost isn’t built into cars from other manufacturers.
[blockquote] The road to solvency begins with a reduction in their labor and retiree costs and bankruptcy is the way to get there. [/blockquote]
One of the biggest bailouts of bloated industrial bureaucracies was the Medicare drug supplement. My mom had her prescription plan through my dad’s policy. As soon as part D came through, the company dropped the prescription plan and told my mom to sign up for part D.
Kendall+ had a good article on a lone ranger (former treasury secretary, I believe) who was traveling the country decrying this boondoggle which we will be paying for over the next fifty years.
Now, if the government is going to pay for prescription drugs, it needs to do what other big organizations do and ask patients to fill their prescriptions through drug warehouses. They don’t and end up paying full price at Walgreen’s. It is stupid.
[blockquote]Kendall+ had a good article on a lone ranger (former treasury secretary, I believe) who was traveling the country decrying this boondoggle which we will be paying for over the next fifty years. [/blockquote]
If only. Between Social Security and Medicare, the US will be bankrupt long before then. Like GM, Ford and Chrysler, the federales have overpromised their constituents. The only benefit to come from it is the political power accrued to those of all parties who have done the promising, and they’ll be long gone when we hit the wall.
Canon Kendall,
The Big 3 are in a hole they cannot get out of. They negotiated generous CBA’s from behind trade barriers when the rest of the world’s industrial base was still crawling out from the ruin of WW2 and happily passed the costs on to consumers. I had an old management-side lawyer tell me that years ago, he told a small group of executives and union leaders that they had better transition to defined-contribution plans and he got laughed out of the room. With their own product lines plummeting, the Big 3 went on a leveraged buy-out shopping spree of foreign manufacturers to try and generate cash flow. But in the meantime, they’ve still got several hundred thousand unprofitable employees and legacy costs to carry.
These companies are negative equity into infinity. They will never, ever be profitable and just need to be chopped up and sold off. The quicker that is done, the quicker the talent and capital can start new American auto companies. Of course, they will immediately head for sunshine and low taxes in right-to-work states.
Perhaps it would be helpful to look at this from a moral perspective. All of these bailouts are made possible by the fact that government takes by force (involuntarily) from citizens the money to make these bailouts. That’s a morally wrong action and you don’t get good results from an immoral action. Hence, the fallacy of all schemes to redistribute – business bailouts or social welfare. Simply put, you cannot expect nor get good results from a wrong (immoral) action.
The problem is the companies agreed to union demands years ago to provide health care for retired members, the result is an added cost on every car of $3,000 and it’s growing as people live longer and require more health care.
Standard (good-natured) repartee among my golf foursome following a round goes like this:
The losers (after surrendering two or three dollars): “We need more strokes.”
The winners: “What you need is to play better golf.”
The big 3 need to make better cars.