To be fair Obama isn't the only one talking about this but he has not only embraced it he is pushing it and even going so far as to try and push the incumbent President into supporting it, which seems more like more political strategy than anything else since, if it succeeds he can take the credit and it fails he can blame Bush.
The idea the idea is to give the Big 3 auto makers the $27 billion bailout they are looking for. It's a bad idea. But one that takes no political courage to embrace since its the politically easy thing to do.
Detroit is claiming they need the money because of the economic crisis. But in case no one has noticed, the same economic crisis exists for Nissan, Honda, Toyota, Volvo and every other foreign auto maker making and selling cars in the US.The real reason for Detroit's economic problems is that they have lost $70 billion in the last 3 years thanks to management that has been responsible for selling cars the public doesn't want because they haven't been as good as the competition's. That has nothing to do with the economic crisis and it's no reason to bail them out and reward their managment for all their lousy work.
But what is even more worrisome is that on the subject of the auto bailout we get more of what we've been getting all along from Obama -- more Obamaspeak which, to me is the product, not of some soaring intellect but a sloppy mind.
Here is one example:
"For the auto industry to completely collapse would be a disaster in this kind of environment"
First, no one has said the auto industry would completely collapse if they didnt get the $27 billion so it's either an example of his not seeing the problem for what it is, or it's more Obamaspeak -- words with nothing behind it. The second part of his statement is almost laughable, that "... the collapse of the auto industry would be a disaster in the kind of environment". What kind of environment would the collapse of the auto industry not be a disaster? Should we wait a few years and then let the industry collapse? No one wants to see the industry collapse and it won't whether they get the $27 billion or not. So it's more words designed to sound smart but are more Alice in Wonderland nonsense from the person who said words matter.
The people who need to be looked out for first and foremost in the auto industry right now are the workers. And for less than half the $27 billion Detroit wants -- $12 billion -- the goverment can guarantee the lifetime pensions of every auto worker at the Big 3. That makes more sense than than throwing $27 billion at auto industry managment who are responsible for years of neglect and making cars that weren't as good as the competiton. Yes, everyone says they learned their lesson and now they are making better cars. But spending $12 billion to make sure the people who had nothing to do with the auto makers losing $70 billion over 3 years have their pension and health care benefits in tact makes more sense.
GM going into bankruptcy is not the worst thing that can happen. Major airlines have done the same and come out of it stronger and more viable. The possibility of Ford and Chrysler having to merge is also a better idea than throwing tens of billions of taxpayer money at management teams that don't deserve it.Yes, if GM had to file for bankruptcy and restructure and Chrysler and Ford merged there would be a loss of jobs, at least temporarily. But the rest of that $27 billion could go to doubling the severance of any auto worker who loses their job, and extending their unemployment benefits to twice their duration giving them ample time to get on their feet or get rehired. And with Detroit producing fewer cars it would almost certainly mean the foreign auto makers employing American auto workers would eventually take up the slack and increase production and over time would be hiring more workers.
At the very least if Detroit was to get a bailout it should come from the original $700 billion from the original bailout bill, not a separate loan. The reason for that is you just cant keep throwing money at everyone. It wont work and wont solve the problems. You start in one place and improve that and then move on from there and not try and solve everything at once.The one thing to be concerned about in an Obama presidency is that he is so used to doing things for strictly political reasons, to try and say something to appeal to everyone ( as he did when his statements about Jerusalem blew up in his face during the primary) that he may try and give something to everyone as a political sop . But the problem is too big and too wide spread for that to be a solution otherwise everyone would be for it.
GM should be allowed to go into bankruptcy and reorganize. Yes it would have a short term negative psychological affect but practically speaking its not a bad thing. GM, Ford and Chrysler mismanagement has caused this problem with years of neglect and not being competitive with foreign auto makers and now they want tax payers to bail them out using the economic crisis as the excuse.
Spending $12 billion to guarantee the pensions and health care of all the autoworkers, and another $15 billion to double the severance and unemployment benefits of those who lose jobs makes more sense than a management bailout. The other thing to keep in mind is that if you throw this money at Detroit management, there is no guarantee people wont lose their jobs anyway.
Forcing GM to downsize, getting rid of management, encouraging a merger between Chrysler and Ford would mean they would produce less but better cars. It also means sales of the foreign auto makers ( all of whom employ American workers in the US) would increase and so would create new jobs there -- jobs that can be filled eventually by auto workers who might be casualties of the downsizing.At the very least, any money going to Detroit should come out of the $700 billion already allocated, not a separate bailout package . But Obama has been pushing for the bailout now and pushing Bush to support it, something Bush has said he wont do.
The one thing to look for, the one big red flag, a marker to throw down now with regards to Obama and the bailout is, if the bailout doesn't happen now and Obama comes to office and doesn't do it himself, its going to be a sign that his seemingly pathological insincerity is real. If he thinks the bailout is a good idea, then let him do it when he comes to office and let the results will be what they will be. But if, after pushing Bush to sign a bailout bill, he doesn't do it himself, then the next 4 years are going to be lost years with Obama doing what he is done his whole political life -- nothing.
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