To bail or not to bail, that is the question

Amidst our current financial crisis the CEO’s of GM, Ford, and Chrysler flew into Washington D.C. last week asking for 25 billion dollars collectively in a desperate attempt to save their dying companies. All three of the largest auto companies in America have been losing billions of dollars over the past several fiscal quarters. For years these companies have been making big gas guzzling cars, and as a result the American people have stopped buying them. They started buying foreign cars like Nissans and Hondas that may be safer, more economical, or better for the environment. Yet they came to Congress practically begging for a 25 billion dollar bailout to split between the three of them without any kind of plan of how they aim to change their failing business strategies. Why should the American taxpayers be putting up 25 billion dollars if GM, Ford, and Chrysler are not going to change the cars they create. After all, these companies have been losing billions of dollars over the past several months, yet they think that for some magical reason if the Government gives them 25 billion dollars to split three ways it will somehow save their companies without them changing a thing to their business plans.





From left to right are automaker CEO's Richard Wagoner of GM, Robert Nardelli of of Chrysler, and Alan Mullay of Ford infront of Congress last week asking for 25 billion dollars










On the other side of things these corporations employ about 3 million Americans who will lose their jobs if these companies go under. There will also be a ripple effect to other industries that make their sound systems, their tires, leather for their interiors, etc. that will create further job loss. For this very reason it is important that we help these automakers as much as we possibly can. Losing all of those jobs would be catastrophic to our country, especially during the economic downfall that we are currently in.

Congress did not go easy on the three CEO’s. Several Senators and Governors asked some critical questions of the “Big 3”. Some, like Mitt Romney, suggested we let these companies go into bankruptcy and then restructure their business models and build up from there. Congress was also certainly not impressed that each CEO arrived on their own personal jet instead of flying commercial. The CEO’s argued that they were literally counting their last blessings, yet they had the audacity to “show up at the soup kitchen in high hat and tuxedo” as Congressman from New York, Gary Ackerman, said it best. After two days in Washington Congress told the “Big 3” to go back to Detroit and to draft up a plan that describes in detail how they are going to use this money, how they are going to become more competitive in the market, and how they are going to ensure that American tax payers get their money back. Hmmm….a plan, that’s not a bad idea. Why didn’t anybody think of this before the automakers flew into Washington with tin cups in their hands?

President-elect Barack Obama has stated that if America’s auto industry is not bailed out before he takes office on January 20th, 2009, he will make it his first priority of business to do so. President-elect Obama understands the profound impact losing these companies could have on our economy, and is not going to have another administration that sits back and does nothing, letting the free market do its thing. Documentary filmmaker Michael Moore shared some interesting thoughts on this matter on Larry King Live the other day. Moore’s father worked for GM for several years, and in the late 1980’s Moore made a film called “Roger and me” that was about the harm that GM has done to America, using his hometown of Flint, Michigan as an example. While being interviewed by Larry King, Moore stated that Obama should “do what FDR did during WWII”. During WWII President Roosevelt told the automakers that they were no longer going to make cars. Government ordered them to make armaments, such as tanks, to help its country through the war. They did just that, and they were successful. Moore suggested that Obama needs to do just as FDR did during the hard times we are in today. Government needs to tell these automakers that if we are going to give you this kind of money, we (Government) are going to tell you what you are making and how it’s made. We need to tell them to make us busses, trains, more fuel-efficient cars, more environmental/economical cars, a mass transit system for our country, etc. Not only would we be putting people to work and creating jobs, we would also be saving the backbone of this country and ensure that we do not hurt our fragile economy any further. This would be a big solution to a big problem. 25 billion dollars is not a big solution, it’s just a lot of money.