PrintObama asks Bush to bail out Detroit now
In their meeting yesterday, Barack Obama asked President Bush to allow the auto industry to tap into the $700 billion kitty passed by Congress to bail out the financial industry.
From The New York Times:
Mr. Bush indicated at the meeting that he might support some aid and a broader economic stimulus package if Mr. Obama and Congressional Democrats dropped their opposition to a free-trade agreement with Colombia, a measure for which Mr. Bush has long fought, people familiar with the discussion said.
The Bush administration, which has presided over a major intervention in the financial industry, has balked at allowing the automakers to tap into the $700 billion bailout fund, despite warnings last week that General Motors might not survive the year.
Mr. Obama and Congressional Democratic leaders say the bailout law authorizes the administration to extend assistance.
Mr. Obama went into his post-election meeting with Mr. Bush on Monday primed to urge him to support emergency aid to the auto industry, advisers to Mr. Obama said. But Democrats also indicate that neither Mr. Obama nor Congressional leaders are inclined to concede the Colombia pact to Mr. Bush, and may decide to wait until Mr. Obama assumes power on Jan. 20.
Obama will base his support for the bail out on the contingency that the auto-industry "go green" and make "cleaner, more energy efficient" vehicles.
That's fine and dandy but that kind of recapitalization needs an awful lot of bread - a heck of a lot more than any numbers being thrown around so far ($50 billion is the most I've seen). You not only have the immediate crisis to deal with but then, on top of that, Obama wants Detroit to completely alter the way they do business.
You are talking about a massive investment in product redesign and retooling auto plants. If the financing were to be in the form of guaranteed loans, we should definitely balk at that kind of short sighted policy. The chances of one or more of the Big Three going under are pretty darn good at this point and if that were to happen, the taxpayer would be stuck holding the bag.
The cascade effect from the financial meltdown is now in full flow and its got to be stopped somewhere before the government gets their grubby paws on most major industries. The auto industry is a good place to start raising holy hell in opposition to a bail out. When an industry makes products that Americans don't want whose fault is that? I would say everyone from the CEO down the to the workers on the line are to blame and throwing money at these incompetents is the worst thing we can do.
Allowing the market to have its way with GM and the rest of the automakers just might cause the stockholders to demand new management. And these companies might just emerge from bankruptcy leaner, more competitive, and more responsive to the needs of the American consumer.
