Bailout Watch 256: TTAC Called It: "Interim" Deal Goes Down
TTAC’s Edward Niedermeyer called it in yesterday’s round-up: Congress will fork-out bailout bucks to “tide” Chrysler, Ford and GM over until… later. Reuters dots a few i’s and crosses a few t’s: “Congressional Democrats and the White House have reached agreement on emergency aid for U.S. automakers of between $15 billion and $17 billion, two senior congressional aides said on Friday.” How Congress will apportion the money between the three supplicants is something of a mystery. But look for GM to get the lion’s share, Chrysler to get some and Ford to get a token amount (“token” as in more money than its workforce earned in the last ten years). Congressfolk are working through the weekend to attach strings to the money– likely to include an oversight board and a deadline for Round Three (March?). So from whence cometh this largesse? From your taxes obviously. More specifically…
“Earlier on Friday, U.S. House of Representatives Speaker Nancy Pelosi dropped her insistence that aid come from the $700 billion financial services bailout fund the Bush administration had refused to use for automakers. Rep. John Dingell, a Michigan Democrat and long-standing ally of the auto industry, said in a statement the money would come from a $25 billion Energy Department loan fund approved in September to help auto companies meet new fuel-efficiency standards — an idea the White House has promoted.” The environmentalists will go mental! Or not.
In a statement, Pelosi had suggested she could agree with that source of funds under certain conditions. “We will not permit any funds to be borrowed from the advanced technology program unless there is a guarantee that those funds will be replenished in a matter of weeks so as not to delay that crucial initiative,” she said.
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I think a realistic solution would be to look at the market and see what things such as currency manipulation by japan and other unfair trade practices cost the domestic industry and fund a bailout based on a tariff on those imported vehicles. Let the big 3 straighten out there own house with regard to insane union contracts and bad product management and see if Detroit can stand on it's own 2 feet on a level playing field. I am not generally for tariffs but the government has allowed certain inequalities to exisist in this area. These would be temporary so that when the foreign markets quit the practices in question they would be removed. Furthermore the Government should kill the Cafe program. If they want to have people drive small cars then let them tax gas. CAFE is just a way to make the auto makers do what they lack the political will and leadership to do. It simply passes the buck to the industry instead of making our leaders explain themselves and stand behind a decision. Lastly, I know the big 3 is not blameless in this, but to have members of congress, who have themselves presided over the flushing down the toilet of our economy and the growing of deficits that it will take generations to repay is just surreal. Is it even possible for a company to be as bankrupt as our government and country?
It will be interesting to see the perspective this Blog takes when GM pays back its loans in a couple of years. Don't you realize that the Detriot 3 have been waging a war against competitors who have 3 advantages they don't. A government willing and able to put up non tariff barriers to make their automotive industries competitive. A government willing to take the health care burden off their industries (don't even start with me on transplants and their penchant for dehiring people as they reach the age of 50). A government willing to do the rational thing and charge a gasoline tax that in someway reflects the true cost of that form of energy in terms of the amount of national treasure that must be spent to secure the supply (IE if the gas tax had to pay for middle eastern security initiatives wouldn't we all be driving 3 cylinder diesels by now ?). In short it appears to me that the U.S. Gov't is finally figuring out, when faced with the hard facts , where its' interest truly lie and dealing with them.