Capitol Hill Blue Forums Political Issues Finance, the economy & Economics Bailing out the auto industry - yes or no?

The U.S. auto industry executives didn't have the foresight to look down the road to develop cars that got better gas mileage or used alternative fuels.

...but they sure did have the foresight to earn a huge salary and bonuses!

Other industries have left the U.S. and we survived - the auto industry will just be another.

We taxpayers can't keep bailing everyone out. The finacial industry screwed us taxpayers without the hugs and the kisses and look at AIG - TWICE they've gone on "spa" meetings on our dime.

...the auto execs want a bailout when they each took private planes at a cost of $22k each instead of flying coach to DC when that is only $300.00 r/t? Gawd forbid an executive fly coach like us peons.

That's like a street person begging for a dollar, then driving off in a Lexus.

I'm sick-to-death of corporate handouts. We peons don't get any.

That strikes me as a little cavalier, rick, and maybe worse. Sure, we've "survived", but look, our economy's tanking right now because we no longer have anything left of value to sell. We survived on cyberspace, property, and bogus financial instruments. What next?

It seems to me that once again we are being asked to bail out the wrong people. The solvency problem with the Big Three is base don their inability to support the burden of their pensioners. The $25B therefore should be put in a pension fund to relieve them of that burden. Then they could use their own money to catch their production up with the 21st century.

Woo,
I've been trying to get to this one for awhile. I scanned back but didn't read each post thoroughly. I hope I'm not repeating something already said.

I hate bailouts too but....
putting 3 million more unemployed blue collar workers with very specific job skills (only) (I think I've heard that figure somewhere) with all the drain it would have on the government thereby costing it a lot more (medicaid, food stamps, public housing, etc), I don't think is an option.

Lee Iacocca

My husband was telling me this story earlier today. I sort of remembered it but not completely so I googled it.
The loans were paid back with interest.

I think a similar thing ought to happen there with these guys. Ford has said they may not even need the money. They just want the guarantees if they do. (I watched some of the hearings yesterday and actually understood some of it!).
I think hefty strings attached should applied. New environmental standards, how the money is used for example.

The money should come off the top of the 700 billion allotted for the bank bailouts.
I mean compared to that 25 billion is nothing.

All of the bailouts should be in the form of loans.

The Chevy Cavalier was little but I would classify it as a compact, but the Chevette was worse. The Chevette was a terrible car that could not get out of its own way. In a former lifetime I worked in the auto industry (rental) and we referred to the Chevette as the Shove-it, as it was cramped, terribly built, unreliable (as were all the 80’s American offerings) and very underpowered.

The Chevette also had a real tendency to catch fire for no reason at all, as I recall; I seem to remember my sister-in-law's car going up in flames one day as it was parked in the drive.

(My apologies; I saw the above post thinking it was on the RT, ans responded accordingly.)

I say yes, bail 'em out. From some of the background I've read on the topic, admittedly not much, the problem is much more complicated than "they didn't change fast enough with the times".

1. Funnily enough, the cars produced by auto companies(much like other products) are not chosen on the basis of "let's screw the American public". They produced the models that sold the best - which for many years were SUVs and trucks(and three trucks were STILL IN THE TOP 10 LIST as of April 2008 as seen here) So, yes, management should have been more pro-active in developing new technologies/better fuel efficient models, but we also need to acknowledge that the American people should have been buying more fuel efficient models.

2. At least part of the crunch the auto companies are facing has to do with the credit crunch facing everyone. Both the crunch in which consumers have trouble getting loans with which to buy cars, and the crunch that makes it harder for corporations to get their short-term financing deals (which others likely have much more familiarity with than I).

3. The toughest part is dealing with the promises made to the past workforce. The pension and healthcare promises need to be dealt with in a fair and humane manner. We can't just throw them out because we don't like the Union that helped negotiate for the terms. The Union is not the big problem here, the big problem here is the same problem that we face as a country in solving issues in the VA, Social Security, and Medicare. It's the combined issue of demographics, longevity, and yearly double digit increases in healthcare costs that are directly increasing the costs of pension plans and retiree healthcare. Eventually, whether through deals the "Big Three" make with the union and the government, or through the bankruptcy of said "Big Three", the pensions will probably end up where so many of them end up - covered by the government anyway. Healthcare is a veritable Hydra - you attempt to fix one problem, two other problems pop up to bite you in the butt. Maybe we'll get a fix for healthcare in the next four years, maybe not, but for now the retiree burden is on the companies and the union.

erinys, I think what sticks in my craw and maybe others is the vehemence with which the industry fought higher mileage standards. Meeting demand is one thing, resisting good policy is quite another.

Good post erinys. Though I have a different idea for a solution, I think your arguments are sound, and well stated.

Actually Mello I was attempting some Cavalier humor in my reply to Steve but the information contained in the post was correct. The Ford Pinto was the car that had a tendency to catch fire when rear ended—the gas tank was prone to explode if the car was rear ended. And indeed the Chevette was a POS, and it was during these times, the early 80’s, that the Japanese started taking over the small car market by building a vastly superior product.

The American made cars of the 80’s were pitiful, finally beginning improvement in the 90’s but never quite catching up to the Asian products IMO. Finally now the GM and Ford products (I know little of Chrysler products) are supposedly on par with Toyota, Honda etc but it may be too late. And the Americans were followers, not leaders, in technology and design.

good post erinys...

....especially out of control spiraling (my description) health care costs (directly affecting my life right now too)
It's screwing the whole country up.