Posted by
Patrick Henry on Tuesday, December 16, 2008 10:32:40 AM
Much was made over the appropriation of millions for Alaska's now infamous "bridge
to nowhere." What every taxpayer should know is that even that futile effort pales by
comparison with the bailout being discussed for troubled American automakers. It's
not just about the money. It's about what, exactly, the money will buy.
The so-called "loan" now under consideration by the Bush White House is, in fact,
an extremely high-risk investment. If that were not true, Detroit's Big Three would
simply get their "bridge loan" from banks. But no banker is dumb enough to give
a large sum of money to those who have already frittered away so much and have no
concrete plan for re-organization. Bush's promises notwithstanding, it is a good bet
that the auto giants will end up in bankruptcy in any case, and that American taxpayers
will never see a dime of the proposed bailout money repaid. Bankers know this, and
Bush probably does too.
And what will such a bailout actually buy? The amount being discussed is considerably
less than the industry says it needs. The United Auto Workers union has promised no
concessions until 2011 (maybe) and so how can the Big Three meaningfully restructure
their costs when burdened by exhorbitant union contracts? What evidence is there that
Detroit can make better cars at competitive prices? And how could anyone possibly be
expected to believe that the current catastophic situation that's taken decades to
develop can be remedied in three months?
The bailout is a bridge to nowhere. But not in the mind of union leader Ron Gettelfinger.
To him, the bailout is a bridge to a Democratically controlled White House and congress
bought and paid for by union money who will then be expected to deliver the goods
by giving the industry everything it wants WITOUT concessions by the union. He could
be right, but at some point even the Democrats will figure out that the country is
running out of money and the notion of bailing out the unions while Medicare and
Social Security continue the slippery slide toward insolvency will get them unelected.
So just what would it take to justify this proposed boondoggle? First, it will take
severe financial restructuring, including the re-opening of the union contract. Apart
from that the whole exercise is a waste of time. It won't matter how good the cars
Detroit builds are if they can't build them to be competitively priced. No matter how
much they streamline operations, that goal is unattainble when union benefits stand
at 150% of salaries. No immediate concessions from the union, no bailout!
Second, the Big Three have to quit hyping the J.D. Power studies that reflect
only INITIAL quality and figure out how to build cars that are fuel efficient, durable,
reliable and thus hold their re-sale value. Absent that, a bailout is like keeping a
brain dead patient on life support. Why do it?
Third, bankruptcy is the vehicle that will best buy the industry time to see if they
can re-tool for success. The doomsday scenario that all three will close down idling
millions of workers is a fearmonger's fairy tale. There are going to be significant
layoffs during re-structuring whether the firms take Chapter 11 or not. That's a
given. But big companies in bankruptcy don't just close their doors and fire everyone.
They continue to operate at a manageable level until they can build back to profitability.
The union -- the principal opposer of the bankruptcy option -- isn't afraid for one
moment that every autoworker will be furloughed. What they fear is the legal right
bankruptcy would give the automakers to break the union contract. A structured,
federally supervised bankruptcy might even include some government subsidy and
could create the latitude necessary for the industry to re-invent itself.
The national deficit is now approaching one trillion dollars. The interest on that
money is $51M for every hour of every day. That deficit poses a far more serious
threat to America than an auto industry whose stubborn shortsightedness and
foolish acquiescence to union greed has rendered it but a hollow creator of
metal dinosaurs. If you want my support, President Bush, and President-Elect
Obama, then please show me a bridge that leads to somewhere. And don't expect
me, my children and grandchildren to keep paying for the failures, stupidity and
greed of others.