A Case For the Auto Industry Bailout

10 years ago

I'm no economist. I don't play one on tv either. But I've watched the government try ways to shore up this economy and so far, none of it has affected me personally.

I did get that stimulus check, which we used to pay off bills (like we were going to go SHOPPING????) however the recent Wall Street bailout hasn't made it to my pocketbook. By the looks of how things are going, won't be inching near my checking account either.

Yesterday came word President-Elect Obama discussed an auto industry bailout in his meeting with President Bush. Today House Speaker Nancy Pelosi called on leaders to work with the Bush Administration to "craft legislation to provide emergency and limited financial assistance to the automobile industry under the Emergency Economic Stabilization Act."

My ears perked up and my heart started to race. This is one economic issue I do know a bit about. Not because I understand how it all works, but because I was born and raised in the 'burbs of Detroit.

Again, I'm not econ wonk by any stretch. But I know what I see.

My hometown needs jobs. People I know and love need plants to stay open, parts to keep on the shelves, and suppliers to stay in business. When a plant goes down an entire town goes down. Detroit isn't one of your 'least favorite cities to visit' for no reason.

Yes, there have been serious flaws with the Big Three for many, many years from management to unions to everything in between. However the Big Three has kept my mid-west going for generations and they need help.


Many of you don't think they deserve help. Certainly not your tax dollars. Let them fall into bankruptcy with their crappy cars and their poor management like any business should when it stinks, right?

Megan McArdle at the Atlantic seems to think so. She writes,

"People don't want to buy their cars. People have not wanted to buy their cars for years. The only category in which they excel is the one in which foreign automakers barely compete because of gas taxes: light trucks. Without light trucks, they die. Even if people did want to buy their cars, they couldn't survive their legacy costs, which are vastly higher than what their competitors pay *in the United States*. The Big Three union model is simply not sustainable. That "massive" renegotiation didn't fix their problems; it merely staved off the date of the projected bankruptcy. That's why the stock has been heading south pretty steadily for nearly a decade, as has GM's credit rating, which hit junk long before the credit crisis. Perhaps you have seen something that all the investors, analysts, and creditors missed. But the company seems to me to have been in trouble for a long long time, and its turnaround strategy based on waiting for the price of oil to drop so it wouldn't lose so much money on light trucks."

As an OWNER of a Chrysler (yes, some of us DO buy American, Megan)I would contend that JD Powers shows American cars totally competitive with their foreign counterparts. The past several years have seen more than an effort to transform the American auto industry quality and the proof is in the ratings.

However Megan is joined by many others, like Betsy who writes,

"We should not be rewarding the Big Three's shoddy management. If we continue down this road, where will we stop? Are we going to be bailing out every large company that makes bad decisions and then goes under? Is Circuit City next? Will the only companies that we don't bail out be the small mom and pop businesses that are small enough to fail?"

And even if you are angry about the hole Detroit has dug itself into, consider what Laurie David writes,

"These companies invited their impending destiny, and some have argued they ought to face the consequences of the market without federal intervention. But the fact is that America can't afford to lose the millions of jobs Detroit provides and the opportunity to lead on a manufacturing product that will see explosive foreign sales in the near future, especially in China and India."

So where does that leave us? Agreement that GM, Chrysler, and Ford have done a crappy job and everyone is to blame. Fine. How do we fix it?

Sending these companies packing is not an option in my book. The American Industrial complex is one steeped in innovation and inspiration AND THE LIVELIHOOD OF MY FAMILY AND FRIENDS.

This is not like Circuit City closing down, or some Mom and Pop shop going under so please spare me those 'then who's next' comparisons. Think of it more like the airlines, or like the recent bank and mortgage companies. It's an entire INDUSTRY that is the heartbeat of the mid-west and beyond.

For those thinking I'm just playing partisan politics here, I should be very clear- yes I grew up union, yes I am a Democrat, but I don't give two flying flips who is squeaking who's wheels or paying back for votes. I want jobs, and I want them now. If the GOP had a plan to help my family and friends, I'd be behind it and considering it just as much as any Pelosi backed bailout measure.

I can't stress it enough- this is not about politics. This is about my cousin not seeing her husband for weeks on end because he's had to take a job in another state. This is about my high school friends back in school working on another degree because their jobs no longer exist. This is about everyone that's left and moved to Arizona or California or Florida.

I don't want to see a hand-out for these companies either, so don't mistake me for some 'socialist.' (insert eyeroll here)

I agree with David, "Congress should set strict guidelines to ensure that Detroit moves as quickly as possible to get clean cars into American driveways where they can help power a new smart grid like the one Al Gore described in Sunday's New York Times. Congress should also open the process beyond the Big 3, offering financial support to smaller entrepreneurial carmakers for large-scale production of their innovative all-electric and plug-in hybrid prototypes which lack financing to move from the concept contests and into dealer showrooms and consumer hands.

It's past time for Detroit to get serious about regaining America's once-proud role as a leader in automotive engineering. Congress must hold the automakers accountable in any bailout to ensure that our clean car 'future' starts now."

...and now can't come soon enough for me and mine.

Erin Kotecki Vest also Queen of Spain blog

BlogHer is non-partisan but our bloggers (including me) aren't! Follow our coverage of Politics & News.

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