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Personal About Politics: To Bail or Not to Bail the Big Three Auto Makers; and Paulson Just Bails.
By Cheri Cabot (about the author) Page 2 of 3 page(s)
Lawmakers did not seem impressed with the pleas of The Big Three. However, while Congress may lack sympathy for the automakers and want to punish them for their past transgressions, they do not want to punish the auto workers. This creates a dilemma. U.S. auto companies employ nearly a quarter-million workers, and more than 730,000 other people have jobs producing the materials and parts that go into cars. About 1 million on top of that work in dealerships nationwide. If just one of the auto giants were to go belly up, some estimates put U.S. job losses next year as high as 2.5 million. (AP) The L.A. Times recently gave the example of how suppliers would be affected. The Ford F-150 pick-up, the top selling vehicle in America has 4,350 parts from 270 suppliers, and 75% of them are made in 26 U.S. states.
What happens if GM and/or Chrysler file for bankruptcy? The prognosis is not very good. In the past, when a company filed for Chapter 11 they would trim down their work force and suppliers, and usually manage to restructure. However, with the credit crisis companies filing for bankruptcy are shutting down because they cannot obtain enough financing to reorganize.
On the other hand would a bailout simply be a short- term fix, leading to eventual demise?
What will it be, bankruptcy or a bailout?
It appears that for now a decision is in limbo. Senate Majority Leader Harry Reid, D-Nev., scrapped plans Wednesday for a vote on a bill to carve $25 billion in new auto industry loans out of the $700 billion Wall Street rescue fund. It's really up to Bush's team to act, he said.
But Bush refused to take action. As White House press secretary and wind-up Barbie doll Dana Perino said, there was “no appetite” in the administration for using the financial industry bailout money to help auto companies.
"I don't believe we need the legislation," Reid said. Treasury Secretary Henry Paulson can tap the financial industry bailout money to help auto companies, Reid said, but "he just doesn't want to do it." (AP)
Where exactly is Henry Paulson during all this heated discussion? Walking away. Now that he has helped out his buddies on Wall Street with about half of the $700 billion rescue fund, he said he has no plans to spend the rest. Not on mortgage foreclosures or the auto industry. He said he plans to leave the remaining funds for the next administration.
Talk about a bailout.
So where does all this political maneuvering leave Detroit’s Big Three automakers on Wednesday? Pretty much up a creek without a paddle.
Which is appropriate since Wednesday was World Toilet Day.
Cheri Cabot
Cheri’s column, “Personal About Politics,” published every week on Gather.com, will reflect on how the life of a 59 year-old, middle class woman is affected by politics, policy and the current state of the nation - a look at the personal aspects of politics.
www.ccabot.gather.com
The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.
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Cheri, why not ask Big Oil to bail out The Big Three
with about $35 Billion in loans from their excess profits. We could back up the request with the suggestion of an excess profits tax. Their interlocking directorships are probably the cause of the problem. No harm in asking. by Samuel Bryan (0 articles, 0 quicklinks, 0 diaries, 190 comments [8 recommended, 0 rejected]) on Thursday, Nov 20, 2008 at 2:55:09 PM  (0+)
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Reply: good idea
Good idea, Samuel....since they have been in "bed" together for years and created the problem together. by Cheri Cabot (13 articles, 0 quicklinks, 0 diaries, 8 comments) on Thursday, Nov 20, 2008 at 3:27:42 PM (0+)
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WHY THE BIG 3 SHOULD SINK
SPECIALLY GM - READ HOW THEY SOLD OUT TO THE OIL COMPANIES AND SOLD US OUT AS CONSUMERS. At Witz' End: GM EV1 - The Real Story, Q&A III - AutoblogGreen by richard felisko (0 articles, 0 quicklinks, 0 diaries, 1 comments) on Thursday, Nov 20, 2008 at 3:01:33 PM (0+)
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Reply: thanks..
thanks, Richard...I'll check it out! by Cheri Cabot (13 articles, 0 quicklinks, 0 diaries, 8 comments) on Thursday, Nov 20, 2008 at 3:28:21 PM (0+)
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This is bigger than our personal biases.
First of all we're not talking about "the" auto industry, we're talking about "our" auto industry, or what's left of it after refusing to protect it from unfair competition with cheaper health care provided labor abroad. We have a different market here as well with much lower fuel costs due mostly to much lower taxes. Gas is back to $2.00/gallon and heading lower so we can stop harping on the absolute need for high mpg. cars as a prerequisite for any aid, though it might be helpful. It is unacceptable to ignore the plight of millions of auto industry workers here earning as livable wage in one of the last manufacturing industries left. by Richard Lee (0 articles, 0 quicklinks, 0 diaries, 298 comments [92 recommended, 0 rejected]) on Thursday, Nov 20, 2008 at 8:10:33 PM (0+)
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"This is bigger.." cont'd
If these millions of american manufacturing jobs (Robt. Reich mentioned upwards of 20 plus millions!) are allowed to be destroyed in the current economic credit crises, it may well be the tipping point of no return for our economy. It goes to national security and it effects everyone personally. These are the issues to consider here, not our personal free-market reactionary views or unfounded anti-car/Detroit biases. It would also help to know the subject on a professional level, both mechanical and marketing before commiting to hard and fast negative views on our car industry. Michael Moore's management criticism (and other less informed talk show host's) may be understandable given his family's association here, but not attacks on the industry out of context with this industry's inequitable problems that the free market proponents have saddled them with. If you don't like our cars saddled with $1500 in extra healthcare labor costs which still win Motor Trend Car of the Year awards, you own the "problem", not "Detroit", and if they go under, you will definitely own the collective problem. by Richard Lee (0 articles, 0 quicklinks, 0 diaries, 298 comments [92 recommended, 0 rejected]) on Thursday, Nov 20, 2008 at 9:25:15 PM (0+)
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Bailout
by B. R. Harand (0 articles, 0 quicklinks, 0 diaries, 2 comments) on Thursday, Nov 20, 2008 at 10:16:57 PM (0+)
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Bailout
by B. R. Harand (0 articles, 0 quicklinks, 0 diaries, 2 comments) on Thursday, Nov 20, 2008 at 10:17:05 PM (0+)
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