It would be unnecessary, catastrophic and wrong to follow the course of defeatism and pessimism. Bankruptcy would be a disaster and lead to cascading failures from the auto suppliers, which would also be driven to failure, and banks, which would find more loans not repaid, adding a disaster upon a disaster if auto companies go bankrupt.
It would be equally disastrous and wrong to take the easy way out, promising more failure, by using the previously enacted $25 billion that should be used to modernize the industry and make better cars and use this money for desperation capital instead.
This is exactly the wrong policy; it is exactly backwards and would be a double disaster by preventing the industry from doing the one thing it must do: build the cars of the future.
What is important is not the exact amount of money, or what pot of money is used; it is the strategy and plan to move the industry into the future. The most important point in this essay, repeated several times for emphasis, is this:
The recession will ultimately end. I promise. Growth will ultimately return. I guarantee it. The credit crisis will end and lending for consumers will ultimately resume. You can count on it. The bear market will end and a new bull market will come. It always does.
And when these things happen, there will still be huge global demand for cars that will last a generation from China, from India, from Africa and Latin America and yes, from Americans who are now delaying new auto purchases.
We must move beyond the defeatism, pessimism and negativity of our current debates. Books are being written about the decline of America and these books are only true if our vision and will is so weak, we make them true. It need not be. It must not be. America has enormous reservoirs of strength, innovation, capital and clout and our mission is to live up to our best, and make the most of it.
We are not an inferior people to the Americans who went to the moon; we merely have a small-minded generation of leaders in government, business and media and we just concluded an election calling for dramatic change.
When the economy strengthens, there will be gigantic profits for the surviving and winning auto companies. The issue is who dies first and who survives to reap the profits, and the winners will be those who make the best cars of the future, and the future is now.
We can mobilize America as Kennedy inspired the nation to reach the moon. Yes, there must be short-term retrenchment, sacrifices by management and labor, termination of unprofitable product lines and hard choices that must be shared by all. But these actions, alone, are only an inadequate beginning that embodies the attitudes of small thinking, pessimism and failure that JFK rejected.
After Kennedy announced his project for the moon, Americans invented the new rockets that would take us there, the new alloys that made the rockets, the new training for astronauts to travel in space, a new commitment to education for science and engineering and a spirit of can-do optimism and daring self-confidence. JFK led us to build the rockets and inspire the astronauts to touch the moon in 10 years.
We can build the cars to travel to the grocery and achieve 75 miles per gallon or better in five years. Combining technology that now exists with modest breakthroughs in fuel efficiency and automotive engineering, we can build a new generation of cars that consumers should buy, to support our country, and will want to buy, because they are great cars.
Let's keep the modest $25 billion for fuel efficiency already enacted. Let's pass the next tier of assistance tied to the retrenchment that must happen. But let's require the auto companies to bring the next president a plan in January to leapfrog the technology into the future. Let's finance this in ways that make money for taxpayers.
The next president and Congress should enact a capital gains tax waiver for investments in those auto companies whose vehicles average 75 miles per gallon within five years. If they don't make it, the provision will not matter. If they do make it, there will be huge energy savings, gigantic job creation, historic environment gains, new business and innovation, which will generate seismic change and enormous new revenue streams for the government.
This approach, in addition to government money, would attract hundreds of billions of new private investment capital into a revitalized, revolutionary, market-leading automotive industry. Meanwhile, government investment, in properly structured deals, with a bold plan for historic industry leadership, would make money for taxpayers while empowering the national economy and protecting the global environment:
All money should be invested in preferred stock that pays taxpayers a dividend and must include warrants to buy common stock with a strike price slightly below current stock prices. No more anti-taxpayer deals from Treasury.