A Michigander’s Perspective: The Goverment Should Not Bail Out the Auto Industry

As rumors fly that a $25 billion bailout of the auto industry may actually come to a vote in the Congress, I figured that I, a citizen of Metro Detroit and Michigan should weigh in.

First, the facts:

Speaker of the House Nancy Pelosi (D-CA) has called for “emergency and limited financial assistance” for General Motors, Ford, and Chrysler where legislation would be passed that would make the automakers eligible for financial support under the $700 billion bailout bill that was passed in October.

This comes after a $25-billion loan program bill specifically for automakers that was passed in September.  The problem with that program was intended to loan money to the Big 3 only to help refit plants across the country in order to assist automakers in making tougher fuel economy standards.  Now the automakers are saying that they need loans just to keep overall operations continuing.

Republicans in Congress are expected to push for the restrictions on the $25 billion to be dropped, before any other optionss are considered.  Senate Minority Leader Mitch McConnell (R-KY) has already started advocating for this plan; however, it is expected that Democrats will oppose dropping any of the restrictions on the $25 billion.

Now, what is my opinion?

Well, I have a lot to gain if the auto industry bounces back.  I have 2,500 shares of Delphi, an auto parts supplier for General Motors.  If it goes back up to $10 a share, I’ll have made a little under around $24,650 on my investment.

Plus, it’ll bring jobs back to Michigan if the automakers do bounce back.  And that’ll help the economy of my state, which is in a pretty sad condition right now.

But, I still oppose the bailout.

First, I’m tired of Michiganders saying, “I support the bailout because it’ll bring jobs back to Michigan.”  Well, my fellow Michiganders, when it’s YOUR tax dollars being spent outside of the state, would you support a bailout?

If the technology sector all of a sudden began failing, would you support a bailout of Silicon Valley companies such as Google, Adobe, Atari, Microsoft, Sony, Cisco, Hewlett-Packard, Intel, etc…?  I wouldn’t!  And as Governor Granholm is advocating for this bailout, mayors of major cities all over the nation are asking for their piece of the bailout?  And did I not predict that as we bail out more companies, more people would ask for their piece of the bailout pie?

This attitude is the same attitude as many people have with earmarks.  Ask most voters and they’ll tell you that they oppose earmarks, but then they’ll go and vote for the Representative “who brought so much money back to the district” through earmarks.  Examples of this are my representative, Carolyn Kilpatrick (D-MI13), who brags about the earmarked money she’s brought to the Detroit area, and more famously, Representative John Murtha (D-PA12) and Senator Ted Stevens (R-AK).

Second, the fact that the United Auto Worker’s Union (UAW) is backing this bailout scares me.  A LARGE PORTION OF THIS PROBLEM IS THE UAW’s FAULT!  The UAW bullied GM, Delphi, and Chrysler into giving workers benefits and wages that the companies couldn’t afford.  How?  By threatening to strike when the companies were suffering.  (I don’t remember the UAW ever threatening Ford with a strike in recent years, but I could be wrong).  Let me give the UAW a little lesson in business management: When your company is losing money, the LAST thing you want to do is cost your company more money by not showing up to work and going on strike.  If the government is going to step in and do anything about the auto industry crisis, it should be to reduce the choke-hold that the UAW has had on auto companies.  Instead of complaining about getting your benefits or wages cut, be thankful that you have JOBS.  Because when you go on strike, that means products aren’t being made, which means that less products will be sold, which means that less money comes in to the company, which means that either A) you lose your job or B) you lose wages/benefits.  Striking during a time of CRISIS only furthers the problem, and the fact that the UAW leadership (and at least 51% of the membership) refuses to acknowledge this (or are just too stupid to realize it), really angers me.  Obviously you can’t see me right now, but I’m actually getting angry just talking about the sheer stupidity of the UAW (and a lot of unions, such as the unions that struck during Northwest Airline’s financial problems and eventual bankruptcy).

And that leads me to my next point: Bankruptcy court.  We have them for a reason folks.  Let the automakers use them.  We shouldn’t be looking at bailouts at all until the companies file for Chapter 11 (and even after that, I will still be opposed to bailouts).

Lastly: I don’t think that the bailouts will work with the auto industry.  Some have cited (as they did for the bailout bill passed in October) that the government successfully bailed out Chrysler in the 1970s by guaranteeing a $1.5 billion loan.  The problem with equating the 2 situations is that in the 1970s, we weren’t establishing a pattern of bailing out company after company who came to the government looking for help.  In addition, that was a bailout of one company, not the auto industry.  Honestly, if one of the Big 3 fail, that will probably be enough to give the other 2 enough business to recover.  It’s not ideal, or anywhere CLOSE to ideal (heck, I have friends and family members who work in all 3 companies), but it’s better than this general industry bailout plan.  I think that an industry bailout will help the Big 3 for a while, but that won’t be enough for them to recover, so 1 or 2 of them may fail (I honestly think GM would be the first to go, and I don’t see Ford going under).

It’s not a good situation, but a bailout will only make it worse.  Michiganders and Detroiters need to stop being selfish and start thinking about the good of the country as a whole.

Done Ranting,

Ranting Republican
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20 Responses to “A Michigander’s Perspective: The Goverment Should Not Bail Out the Auto Industry”

  1. Bob Says:

    I would rather that our economy suffer and Unions continue to push for their right to be treated like humans rather than cogs, after all the Big corporations claimed that giving workers the weekend off would ruin them over a century ago. If this anti-union propoganda had succeded in the past we would still have ten-hour work days, if you were lucky, 6 day work weeks, and unrestricted child-labor. Maybe if more people belonged to Unions they wouldn’t be scraping out the meekest of lives and could actually afford to buy things like cars and computers thereby making the economy improve.

  2. John P. Says:

    You forgot the earmark champion! Robert Byrd! The man has earmarked money for statues of himself all over W. VA.

    The fact of the matter is, the UAW is ruining the auto industry. I’m sorry, but people are being paid 33.50 an hour to do $12 an hour jobs. Not to mention a lot of the top guys are in a break room playing cards!

    In New York’s teacher’s union, they have what’s called a “rubber room”. They send the worst teachers that shouldn’t be let near kids for reasons such as sexual aggression, terrible tempers, or just horrible teaching skills to a room where they read a newspaper all day, just to keep them away from kids! However, they still have to pay them because they’re “tenured” and if the union found out they had been let go, all hell would break loose.

    There was a time for unions, when workers were violated, and children were in coal mines. But now is not the time for unions. We have labor laws in affect, people!

  3. inkslwc Says:

    Bob, unions aren’t needed like they were before. Now, we have enough regulation and enough regulators to see that companies like auto companies are adhering to these rules. UAW workers (and a lot of union workers) are so overpaid. There WAS a time for unions, but that time is (mostly) over.

  4. Joe Says:

    If more people belonged to unions, then this economic situation would be far worse. You don’t see Toyota, Honda, or Nissan looking for handouts. Yet they keep expanding in the US and creating jobs. Meanwhile, the “big three,” under the UAW yoke, keep cutting jobs. GM needs to be allowed to fail. No more throwing taxpayer money down a hole.

  5. Nick Says:

    Interesting study by a U of M Economist THIS week pegs the average hourly cost to employ a union worker at the Big 3 at $73.20. The average American worker overall? Less than $30.

    To “Bob’s” point, what’s wrong with 10 hour work days and 6 day work weeks? Many of us here in non union land do that all the time and we don’t complain about it. It’s called life. Nothing wrong with hard work and earning an honest living.

    To the broader point about the bailout, I look at it in these political terms… if we DON’T bail out the Big 3 no Republican will win an election in the city of Detroit ever again.

    If we DO bail out the Big 3, no Republican will win an election in the city of Detroit ever again.

    There is zero constituent related impotace for small government conservatives to stand on principle here.

    –Nick
    http://www.RightMichigan.com

  6. WadeHM Says:

    Another problem with the Big 3 getting all this money is they aren’t changing their ways. They give us the same over priced cars that get higher every year. Wonder why they aren’t selling? Pricing. They also don’t give the consumer what the consumer wants. They give the consumer what the automaker wants. Goes back to the old quote by Henry Ford, “You can have any color you want as long as it is black.”

    Earlier this year on WWJ Newradio 950 (Detroit) Alan Mullaly, Ford CEO, was asked if he thought they could sell the Ford Ka here in the US. Mullaly responded that they had no idea if it would sell here. This is typical of the motor company top brass. They have no idea what they are doing. Until they can cut costs and make other changes and adjustments that make them more profitable, they don’t deserve bailout money. The more they get the more they will keep asking for. Filing for bankruptcy is the best thing for them.

    Also, the Big 3 need to quit giving the top brass bonuses when they are not making profits. Last year when Delphi was in bankruptcy, Delphi was going to give bonuses to its top people. The bankruptcy judge had to file a court order to stop them, and told Delphi to stop, that they had no business giving management bonuses while in bankruptcy.

    Its the mentality of the automakers that is the problem. I come from a union family and I have mixed feelings on the union part. They have done alright by my parents, but at the same time they will not give concessions that help save jobs. It is all or nothing, and for the workers that nothing means no job.

  7. KCuz Says:

    I am opposed the bailout for two reasons:

    1) it isn’t the role of gov’t (that should be enough but there is a #2)

    2) When you bailout or subsidize or price control anything, that prevents resources from being allocated to other industries which may have a better long term economic future. A bailout of the big 3 would simply keep Michigan in an automotive manufacturing mode. The reality is Michigan needs to move forward and diversify it’s economy. A bailout will provide little to no incentive to do so and Michigan will be hurting (and probably more so) in another 3 to 5 years.

  8. inkslwc Says:

    KCuz, you’re absolutely right. #1 should be enough, but the scary part is that to a lot of Americans, they need a #2 or even a #3.

  9. Drone #7607 Says:

    The unions today have betrayed the average worker. Unions were created as a means to an end, that end being deplorable working conditions. Those deplorable working conditions were dealt with and now the UAW and several other unions serve only as a symbol of greed. Where are the unions when it comes to the Human Rights violations committed by large companies usch as Nike? Where are the unions when it comes to Wal-Marts unequal treatment of women? They don’t help those people who truly need it because they are too busy getting and extra 12 cents an hour out of other corporations. The unions no longer care about human rights, all they care about now is money.

    A very large problem with unions is something called a closed shop union, which means in order to work at a certain business, a worker is forced to join a union and pay union dues. This is absolutely unacceptable. I may end up having to work in such a place soon and I can tell you I do NOT want to pay dues to a union I don’t believe in. I want a choice in the matter, I don’t want to be forced one way or the other.

    As for the Auto Industry bail out, what is the point? Pretty much it comes down to being welfare for the Big Three. We’re giving them money for being down on their luck but the truth is free money doesn’t change the ways of the people, or in this case, the big three. Most likely when the money runs out, the big three will not have changed and will find themselves in a similar problem to today. What happens then? Are we supposed to give them more bail-out money?

    #7607

  10. inkslwc Says:

    Of course, because the government has an unlimited supply of money. What’s that Mr. Paulson? You’re saying we DON’T have unlimitted money!

  11. inkslwc Says:

    Of course, because the government has an unlimited supply of money. What’s that Mr. Paulson? You’re saying we DON’T have unlimitted money!

  12. DetroitBasketball Says:

    When a blessing comes your way you should unquestionably take it. The hell with economic principles! The banks were bailed out for making horrible decisions, why shouldn’t the auto industry?

    I think the Unions have caused all the problems, making it more costly to make a Ford, GMC, or Chrysler vehicle than a Toyota or Honda. With higher labor costs, there is less money left over for the Big Three to concentrate on product innovations.

    Obviously, if Congress does give the Big Three money to keep them afloat, the Unions must be wholly defeated. It makes no sense to give money to the Big Three if the same Union problems remain.

    To presume that Japanese automakers are smarter than their Detroit counterparts is plain stupid. Or to presume that Japanese or foreign line workers are better is also stupid since many Japanese vehicles sold here are assembled in the United States.

    Unions = Death
    Unions = Greed
    Unions = Overstayed their welcome
    Unions = Crap

  13. inkslwc Says:

    But if we bail out the auto industry, will you say no to the next bailout?

  14. Drone #7607 Says:

    The banks can actually be fixed with a bailout, whereas the auto industry can not be fixed by throwing money at it and hoping the problems will go away.

  15. auta ze szwecji Says:

    Very interesting article, i bookmarked your blog
    Best regards

  16. Representative Sherman to Auto Executives: Raise Your Hand if You Flew Here Commercially. No Hands Went Up « Republican Ranting Says:

    [...] to a bailout.  Additionally, the Union heads (and even workers) need to learn to take a pay cut.  I’ve said before that UAW workers are so overpaid, it’s just [...]

  17. South Carolina Governor Mark Sanford: “Don’t Bail Out My State” « Republican Ranting Says:

    [...] in my opinion, the government probably shouldn’t intervene.  But it’s visible in the proposed auto bailout: Some in Congress are saying that the auto companies shouldn’t try bankruptcy first (even [...]

  18. RAINE Says:

    What makes me so angry is that when we hit a rough spot in life and ask companies for a little time, they won’t even listen and want their money right now.. There is no empathy, but now they want us to have empathy for them.. I think we have given enough of our money to these companies that would put us in bankrupt in a heartbeat and not blink an eye..

  19. The UAW Put the Auto Industry in the Position that It’s in Now « Republican Ranting Says:

    [...] that It’s in Now Today, I saw a TV interview that has confirmed what I’ve been saying for years (see the long paragraph in the middle).  The UAW has driven the auto industry down into a [...]

  20. Doug Rouse Says:

    The Jaspanese implants don’t ask for handouts as they are already getting them from their government . Think of all the money leaving the USA back to Japan. These companies only have a small percentage of workers compared to the Big 3.

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