Alright, well this morning, President Bush held a press conference where he announced his plans to give a $17.4 billion loan to GM and Chrysler. Here’s a video of that press conference (courtesy of FOX), and I have a transcript (again, courtesy of FOX) which I’ve done a “play-by-play” analysis of below:
STATEMENT BY THE PRESIDENT ON THE ADMINISTRATION’S PLAN TO ASSIST THE AUTOMAKERS
9:01 A.M. EST
THE PRESIDENT: Good morning. For years, America’s automakers have faced serious challenges — burdensome costs, a shrinking share of the market, and declining profits. In recent months, the global financial crisis has made these challenges even more severe. Now some U.S. auto executives say that their companies are nearing collapse — and that the only way they can buy time to restructure is with help from the federal government.
This is a difficult situation that involves fundamental questions about the proper role of government. On the one hand, government has a responsibility not to undermine the private enterprise system. On the other hand, government has a responsibility to safeguard the broader health and stability of our economy.
Well, personally, I think that the best way to safeguard the health and stability of our economy is to NOT give out loans to companies who were irresponsible!
Addressing the challenges in the auto industry requires us to balance these two responsibilities. If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers. Under ordinary economic circumstances, I would say this is the price that failed companies must pay — and I would not favor intervening to prevent the automakers from going out of business.
How exactly would the bankruptcy be disorderly? The whole point of bankruptcy is to keep the process orderly. And if President Bush means liquidation as in the entire company, then this press conference was just a scare tactic to get the American people behind the auto bailout. The companies wouldn’t go under.
But these are not ordinary circumstances. In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action. The question is how we can best give it a chance to succeed. Some argue the wisest path is to allow the auto companies to reorganize through Chapter 11 provisions of our bankruptcy laws — and provide federal loans to keep them operating while they try to restructure under the supervision of a bankruptcy court. But given the current state of the auto industry and the economy, Chapter 11 is unlikely to work for American automakers at this time.
American consumers understand why: If you hear that a car company is suddenly going into bankruptcy, you worry that parts and servicing will not be available, and you question the value of your warranty. And with consumers hesitant to buy new cars from struggling automakers, it would be more difficult for auto companies to recover.
Then by this argument, Chapter 11 would NEVER work for an auto company, because people would be hesitant to buy. And how do you remedy these fears? You emphasize the fact that 3rd party institutions offer warranties, and you don’t HAVE to go to the dealer to get your car serviced. There are lots of other shops that do just as good of a job, if not a BETTER job than the dealership.
Additionally, the financial crisis brought the auto companies to the brink of bankruptcy much faster than they could have anticipated — and they have not made the legal and financial preparations necessary to carry out an orderly bankruptcy proceeding that could lead to a successful restructuring.
Um … when they were losing money years ago and asked the UAW members to take a pay cut, but the union said no, so in order to avoid a strike, the companies gave in, the companies should have known that continuing to pay wages that you can’t afford would make you go into bankruptcy eventually. Like I’ve said before, it’s the companies’ heads’ fault for not cutting wages of the workers as well as taking pay cuts themselves, and it’s the UAW members’ fault for being greedy and refusing to budge at all.
The convergence of these factors means there’s too great a risk that bankruptcy now would lead to a disorderly liquidation of American auto companies. My economic advisors believe that such a collapse would deal an unacceptably painful blow to hardworking Americans far beyond the auto industry. It would worsen a weak job market and exacerbate the financial crisis. It could send our suffering economy into a deeper and longer recession. And it would leave the next President to confront the demise of a major American industry in his first days of office.
Are these the same economic advisors who encouraged the Economic Stimulus Package and the first bailout bill? Because if so, they suck, and I would have fired them a LONG time ago.
A more responsible option is to give the auto companies an incentive to restructure outside of bankruptcy — and a brief window in which to do it. And that is why my administration worked with Congress on a bill to provide automakers with loans to stave off bankruptcy while they develop plans for viability. This legislation earned bipartisan support from majorities in both houses of Congress.
If bipartisan you mean Democrats along with traitorous Republicans, then yes, I guess it was bipartisan. HOWEVER, I commend the brave and honorable REAL Republicans who stood up against this bailout, and the other bailouts. I especially commend Bob Corker (R-TN) for standing up against the UAW. Of course, Ron Paul (R-TX) must be mentioned, since he’s hugely against this as well. I commend all 28 Republicans who had the common sense to vote against this bill.
Unfortunately, despite extensive debate and agreement that we should prevent disorderly bankruptcies in the American auto industry, Congress was unable to get a bill to my desk before adjourning this year.
This means the only way to avoid a collapse of the U.S. auto industry is for the executive branch to step in. The American people want the auto companies to succeed, and so do I. So today, I’m announcing that the federal government will grant loans to auto companies under conditions similar to those Congress considered last week.
These loans will provide help in two ways. First, they will give automakers three months to put in place plans to restructure into viable companies — which we believe they are capable of doing. Second, if restructuring cannot be accomplished outside of bankruptcy, the loans will provide time for companies to make the legal and financial preparations necessary for an orderly Chapter 11 process that offers a better prospect of long-term success — and gives consumers confidence that they can continue to buy American cars.
Because Congress failed to make funds available for these loans, the plan I’m announcing today will be drawn from the financial rescue package Congress approved earlier this fall. The terms of the loans will require auto companies to demonstrate how they would become viable. They must pay back all their loans to the government, and show that their firms can earn a profit and achieve a positive net worth. This restructuring will require meaningful concessions from all involved in the auto industry — management, labor unions, creditors, bondholders, dealers, and suppliers.
Well obviously they have to pay back the loans. It’s not a loan if you keep the money!
In particular, automakers must meet conditions that experts agree are necessary for long-term viability — including putting their retirement plans on a sustainable footing, persuading bondholders to convert their debt into capital the companies need to address immediate financial shortfalls, and making their compensation competitive with foreign automakers who have major operations in the United States. If a company fails to come up with a viable plan by March 31st, it will be required to repay its federal loans.
OK, this is where this whole thing just confuses the crap out of me. We give them the money, and they spend it. If they don’t have a plan by March 31st, they have to give all the money back. But does Bush really think that they’ll have all the money that we gave them? If they do, then it’s OBVIOUS that they don’t NEED the loan, because they still have enough money! If they can’t repay us back, how is it any different than a normal loan. How are we going to force them to pay us back? The entire PREMISE around this bailout is just idiotic!
The automakers and unions must understand what is at stake, and make hard decisions necessary to reform, These conditions send a clear message to everyone involved in the future of American automakers: The time to make the hard decisions to become viable is now — or the only option will be bankruptcy.
The actions I’m announcing today represent a step that we wish were not necessary. But given the situation, it is the most effective and responsible way to address this challenge facing our nation. By giving the auto companies a chance to restructure, we will shield the American people from a harsh economic blow at a vulnerable time. And we will give American workers an opportunity to show the world once again they can meet challenges with ingenuity and determination, and bounce back from tough times, and emerge stronger than before.
END 9:08 A.M. EST
Well, I have now lost most all of the approval that I still had for the Bush administration.
There’s still a glimmer of hope: Once Treasury Secretary Paulson actually makes a formal request, the money will be released unless Congress rejects the request within 15 days. I can only hope that Republicans oppose it and that enough Democrats, angry at the way Bush has handled the release of money, will oppose this awful plan. Sadly, I don’t see that happening; however, I will hope and pray and continue advocating that we put a stop to all of this economic nonsense!
This bailout plan is NOT the solution. Like I said, the entire premise of it is flawed: We’ll loan you money to spend, but if you don’t have a good plan, you have to give that money back. Well, either the money is STILL in their bank accounts (meaning they didn’t NEED the money), or the money has already been SPENT (partially)!
We need some strong fiscal conservatives to show what the Republican party truly stands for. We need more people like Neil Cavuto, Bob Corker, and Ron Paul. I’m tired of the Republicans here in Michigan supporting the bailout because it will help our state. It’s selfish and wrong. I’m especially disappointed in Representative Pete Hoekstra, who has always been very outspoken about fiscal conservativism. We need people who will fight for economic justice! We need people who will fight for the American TAXPAYER!