Posts Tagged ‘Northwest Airlines’

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

November 13, 2008

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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