President Bush says no to bailout for U.S. auto companies

[tattedupboy]

NO MORE BAILOUTS! If the government is to do anything, it should not be to throw money at the companies, but instead, to stop the UAW. In addition to being slow to adapt to changing consumer tastes in this era of wildly volatile gas prices, the unions have made car manufacturing so cost ineffective as to be financially ruinous to the companies.


Prospects dimmed on Monday for the $25 billion bailout that U.S. automakers say they desperately need to get through a bleak and dangerous December.

Though all sides agree that Detroit's Big Three carmakers are in peril, battered by the economic meltdown that has choked their sales and frozen loans, the White House and congressional Democrats are headed for stalemate over the government money that might go toward helping them.

Behind the logjam is a troubling reality for the car companies: Bailout fatigue has set in at the White House and on Capitol Hill, where many in both parties have spent the past few weeks being berated by constituents for agreeing to the $700 billion Wall Street rescue.

The new debate comes as the financial situation for General Motors Corp., Ford Motor Co. and Chrysler LLC grows more precarious. GM has said it could run out of cash by year's end without government aid.

A Senate auto bailout bill unveiled Monday noted that 355,000 U.S. workers are directly employed by the auto industry, and an additional 4.5 million work in related industries. That doesn't count the 1 million retirees, spouses and dependents who rely on the firms for retirement and health care benefits.

Still, not only has President George W. Bush made it clear he doesn't want to dole out any new aid for the automakers, congressional officials say his administration has privately informed top Democrats it won't even use at least half of that huge rescue fund approved last month to aid the financial industry.

The Senate Democrats' measure would carve out a portion of the Wall Street bailout money to pay for loans to U.S. automakers and their domestic suppliers, but aides in both parties and lobbyists tracking the plan acknowledge they do not currently have the votes to pass it.

The White House and congressional Republicans insist that any automaker bailout money instead come from redirecting a $25 billion loan program approved by Congress in September to help the industry develop more fuel-efficient vehicles. The GOP would lift restrictions on that money to speed it to the carmakers.

Democrats want to leave that money alone and give the industry an additional $25 billion from the financial bailout funds — for a total of $50 billion.

Majority Leader Harry Reid, D-Nev., said he would hold a vote this week on a bill that pairs the auto industry bailout with an extension of jobless aid. But in an acknowledgment of the long odds facing such a plan, Reid also laid the groundwork for a straight up-or-down vote on the more widely supported unemployment measure, which is probably all that can pass this week.

House Speaker Nancy Pelosi, D-Calif., has held off scheduling a vote on an auto bailout bill until it becomes clear whether such a measure can pass the Senate, where it would need a 60-vote supermajority to advance.

The Senate's proposed auto aid bill would provide loans with initial interest rates of 5 percent in exchange for a stake in the companies or warrants that would let the government profit from future gains. Loan applicants would have to give the government a plan for "long-term financial viability."

But the measure stops short of giving the government a say over the firms' operations through an oversight board or hard limits on executive compensation. While taking advantage of the program, the companies could not pay dividends or award bonuses to executives making more than $250,000 a year or give large "golden parachute" payments to top people.

A vote on the measure could come as early as Thursday.

"I ask my colleagues to show the American people that in the face of tremendous economic pain and uncertainty, we will not wait until January," Reid said as he opened a special postelection congressional session.

The White House, meanwhile, took pains to clarify its position on the bailout, saying the administration "does not want U.S. automakers to fail." But press secretary Dana Perino said the administration steadfastly opposes drawing funds from the $700 billion bailout plan to help Detroit.

President-elect Barack Obama has said he believes aid for U.S. carmakers is needed, but he hasn't specified where it should come from. He says the money should come as part of a long-term plan for the industry.

Sen. Carl M. Levin, D-Mich., who crafted the Senate Democrats' bill and spoke with Obama Monday, said the president-elect has "not signed off on any particular language or any particular approach" but generally backs loans to the struggling auto industry.

With all sides agreeing something should be done, Levin said, "There's a reasonably good chance that we can get this done this week."

Top House Democrats also were putting the finishing touches Monday on their own bill to provide auto industry loans in exchange for some sort of government stake in the companies, with strict limits on executive compensation, new environmental requirements and the elimination of dividends.

The chief executives of the Detroit auto companies and the head of the United Auto Workers union are to make their case for the aid Tuesday at a Senate Banking Committee hearing. The House Financial Services panel is to hold a similar session Wednesday.

But the package is a tough sell to the public. In a Gallup Poll conducted Nov. 7-9, only 20 percent said providing loans and other help to auto companies should be a top economic priority for President-elect Obama. Given five choices, aid to the auto industry tied with assistance for large financial institutions as least-favored options.

Most — 60 percent — said enacting stricter regulations for financial institutions should be a No. 1 goal. About half named helping homeowners, about the same number supported cutting taxes for the middle class, while a third cited a new economic stimulus package.

"The automobile industry, obviously, is of enormous importance in our country, and not to have the automobile industry would have very, very severe economic consequences," said Sen. Arlen Specter, R-Pa. But, he added, "The question that I would submit, and heard from my constituents: 'Who's next?'"

Some top Republicans are against any additional federal automaker help, no matter where it comes from.

"There's no indication that the car companies would do anything different than what they've been doing, which has been a big failure, which is why they need the bailout. And there's no reason to throw money at a problem that is not going to get solved," said Sen. Jon S. Kyl of Arizona, the No. 2 Republican.

[gdcleanfun]

Ouch. Where's that Wal*Mart application I picked up? I put it here somewhere. Ah, here it is. Let's see, position applied for: Greeter. No wait. Janitorial. No wait. Greeter. No wait...

[toreskha]

An auto industry bailout would be bad in the long run. We can't afford Obama's socialism, and we can't afford to continue to proliferate this kind of safety net-style capitalism. If a business fails, it fails, and the consequences will follow. Hopefully the business operators will be publicly shamed when they see the destruction they've caused, but it's not up to the government to set things right.

• Domestic carmakers have failed because of bad management, poor product lines and corruption. They're not making a compelling case as to how they're going to get out of their current doldrums even with the bailout money.
• A serious failure - from one or all of the Big Three - will make a lasting impact on America and force people to really wake up. We can't gloss over that sort of thing.
• The current argument that the auto industry is making - that our economy is going to suffer - may hold water, but it's essentially a way of holding us hostage with fear. Economic woes or not, they've made poor business decisions and that's just the way things go.
• Allowing mainline carmakers to fail will make room for innovative startup companies, which are desperately needed in the auto industry.
• The unions will get hit with their fair share of blame, and it's about time that people see unions for what they are - legalized organized crime.
• Who will we bail out next? If Lockheed were doing badly, they could probably make a case that they're critical to national security. What about the airlines? The list is endless, but taxpayer money is finite.

[Glock Fan]

Maybe the displaced auto workers can find jobs in firearms factories.



gf

hmmmm I say just send $500,000 to each American family.....that should fix things

[pistol pete]

All this bailout BS is just getting the US more in debt. Throwing money we dont have around does nothing. It just prolongs the agony.
This is the fall of the roman empire, let it fall and lets see what happens.

No bail-out! Money given to the auto manufacturers will keep them ALMOST solvent for another 6 months or so, and then they'll need another hand-out. And isn't it funny how the unions are taking a hard-core stand against doing anything to help the companies that they put in this position? UAW will not even consider any consessions with the companies, so when all of them become welfare cases, and the wonderful benefits and retirement funds they have disappear, they can thank themselves for sticking to their guns.

Have any idea how many auto workers will be out of work if Ford, GM and Chrysler go belly-up? You don't even want to know. But the scare tactics are already in place - we're already being told that this country simply cannot survive if these companies fail. Oh, really??? I for one would be willing to see.

[Glockster20]

I hate to see these car companies struggling. I am sort of a car guy and I grew up during the "muscle car" era, (the first one). Some day, any car with a Ford, GM or Dodge/Chrysler emblem will be an antique. A reminder of America's hay day

[toreskha]

Originally Posted by Glockster20

I hate to see these car companies struggling. I am sort of a car guy and I grew up during the "muscle car" era, (the first one). Some day, any car with a Ford, GM or Dodge/Chrysler emblem will be an antique. A reminder of America's hay day

Back then they were offering a compelling product that resonated with consumers, so they moved a lot of merchandise and made a lot of money. Now, their products aren't nearly as attractive.

The only reason I continue to buy American cars is because I get free repair expertise from my ex-GM employee relatives. If I had a larger budget, I'd probably go out and get a Toyota RX. They're kind of ugly, but practical - small enough to park, good mileage, can haul a lot of guns around, etc.

[tattedupboy]

I have what you might call a Darwinian view of all of this. If they play by the rules of capitalism (no government assistance and no corruption), then they'll adapt and survive. However, with the proliferation of unions, the companies have been slow to make the needed changes to survive, and now they're being bitten in their butts for it. Let capitalism prevail, with minimal government oversight, and the industry would be thriving.