Congress Scraps a Good Car with Bad Steering

Congress might as well be arguing about the sale of the state of Michigan as it debates the proposed bailout of the Big Three automotive makers.

Whatever message voters sent to the GOP on Tuesday, Nov. 4, it's become increasingly apparent the party leadership has not received it. The remarks of Rep. Spencer Bachus (R-AL) - ranking Republican on the House Financial Services Committee - today are a disappointing case in point:

"My constituents do not understand why their tax dollars should go to support what they consider less efficient businesses," Bachus said today during the committee's hearing with Detroit automotive leaders.

I daresay Bachus' constituents have said the same thing about the very federal government for which the congressman works.

The fact is, Bachus - like the vast majority of his Republican counterparts and a growing number of Democrats - fundamentally misunderstands the crisis. No one - this Michigan resident included - is out to defend recent management of Ford, GM and Chrysler as "efficient." It doesn't take an industry analyst to determine the status quo broken.

But neither does it take significant economic expertise to realize that the strategy by bailout opponents to scuttle an entire American industry is dangerously counterproductive. In fact, such an argument is not dissimilar to (gasp) a major automaker scrapping plans for an otherwise viable model after discovering a minor problem with its steering system.

Who's inefficient now?

Rep. Bachus' Alabama constituents might not understand why they should dish out to save a failing American auto industry, but I'm guessing they're also not particularly going to like it when thousands of freshly unemployed Michigan autoworkers arrive in Montgomery begging for jobs and social services.

That is trickle-down economics: coming to an America near you if Congress fails to pass the automotive industry bailout.

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Comments

[blood1]

OK, we all know that Baucus is a jerk and is so buried in his dogma that he wouldn't know a good idea if it bit him.....

So, we still have a lot of "Chicken Littles" running around...i­f GM fails so do the other 2...If the other 2 have any near term plans for innovation - Ford has the Focus! Chrylser??? Didn't Paulsen say if we did not give him MONEY NOW! and we did - to no effect....­so if there is to be a settlement­...it should be on a case by case basis...no­t all 3 and I am guessing that contractors will rather have some jobs /contracts than NONE.

My biggest complaint came today when GM decided to "HEDGE ITS BET" and GMAC has applied for Bank Status - which would qualify for Paulsen Bailout Funds....s­o now GM does not only want money with the other 2 automakers­...it wants a private loan as well....Do­esn't that sound like "gaming the system...a­nd as one is being monitored by Congress and one by Treasury..­..and surely we all know that Bush Depts don't talk...tha­t GM could end up with more than 25B....tha­t we must oppose!

And as all Americans, we are all heartsick for the employees, but at some point in time, we must kill the monster.

[kermstyson]

Dan, I think your analogy is flawed. There isn't a minor problem with the auto industry -- it's not just that their screwy management system has made them bloated and unresponsive -- but rather they're in a market in which they cannot compete. Similar to the fact that we don't see many steel plants here, or textile manufacturers, cars can be made cheaper (and better), elsewhere. Maybe if the federal government is able to enact a universal health-care system that takes the burden of insurance off employers, and they are able to change their management structure, and completely re-design their production model so they are actually producing competitive cars, maybe then the U.S. auto industry has a chance. But that seems unlikely. More likely, they are forced out of the market, and we start seeing a lot more fuel-effic­ient/cheap Toyota's and Honda's on the road. Yes, tear for the midwest and massive unemployment, but in the long run, trying to protect these jobs now would lead us to a stagnant, outdated, and non-productive economy. This kind of protectionism is just not sustainable or good for the overall economy.

[DianeTreehugger]

What in the name of all that is holy is wrong with the Southern half of this country? What, is this payback for the Midwest going Democratic? And (gasp) electing a black man? I think it goes back farther, even farther. I think these Southern republican senators and their backward constiuency are inwardly smiling that theirConfederate great-grandaddies can roll over happy in their graves now - abandoning the Yankee automakers is their final shot in a Civil War that many Southerners never stopped and haven't stopped fighting. Perhaps they prefer Chinese communists owning our manufacturing infrastructure.

[Raven]

Diane, I grew up in the South. The very old, very Deep South. I know the people of whom you speak. I'm, much to my dismay, related to them.

And I can say without hesitation that much of your assumption is absolutely correct.

Sure, the idiotic Repugs believe that with the big 3 gone, they'll be sitting pretty as the future manufacturing arm of foreign car makers.

They're short-sighted and wrong, but they're Repugs so what would we expect?

But much of this is also payback to the damn yankees, especially those in the industrial states.

By the time those idiots wake up and realize they've shot themselves in the foot, we'll all be sitting in a pile of do-do.

But we're talking the same folks who thought firing upon Fort Sumter was a great idea. And many of their states are still flying a flag that speaks volumes of hatred for all the world to see.

So what would be expect?

[zorak1704]

The United States of America. Born 1776-Died 2008. R.I.P.

[Raven]

Dan, when you say,

"Congress might as well be arguing about the sale of the state of Michigan as it debates the proposed bailout of the Big Three automotive,"

I almost think you get it.

Because, sure enough, the Repugs clearly have shown that they have no interest whatsoever in the future of the state of Michigan. Or Ohio for that matter.

But this goes much further than that.

it doesn't take a genius to see that, in the most optimistic of scenarios, we're looking at possibly pulling ourselves out of this recession somewhere in the last half of 2009.

But pull the automakers out of the equation, and all bets are off.

Let the big 3 fail and we're looking at a very long and very protracted depression. Worldwide.

And they want, what, $25 billion to stay afloat? In villager terms, that's small potatoes indeed.

What happens if they say no?

We are cooked. Every single last one of us.

Even those of us who have never touched the land of Michigan.

This is the future of America we're talking about. And if all that bipartisan talk is to mean something at all, can't someone in the village figure out how to stop the biggest depression the world has ever known from happening?

And I'll give them a clue. Hank ain't going to help them at all. Never has. Never will.

[Nancyok]

Amen to this comment and the article. The wrong people testified yesterday. It put the wrong face on this crisis. If you want to see who will be cast out on the streets and loose everything if we let Detroit go under, look in the fricking mirror. Those guys will board their private jets and retire to their million dollar beach houses and be fine. But the rest of America and the world will be picking up the pieces of the one million new unemployed for decades...­then all the vendors, then all the retailers and restaurants and small businesses that rely on the goods/services that these million people buy, then the total collapse of the housing market.

Lawmakers need to start acting like lawmakers and grow a pair. We need this bail out, but tie it up with as many strings as we need. Do what you didn't do when you handed Hank a blank check for his bank buddies. Cap exec. compensation to human levels...i­f they leave, fine....th­ey're the ones forcing all the smart guys below them to make bad choices, force UAW concessions to save jobs, and no bonuses for ANYONE until it's paid back...per­iod.