This Sucks, but I'm Rooting Against the Auto Bailout...

I realize that I'm going to get a ton of grief for this from my friends and colleagues, and I really hate it when I find myself siding with the Republican Party on policy -- because they're just so predictably wrong on almost everything they utter these days -- but I think this auto industry bailout is a piss-poor idea and I find myself rooting for the GOP to kill it.

First, I totally get why we're headed in this direction and, having been raised in a union household (dad was a Teamster for 40 years), it really pains me to think about the millions of union households -- who have gotten the squeezed so hard over the past decade thanks to Republican policies -- that would be out-of-work if the car companies go under. I get that and I realize that not a small part of the current GOP opposition to the bailout is that they see a prime opportunity to drive another stake through the heart of labor in hopes of pleasing the big business pimps which they work for. It also sucks to watch our ever-shrinking manufacturing base shrivel even more. Awful.

But the truth is, the American auto industry has done an abysmal job for decades when it comes to building non-SUV vehicles that are both appealing to the eye and the wallet. In fact, outside of the SUV lines, I can't think of a single American car that would even make my Top 10 list right now. If I want style and performance, I'll take a Lexus or BMW or Acura any day. For durability and gas mileage, I'll take a Prius or Civic or Camry. For a solid car at a lower cost, some of the Hyundai models are finally appealing to me. Other than Jeep, I never find myself looking at American cars. Ever...and I am presently looking.

The car companies suffer from a chronic problem in leadership, a lack of vision, crappy management, and a refusal to adjust to the demands of the market. Now, with an economic crisis upon us coupled with a public that is gun shy about gas prices (you just know those $1.75 prices are only a short-term tease), they now come running, hat-in-hand, begging for bridge loans, as if this economic downturn was the only obstacle in front of them before reinventing themselves into profitable companies that build great products.

Whether or not we like it, whether we think it's a good thing or not, globalization is here to stay. Once that door opened, it will never close again. The days when the Big Three saw a domestic market share of 50 percent are long gone and, frankly, other countries simply do a much, much better job at building cars than we do. And except for products built by Apple, they also do a much better job at building pretty much any desirable consumer electronic (computers notwithstanding).

The truth is, until this moment of monetary groveling by the auto companies, they displayed no ability to turn a profit on any of its non-SUV product lines. Instead, they happily made a ton of money on each SUV sold, lost money on all their cars, and suffocated any attempt at innovation along the way. And the first moderately interesting product that Detroit has any shot of actually bringing to the market is the electric Chevy Volt. But, apparently, we have to wait a few more years and they're talking about some absurd $40,000 price point, to boot. Exactly why would we spend $10,000 more for an American green car than for the next-generation Toyota Prius which will offer solar roof panels to power things like air-conditioning and are expected to be plug-ins? It's not even close.

I also wasn't thrilled about the bailout of the investment banks, but I knew we needed to do it. We really were on the precipice of something catastrophic and hoping to prevent that calamity (and we're not out of the woods yet) was more pressing than debating the merits of whether those white collar gamblers deserved a rescue (they didn't). But despite the moronic and ever-changing efforts by Hank Paulson, the infusion of hundreds of billions of dollars of cash into the banking system has, so far, prevented a complete credit collapse and the ship is still sailing. Hopefully we'll avoid that other massive iceberg in front of us, which is a very possible implosion of the commercial real estate market.

Ultimately, the only compelling reason to try to save the auto companies is the fear of what a few million more unemployed American workers would do to an already fragile economy in recession. I don't underestimate that concern. But separate from the jobs issue, I'd rather save our domestic airlines than our car companies, if I had to choose. We already have better automobile options right now with foreign companies, but we really can't afford to lose our national air carriers. There aren't foreign options to pick-up their slack, nor do I think that relying on foreign air carriers to provide domestic service is particularly wise. But I digress.

I don't want to bailout the auto companies because they've more than proven that their product is not worth saving. I realize what is being discussed is a "bridge loan" and not anything like what we've done with our big banks. But I don't believe for a moment that the money will do anything but temporarily prolong a well-deserved death. It's not like they were on the cusp of a revival until the economy turned sour. The trendline has been going down and nothing I've seen shows any realistic hopes that a few billion dollars is going to do much for companies that burn through several billion a month as a matter of course.

Actually, the best argument might be that the money is needed to prevent the auto companies from going under right now because we may not be able to handle the shock to our economic system if they do, and that the $15 billion is mainly an effort to prolong their collapse until next fall when our economy might be on sufficient footing to better weather that storm. I might be willing to go along with that bad medicine. But the notion that we might actually be able to save these companies with a modest loan, even though they've been unable to save themselves for some time, even with massive concessions from the UAW, sounds like lunacy to me.

It kills me that our manufacturing base has been some decimated and that organized labor has taken such a hit over the past few decades. I hold out hope that President Obama will be able to spark a green revolution in the coming decade right here in the United States and that will prove to be American Manufacturing 2.0. It has real potential. But I think this bailout, bridge loan, whatever you call it, is bad business and I'm really hating the fact that I'm rooting for Republicans to kill it.

Hopefully, I'll never have this feeling again. Ever. It makes me feel dirty...

Mark Nickolas is the Managing Editor of Political Base.

Follow Mark Nickolas on Twitter: www.twitter.com/mnickolas

Comments

[BLKNT6]

Bailouts to anyone except the MainStreet pocketbooks are money thrown down the drain. Why? Because that won't fix the real problem. It will be business as usual and in due time we'll be right back where we are today. As for the auto industry, both management and labor are the problem. Management can't shake useless old design guidlines, and labor isn't worth half of what they get paid. The changes required are never going to happen because they are genetic in American habits and practices. Dump the American auto industry, closely regulate the financial industry and bailout the consumer. Then, closely regulate the credit card industry and then the frauds in lending and the realestate developers will have to pull in their horns. After all this, the economy might become healthy again. Without severe changes, perhaps in congress as well, the economy is powerless.

[research]

Give the banks all the money,

which they are hording,

but lend nothing to GM,

GM needs the Loan because the banks aren't lending.

See a little problem there???

http://www.huffingtonpost.com/users/profile/research?action=profile

[MsCanadian]

Mark, I agree - no bailout! This is indeed a global economy, and we are going to have to think differently about the kind of jobs that are needed. The foreign companies do build better cars, and I don't think the Big 3 will ever come up with a product that is viable within the short term.

[luckylily88]

i think we should take the CEO's of the Big 3 to court, take all their assets and money, and use that to re-tool the auto industry.

people who haven't worked for their money don't deserve it. as i work for my money, i'm not so keen on having it bail out the very people who are looking to screw me over.

[liberalsrheros]

that's right throw the baby out with the bath water. kill organized labor, watch the american worker suffer and see our standard of living sink further so the gop can appease their corporate masters. wake up.

[TheIndependenceParty]

You wrote "the American auto industry has done an abysmal job for decades when it comes to building non-SUV vehicles that are both appealing to the eye and the wallet."

I could not agree more. I drive a Subaru, my second, after giving Ford and Chrysler vehicles a chance in the 70's, 80's and 90's. They could generally not make it to 100,000 miles before becoming rattletraps.

That said, the $ 14 Billion should be given, and the managers made to account for what they build and how many. I believe the auto workers should not pay for the blithering incompetents of management, particularly at this time. Think of this as "life support" for a manufacturing sector, for its employees and dependents. The patient may not survive, but this would be a terrible time to let them all be cut loose in an economy that has no other employment to offer!

[FessorFrink]

The problem is that the Democrats are toothless when fighting republicans. We must demand that any money given to the Big 3 is in exchange for complete modernization of property, plant, and equipment. Most of the foreign cars we buy are built in the U.S. down south. There is nothing wrong with the American worker if they are given the right equipment to make competitive and fuel efficient cars.

I expect in a few months, if given the funds, the Big 3 will be back for more. With about 58 Democratic Senators, plus a few moderate republicans, if they do not put the hammer down on the Big 3's mismanagement, propose massive reorganizational changes, then we know where we stand.

We will have a Congress who talks, but does not act. That will not bode well for our future given the mandate we gave them.

[RobChattaTN]

my sister is a union organizer and i grew up in a union household and my dad always told me, and i always believed him, that we'd not have NEAR the decent middle class life that we did without the unions!

what makes me sick about this is that the u.s. auto companies have been STUNNINGLY mismanaged!! by making cars that fall apart & look ugly as sin: i haven't bot one in decades!

BUT to blame the unions for the total screwup of the management is obscene, shameful and completely misplaced. its disgusting that repug senators are mostly focused on putting a few more nails in the unions coffin. its gross and unamerican! shame on them.

i'm not for dumping more money into this cesspool of mismanagement, UNLESS its all the gazillions of dollars of profits that the OIL COMPANIES have made off these crappy products!!! THEY are the ones who have profited by the glut of suvs. THEY are the ones, with the auto execs, who have FOUGHT FOR DECADES against more fuel-efficient cars. Put the blame for this american disaster where it belongs: on the AUTO COMPANIES, and NOT the unions!!!

[luziannagirl]

Foreign countries do a better job building cars than we do only because they aren't burdened with our onerous consumer protections, environmental regulations, worker safety measures, worker benefits and of course, sky-high worker pay. And union demands.

If we only eliminated all those obstacles, and "leveled the playing field", why, the Dodge Neon would outsell Toyota Corolla twenty to one.

Right?

NOT!

[Citizen54]

I wish the South would secede so the rest of us could have progress in America.

[tbone99]

It is just a matter of time , giving these people money is like pouring water into a leaky bucket. The sooner we face the truth the sooner we can begin to direct resources to a recovery based on reality. Pouring water into the bucket faster doesn't change anything and it wastes water .

[AchievePeace]

You are absolutely right. The auto bailout is like fanning a corpse hoping to revive it. Unviable business plan, lousy management, and uncompetitive products are not going to be solved by a $34M loan from the government that most likely will never be repaid. I agree that Republicans are opposed to it because of the wrong ideological reasons - but the bottom line is that we can't save the industry and a six-month reprieve for those 3 Million workers will leave them trying to find jobs in an even harsher economic environment in the summer of '09, when unemployment is well into double digits.
Better to spend the $34 Billion on re-training programs and financial help for the folks tossed out of work due to the stupidity of the management of these companies.

[zjr909]

The biggest problem with letting GM and/or Chrysler fail at this particular moment in time is that, from this day on, Mr. Nickolas, the Media will have a field day pinning the whole mess on the UAW. And no one will ever be able to dispute it because the companies and the workers will be gone. That alone is enough reason to bail them out: saving the union's reputation (or whatever's left of it).

[WeWon]

But the truth is, the American auto industry has done an abysmal job for decades when it comes to building non-SUV vehicles that are both appealing to the eye and the wallet

And how the H.ELL is that the workers fault? I grew up in the Midwest and watched my family and friends trudge off day after day year after year to mind numbing jobs. I doubt very seriously that YOU could have (for one single second) ... done this labor.

The American workers who have given their LIVES to this auto industry ... made them MILLIONS don't deserve to be thrown to the wayside just because these aholes put greed and profit before the need of the average American.

If you ever had a REAL JOB you would have more compassion.

[feo]

At a minimum be logically consistent: be against all forms of subsidy capitalism. No corn subsidies, no sugar price supports, no oil subsidies, no mining subsidies. No tax abatements, so special tax code monopolies (major league baseball), no special tax write-off provisions. End all this bull crap and end it now. Let's actually have free market capitalism.

[Citizen54]

And how about no subsidies for FOREIGN automakers?
I hope everyone realizes that these foreign car companies being held up as superior to the US car companies do get tax breaks to build their cars in the States. In other words, American taxpayers subsidize foreign automakers.
And yet some people are opposed to helping out American automakers -- and American jobs.

[BUTCHER111]

Don’t forget the spiraling effect. It’s not just the direct and indirect jobs but the loss of millions of jobs would shock the system and cause more job loss. So far this year the US has lost at least 1.9 million jobs and if the Big 3 go down 2 to 3 or more million more will be lot. Some are predicting a 10% unemployment rate and how Depression isn’t off the table. KB Toys filed for bankruptcy and are closing 400 stores, and that means more jobs lost. The loan is $14 to $15 Billion is the cost of the loan but can anyone tell me how much taxpayers will be on the hook for when it comes to paying more unemployment, Medicaid, and other social benefits? Millions out of work means millions without money to spend money on consumer goods, vacations, and other things, even the basics. That would effect other industries such as retail, tourist and travel business, restaurants, and so on. Even if people can get credit and could buy cars why would they buy cars from bankrupt companies if they can’t be sure the warranties will still be good in a couple of years or auto parts will be available or even be able to get their cars serviced? Also, even foreign car companies stock prices are down and are hurting. The big 3 go down it’d make a bad situation worse.