Auto Bailout Appears More Likely
Congressional leaders are signaling that some form of bailout for the struggling auto industry is likely to be approved quickly. In a turnaround from their dismal public relations efforts in November, auto industry executives are offering to make some symbolic sacrifices of their own in order to gain approval for the plan:
Ford’s proposal said it hopes to avoid using the credit and doesn’t anticipate a 2009 “liquidity crisis,” barring a competitor’s bankruptcy or more severe economic slump. Ford plans to sell five jets and would pay Chief Executive Officer Alan Mulally a $1 annual salary if the loan is used.
This bailout is substantively different from the bailout of the financial sector in that the groups affected have different economic impacts and political connections. Economically, the financial bailout was a necessary evil because it was the only way to affect the entire banking system from the fallout of the effects of collapse in the elite national banking sectors resulting from ill-advised innovations like “default credit swaps” and “mortgage-backed securities”. It was necessary to socialize (yes, it is not always a political heresy) the consequences of bad financial decisions in order to avoid the devastating alternative of frozen credit markets and a tumble into an economic depression. Potential bankruptcies in the U.S. auto industry do not threaten anything near the same second-order cascade effects, and thus are less necessary.
Politically, the financial bailout ultimately had bipartisan support, as both Democrats and Republicans with contacts in the business sector were able to testify as to the truth of the disastrous potential for inaction. Even the feckless and counterproductive uncertainty telegraphed by Treasury Secretary Henry Paulson in carrying out his mandate to react to the financial crisis was insufficient to override the bipartisan consensus that shoveling money out of the Federal Reserve was and is the only plausible option. With regards to the auto industry, however, support for bailout is much more concentrated in the Democratic Party, as their constituencies among union leaders are the most directly threatened.
As a practical matter, Democrats’ overwhelming control of Congress makes this point moot. Even without Republican support, the auto industry bailout is unlikely to be impeded. But Democrats will much more directly own the consequences if it should turn out that union concessions accompanying the bailout request are insufficient to redress the structural competitiveness problems that U.S. auto companies face in comparison to foreign competitors. If the auto industry succeeds in getting its bailout and comes crawling back again and again for more and more, Democrats will have a hard time explaining to the taxpayers why this industry should receive such special treatment.
AUTO BAILOUT OPTION
Please consider this option for the auto bailout. This will make Congress look like heroes to the American taxpayers and help the auto manufactures.
The auto manufactures would be able to sell 2.5 million vehicles which would keep people employed and the taxpayers would get a benefit from the bailout money which came out of their paid in taxes.
Instead of just giving the auto manufactures $34 billion dollars for a bailout, give each person who filed an income tax last year and made less than $100,000.00, a government voucher for $20,000.00 to be used toward the purchase of a new American made vehicle.
I’m not sure exactly how many people would fall in this category but the figures could be adjusted. Vouchers could be only good for the original holder and the car dealers would have to verify with the federal government that the voucher presented to them was truly sent to the person trying to use it and the vehicle would be titled in that name.
The $20,000.00 cap would keep sales targeted toward the smaller, more energy efficient models.
It is a win-win situation.
I am pretty sure that your plan would violate WTO and NAFTA treaty commitments that have been signed by the President of the United States, ratified by the Senate, and are therefore the “supreme law of the land” IAW Article II of the United States Constitution.
indeed these three automakers need any financial assistance and support all the way to make greener cars for the future.