Big Three Bailout Part Deux?
|
|
"Bailout" Becomes a 2008 Buzzword
|
|
The financial sector isn't the only industry looking for a government bailout.Automakers have requested $50 billion in federal loans.
|
Michigan’s congressional delegation pushes Washington for more auto industry assistance.
By Christopher Smith
As we approach what may be the most important election in the last 70 years, partisan preaching is steaming into overdrive with barely two weeks until Americans elect a new Commander-In-Chief. Such an atmosphere is the last place one would expect to find Republicans and Democrats agreeing on an issue, never mind an entire delegation. It was just such a scene on Wednesday, as a near 50-50 bipartisan delegation of 15 representatives and two senators—the entire congressional delegation from the battered and beaten state of Michigan—spoke in a single voice and appealed to the Bush administration for federal assistance in saving the domestic auto industry.
| Given the fragility of the auto industry however, it’s virtually guaranteed that the next administration will be staring down the headlights of a collapsing domestic auto segment much sooner than anticipated.
|
In a press release outlining the request, Michigan Congressman John D. Dingell said, “The domestic automobile manufacturers face the most difficult conditions they have faced in decades. The Michigan Delegation is pursuing all options and asking that the Bush Administration … also consider all available options.”
The bipartisan request comes on the heels of a $25 billion dollar federal loan program for the domestic auto industry, which was signed into law less than a month ago. That program promises federal loan guarantees to automakers but restricts the money to research and development programs, assisting manufacturers in producing smaller, more efficient vehicles. The all-new proposal penned by the Michigan Delegation seeks an unspecified amount of additional government assistance, this time to free up credit markets relating to the auto industry, with a specific nod to consumer financing.
“Restoring liquidity to all realms of the U.S. auto industry, particularly for car buyers and dealers, is critical to our nation’s economic recovery, said Congressman Fred Upton.
Senator Debbie Stabenow offered the following: “With one in ten American jobs directly related to the auto industry and vehicle sales having reached a 25-year low, the need for the federal government to support American auto manufacturing has never been greater for the future of our middle class.”
Along with the press release, the delegation drafted and sent a letter to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, detailing their request. In the letter they specifically ask the pair to exercise their authority given through the Emergency Economic Stabilization Act to “promote liquidity in the U.S. auto industry.”
Proponents to the proposal draw parallels to the financial sector bailout, stating that more harm would come from the collapse of the industry versus injecting taxpayer funds to save it. Critics of the plan point the blame squarely at the automakers themselves, accusing them of promoting gas-guzzling trucks and SUVs while ignoring advancements in efficiency made by European and Japanese competitors. Critics also suggest that a thinning of the market—possibly though the bankruptcy of at least one domestic manufacturer—will be necessary for the industry to survive.
With less than two weeks left in the Bush Administration, it’s unlikely any action will be taken on this most recent proposal. Given the fragility of the auto industry however, it’s virtually guaranteed that the next administration will be staring down the headlights of a collapsing domestic auto segment much sooner than anticipated. 30 years ago a government bailout saved Chrysler. The $25 billion question for today is whether or not the government can save all three manufacturers at once.
| 
