The Road to a Bailout They Don't Deserve

Author: 

It's desperation time for the Big Three automakers. They are awash in gas-guzzling vehicles nobody wants to buy, bleeding red ink and running out of cash.

So it should be no surprise that when Congress returns next week, the companies and their unions will put on a full-court press to win approval for $50 billion in federal loans to be used to re-engineer and retool their plants for a new generation of energy-efficient vehicles.

With the auto-dependent states of Michigan, Ohio and Indiana up for grabs in November, the Big Three hope to use the political calendar to their full advantage. They've already won the backing of both of the presidential candidates, along with House Speaker Nancy Pelosi, who promises quick action this fall. And while the White House has indicated its reluctance to involve the government in the rescue of yet another industry, it may have a hard time explaining why the automakers are any less deserving of a "bailout" than Wall Street investment banks or Fannie Mae and Freddie Mac.

The foundation for this effort was quietly laid last year in a little-noted provision tucked into the energy bill passed by Congress and signed by the president, providing for $25 billion in loans. Although any company producing autos in the United States could qualify for the loans, priority was given to those retooling plants that were more than 20 years old, which pretty much guarantees that most of the money will go the Ford, Chrysler, General Motors and their suppliers.

Since passage of the energy bill, things have only gone from bad to worse for the Big Three, due to the credit crunch, an economic downturn and $4-a-gallon gasoline. So the industry and its supporters will try to expand the program to $50 billion and provide the necessary funding in the omnibus spending bill that will be needed before the election to prevent a government shutdown.

Read the full article at The Washington Post

Date published: Sep 03, 2008

RSS

Syndicate content