Congressional Auto Bailout – Not

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    Is it difficult to see thousands of our fellow Americans worried about their job and their employer?  Absolutely.  Do we wish that the companies and their employees were not facing this situation – no doubt about it.  Should the federal government take dramatic steps to intervene to prevent (or, as some might say, merely delay) the arrival of the day of reckoning?  Probably not – especially under the current circumstances.

    Many point fingers at different aspects of the “Big 3” as causing their current problems.  Some say it’s poor management.  Others say the unions (and the sky high payments for people who are not making products) drained the very lifeblood from the companies.  Some have even pointed to CAFE fuel standards imposed by Congress as forcing the companies to make cars that people did not want while forgoing making vehicles that people really want.

    There are two primary problems with any governmental “bailout” – Congress is incapable of designing and producing the cars, trucks and SUV’s that buyers want and a “bailout” that does not fix the problems is a waste of money.

    Undoubtedly, Congress will put strings on any “bailout.”  As a political body, it is reasonable to assume that the strings will be politically motivated.  As some have noted, “If you only have a hammer in your toolbox, everything looks like a nail.”  Terms and conditions driven by politics will not fix that which is broken.  It will instead create a situation where everyone does everything they can to keep any fixes from occurring in their area.  

    Congress, with an extremely long track record of politics prevailing over economics, is incapable of outlining and effectively requiring the changes to return the companies to profitability.  When its members spent more time in hearings and on talk shows spouting off about the corporate transportation instead of how the companies found themselves in their current position, no one can credibly assert that Congress has the slightest idea of what should be done and why.   Yes, these were the same types of private aircraft that Congress famously used only a few short years ago before a public outcry forced the representatives to eliminate.

    Without the structural changes that will return the automakers to profitability (and swiftly), the companies are already doomed and merely waiting to die.  One definition of insanity is repeating behavior and expecting a different outcome.  If Congress is allowed to spend billions of our dollars to allow these companies (and those working with them) to continue repeating their former behavior without requiring the changes necessary to make strong companies, we are the ones who are insane.
Date published: Jan 08, 2009

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