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Ladywriter

Auto bailout

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Should Congress bail out the Big Three? Here's what lawmakers are considering and what's at stake.

Democrats’ Soft Spot for Automakers Have Shielded Detroit from Its Own Bad Decisions

Garland McLaurin, American News Project. November 17, 2008.

The automobile lobby is back on Capitol Hill to secure $25 billion in loans. Will the money get wasted or put to good use?

Bush ‘does not want U.S. automakers to fail’

Administration supports help, but not at expense of financial bailout

Auto Workers Union Rules Out Concessions To Help Detroit Bailout

etc

We've seen companies come and go, car companies too. They fail and get bought out. (Chevy Buick Saturn Pontiac GMC Hummer SAAB Cadillac all their base belongs to GM)

I don't think the guy who stood on the line for 30 years should have his retirement plans fucked with. He earned it working in a tedious toxic factory.

It was their financial strategy to introduce and mass produce vehicles that got less mpg (SUV's etc). It isn't as if they do not possess the technology to refit their factories to making more green products, their complaint is they don't have the capitol to invest in the project.

Now they've put their hand out just like the bankers did. We have to do something to help them or millions of people are going to lose their jobs. So they'll get their bail out too but this time lets not hand them a check and worry about getting the oversight committee assembled a month later. If they want and need our godamn money too then lets put some strings on that cash. If they want to survive they have to invest in the future. We don't need to be driving fortresses that get 17mpg, we need fuel efficent eco friendly cars. If the American auto industry doesnt want to loose all its current potential and future coustomers to their competitors they need to step up the competition. Settle on a hybrid design and pump that fucker out there cheap enough for everyone to go nuts and buy one. (I'm not 100% for eathonal at this point because of the use of corn. Food as fuel is a bad idea. Up here they're trying other flora, primarialy willow trees. Again here is another situation where the cultivation of hemp would be a plus because it could be used in ethonal production.) The new car companies generally put out a couple of cheap beat em up boxes; Saturn and Kia both did it not so long ago and they made a good buck. We need cheap greener cars fast, our car companies can keep up or go swirly down the toilet. On a personal note I wouldn't mind taking a hatchet to the big 3 and bust this shit up a bit -_-;


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Ill sign any take action petitions to stop all future bailouts, bankruptcy would be a better option for auto makers, they could get rid of all bad elements and retool. With a bailout nothing gets fixed.

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I read on my Wii that Obama might be for the auto bailout... A major let down if it does happen during his presidency.


"Cool. I always knew Atheists would someday save The World."

- Fantomex

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Most of the politicians are for rescuing the big three. At least this time they're pausing long enough to consider accountability, something not done with the wall st package.

We've seen airlines post 9/11 end up declaring bankruptcy then turn it around and the airline survives.

I'm getting real tired of rewarding the fuckin greedy idiots with our money. We don't get shitz in return. Its enough of the corporate welfare system.


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                                               Look at the flowers

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                                               Look at the flowers

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I agree. The big three should retool in bankrupcty. As mentioned by Lady, I did work for the airlines. As I mentioned bailing out would only reward the bad system. Lady, why arent your contacts setting up take action petitions, we all should say no, to congress. They get it but we need to reinforce. Everyone getting theirs and asking for help (States included, 5 by my count but prob all) No More. Lets thin the herd, failure is an option. And a reality, Where do we draw the line. Right here, and suspend bank bail out. Its not impossible. We just gotta shout at our reps.

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WHY WE SHOULDN'T BAIL OUT GM

By Nicholas von Hoffman, The Nation

The bailout should be used to expand unemployment

compensation instead of propping up a single, failing

corporation.

http://www.alternet.org/workplace/107789/

Now it is the auto parts suppliers who want government money. They employ 600,000 people, more than work for the automobile companies themselves.


If the standard for giving out money to companies is the threat of lost jobs, the auto parts suppliers' claim is as good as that of General Motors. The argument against subsidizing money-losing companies to preserve employment is that it would be impossible to think up a more expensive way of helping people.

There ought to be another way -- and there is. Unemployment compensation should be expanded to ensure those losing their jobs will not lose their houses or their health insurance. Helping people on that scale will not be cheap, but helping them by propping up corporate losers is infinitely more costly: sooner or later people will find other employment, but the automobile companies will never turn a profit.

They have been steadily losing money for a generation. Their predicament has nothing to do with today's credit crunch or the stock market crash. It has to do with their being incorrigible foul-ups.

Their record for money-losing is beyond comprehension. David Yermack, professor of finance at New York University's Stern School of Business, has calculated how much capital the car companies have destroyed over the last few decades.

He writes, "General Motors and Ford...between them...destroyed $110 billion in capital between 1980 and 1990.... GM has invested $310 billion in its business between 1998 and 2007. The total depreciation of GM's physical plant during this period was $128 billion, meaning that a net $182 billion of society's capital has been pumped into GM over the past decade -- a waste of about $1.5 billion per month of national savings. The story at Ford has not been as adverse but is still disheartening, as Ford has invested $155 billion and consumed $8 billion net of depreciation since 1998. As a society, we have very little to show for this $465 billion."

Having eaten its way through almost a half-trillion dollars, the American car industry will gulp down the $25 billion now proposed to save it faster than most of us can swallow. The Democratic leaders in Congress think they can prevent that and force a turnaround by attaching some kind of government oversight board to the financial aid. Such a board might make sure that executives do not draw down indefensibly high salaries, but any such arrangement will make it doubly certain the companies will not find their way back to prosperity.

Not that revivals are impossible. General Motors teetered on the edge of bankruptcy once before, in 1920. Then, as now, the cause was incompetent management. At that time one of GM's biggest stockholders was the du Pont family, who realized that its investment was in danger of evaporating. To save its holdings the family put its most talented member, Pierre S. du Pont, on a train to Detroit.

Once settled in at GM, du Pont installed Alfred P. Sloan as its new president. Together these two business geniuses created the single greatest industrial organization of the last century. At its apogee under Sloan, General Motors became the model for creative and effective corporate management. Quite literally, the world had seen nothing like it.

This is the inheritance that the epigones running Detroit's today have ruined. What they have done is a crime against their stockholders, employees of the Big Three, their customers and the nation.

Now we are amid these splendid corporate ruins. The best hope -- and it is only a hope -- is bankruptcy. With bankruptcy comes the chance of reorganization, the breaking of the anachronistic union contracts and the possibility of new and effective management. A modern version of du Pont and Sloan is asking too much, but surely somewhere in the three major car companies there are more effective and courageous executives than those now them.

The Republicans are against a bailout for the usual doctrinaire reasons -- free market blah-blah, creeping (or galloping) socialism. Such meaningless abstractions aside, the reality is that a society pockmarked by large, losing, subsidized corporations is a society on the way to the poorhouse. By propping up GM and saving some jobs now, we will see many more lost just down the road.

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Subject: They could do this instead

The Big Three automakers came to Washington last week, begging for

$25 billion in loans.

The Detroit automakers can't say why they need so much, how they

would spend it, or that they won't be back again, asking for more.

After the bungled handling of the banking bailout many lawmakers are

reluctant to give the automakers what they want. As of now, there's

no deal, but the danger hasn't passed.

Proponents of a bailout argue that without it the money will instead

be spent on unemployment checks and income tax losses when one or

more of the Detroit 3 file for reorganization under the bankruptcy

laws. So why not just go ahead and do the bailout?

We need to push our own counter-arguments. Let's start with a few

startling facts . . .

The U.S. has the second-highest corporate tax rate in

<http://www.taxfoundation.org/news/show/22501.html>

in the developed world. <javascript:void(0);/*1227539762527*/>

We're losing the world-wide tax-rate competition. With lower

corporate taxes we could attract businesses and create jobs.

U.S. businesses spent $148 billion in 2005 complying with a

complicated and inefficient tax code. Meanwhile, revenue from the

corporate tax was only $272 billion.

<http://www.taxfoundation.org/files/sr138.pdf >

Some companies spend millions trying to find tax loopholes. This is

money that could go to create products, services, and jobs. In 2008,

the combined cost of corporate taxes and tax compliance is likely to

be about half a trillion dollars.

Why should the politicians . . .

Impose $500 billion dollars in costs on businesses to raise only

about $300 billion in tax revenue

Spend $1 trillion or more propping up companies

When instead, they could . . .

Allow Chapter 11 bankruptcy to turn inefficient firms into

reorganized, rejuvenated, productive businesses

Eliminate the corporate tax and thereby pump $500 billion a year

back into the economy

Bankruptcy isn't the end of the world. Many large businesses, from

retailers to airlines to steel companies, have gone bankrupt, but are

still in business through reorganization and consolidation. Bankruptcy

actually saves many businesses.

The Big Three's problems are self-inflicted, from signing extravagant

union contracts to building gas-guzzling SUV's. Foreign-owned

automakers who build cars in the U.S. aren't facing the same

difficulties. So why should taxpayers have to subsidize the

incompetence of the Big Three, when reorganization under the

bankruptcy laws would allow them to correct their errors at little

cost to innocent bystanders?

Let's propose an alternative to another Big Bailout: Downsize DC!

Send Congress another message opposing the automaker bailout.

<https://secure.downsizedc.org/etp/campaigns/106>

Use your personal comments to urge Congress to completely eliminate

the corporate tax and all of the complicated tax regulations that go

with it. Tell your elected representatives that this would . . .

Inject half a trillion dollars a year into the productive economy

Lower the costs of good and services, since many economists agree

that the corporate tax is just passed onto consumers in the prices we

pay

Make the U.S. the most attractive business environment in the entire

world

Create huge numbers of new jobs, and save many old ones

Cost much less, to the government, than their boondoggle bailouts

You can send your message using our Educate the Powerful System.

<https://secure.downsizedc.org/etp/campaigns/106>

And magnify your voice by sending this Dispatch to others, by

reprinting it on your blog, and by "Digging" it on our blog.

<http://www.downsizedc.org/blog/they-could-do-this-instead>

Thank you for being a DC Downsizer.

James Wilson

Assistant to the President

DownsizeDC.org


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                                               Look at the flowers

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