Bush has drawn his line at the automakers' doors, having already been forced to shelve the free-market principles of his Republican Party to bail out the financial industry over the past two months. But Republicans say he would acquiesce in aid to automakers in return for Congress's ratification of the Colombia pact and pending trade agreements with Panama and South Korea.
I hope that Bush gets away with this. . .If there really is one group that should not receive government assistance, other than the airlines, it's the auto industry. As much as the Democrats think they can call Bush's bluff and that he won't let GM fail, how much are the Democrats willing to let GM fail instead of passing the Colombia, Panama and South Korea free trade agreements. Democrats are simply serving the desire of two of their largest constituents: labor and environmentalists. Instead of serving the, you know, American public, they are already letting special interests dictate policy.
It would be far better for the American auto industry to cut jobs, cut production and stand up to the unions and negotiate wage cuts. Instead, they're plowing through cash, keeping their middle management, not working with the unions, not cutting production, but they are asking for more money to keep operating. And that includes increasing spending on the Volt, despite its own precarious economic position.
Let GM fail. Detroit has been unable or unwilling to move ahead in designing the cars or building more fuel efficient cars, in the face of increased demand for fuel efficient cars. GM is asking for $50 billion in federal aid.
How much longer will the American people be forced to bail out another industry, another company, that failed to do their job. Haven't we all learned enough? First, we had the housing industry, propped up on mortgages that shouldn't have been issued to people that had no business owning a home; then we moved on to the banks that bought up these mortgages, on promises of continued and future increases in property values; then we have AIG, I can't even explain what caused us to bail out AIG, which has now increased from an initial $85 billion to $150 billion. Lehman was allowed to fail, and the government facilitated a number of other takeovers. Now the automakers want a piece of the bank bailout pie. Let them fail.
President Bush should hold out. He should not cave into the demands of Congressional Democrats, union leaders or the auto industry. The auto industry fought long and hard against various fuel efficiency measures, had a protector in Rep. John Dingell, not to mention the various Democrats who are beholden to unions, which also opposed the fuel efficiency measures, and are now left holding the bag because they built cars that the american public doesn't want, and can't buy. I don't begrudge them for trying to fight the fuel efficiency measures, I begrudge them because they failed to heed the market demand for such cars. They wanted to play by their rules, and when their rules turned on them, they come begging for a handout so they can do what they should have done 3 years ago. At some point, the government is going to have to say no more- we will not be saving businesses that failed to change with the market; you made your decisions, and we will not help you.
As Thomas Friedman noted today, not all auto companies are having a hard time- Honda recently opened a new production facility in Canada. Yet, it's the American auto industry that's having a hard time. The auto industry wants money to keep it afloat, it wants money to help it move to more fuel efficient cars, it wants money to help pay its terrible union contracts, and it wants money to keep paying the salaries of all its middle management.
Congressional Democrats and Pres-elect Obama are simply shilling for the unions, under the guise of unemployment and "too big to fail" arguments. President Bush should hold out. The auto industry, and GM in particular, should be subject to the laws of supply and demand and the cruel hand of the market, just like everyone else.
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