Congress must refuse this bailout. Without a bailout, they will be forced into Chapter 11 reorganization. The Big 3 would be given the freedom to renegotiate their labor contracts and their contracts with dealers, giving them the opportunity to put together a business plan that can make them competitive and profitable. It would not destroy the auto companies or put their workers on the streets; it would simply force them to fix their mess.
Transferring tax dollars to them will only worsen the situation. They will burn through that money in a matter of months, and we’ll face this maddening situation again in 2009. Unless American taxpayers are willing to subsidize the Big 3 forever, this cannot continue.
Do you want the same people who ran the Hurricane Katrina response to run the companies from which you buy your cars? The Mad Hatter from Alice in Wonderland sat at a long, white dining table and made an absolute mess of the place where he was sitting. Then, instead of cleaning it up, he just moved to the next seat at the table and made a mess there as well. That’s how the federal government works. Having made a mess of the housing and financial sectors, it’s now willing to move to the automotive sector, and who knows what else.
And the corporate welfare won’t stop with the Big 3. The rationale for bailing them out is that they are important to the U.S. economy. Well, many companies can make that claim; there are many industries essential to the American economy. Are we going to bail them all out?
Not only that, but there are players bigger than the Big 3 now lining up for a handout. The big cities of Philadelphia, Detroit and Phoenix are requesting billions of dollars each, and others will follow. And the state of California is now tens of billions of dollars in the hole. Having taxed everyone in the state to the hilt, the Golden State is now looking for federal tax dollars to fill their coffers. Others will follow.
As a former mayor of Cincinnati, and the former Treasurer of Ohio, let me assure you that cities and states can wield far more power than any corporation or union. The mayors and governors who run them have enormous influence, and presidents standing for reelection and members of Congress seek the favor of such individuals. Each of the three cities named above are in swing states, and California is a massive source of campaign cash for both parties.
I was always taught when growing up that when you reward bad behavior all you get is more bad behavior. From the mortgage meltdown to the automaker debacle to cities and states going under, it’s all bad behavior. It should not be rewarded.
The problem here is that our culture of debt—both personal and corporate—has created a culture of dependency. Everyone is calling out to our central government to give them money. And horrors of horrors, many are willing to let the federal government take ownership stakes in these entities and have a hand in their management.
That is the road to socialism.
The first step to ending the culture of dependency is to tell these corporations, cities and states they need to start taking responsibility for their actions by dealing with the consequences they have created for themselves.
If not, then we could accumulate a national debt that even our grandchildren will never pay off.