News Today

I‘ve been in a particularly libertarian mood today. This auto industry bailout situation is such a mess, in fact in honor of the dearly departed firejoemorgan.com we’ll call it a tragic gallimaufry.

The auto bailout plan, approved by the house on Wednesday, stalled in the senate today, with talks expected to continue into the night. There is still no time-table for a vote however.

The public has been very wary of the rescue plan for the industry, and understandably so. Part of the frustration can be credited to the way that we’ve seen the 700 billion dollar bailout play out so far. I read a very telling statistic the other day, the financial bailout will cost more than the total combined costs in today’s dollars of the Marshall Plan, the Louisiana Purchase, the Korean War, the Vietnam War and the entire historical budget of NASA. Plus now we’re finding out that, surprise surprise, Bush didn’t push regulation after the bailout like he said he would.

The proposal passed by the house called for the extension of taxpayer-funded loans or lines of credit to the so-called Detroit Three, namely General Motors (GM) Corp., Ford Motor Co. and Chrysler LLC. President Bush would be in charge of appointing a government “car czar” who will oversee the rescue package and a major auto industry restructuring aimed at innovation and commercial viability. Funding for this would be taken from an existing 25-billion-dollar loan program meant to help the Detroit Three retool to make more fuel-efficient vehicles.

While this proposal has the backing of the Bush administration and some democrats too, it’s unclear if there’s enough support to pass the measure, which is facing staunch opposition from congressional republicans.

While it has definitely been refreshing to see congressional republicans growing a pair and standing up to Bush (where the hell was this the last seven years) the proposal they’re backing, in my opinion, doesn’t do enough to help the industry’s situation either.

The Republican proposal calls for a two-part alternative that would reduce the wages and benefits of U.S. autoworkers to bring them in line with those paid by Japanese carmakers Nissan, Toyota and Honda in the United States. If they did not meet these and other specifications then the company would be forced by the government to file for Chapter 11 bankruptcy. The proposal also says nothing about raising fuel-emissions standards though, something the companies will need to address in order to be profitable.

I’m not convinced on either of these plans. Also I think we’re setting a very dangerous precident with these bailouts. Where are we going to draw the line? City and state governments are terribly underfunded and many are beginning to ask for funding, should we bail them out next? Should we be bailing them out first? Also, at what point do we begin to address the huge deficit we’re racking up as a result of all of this?