Bush revs the engines

Concerned about the $13.4 billion bailout of General Motors and Chrysler (Ford may come later) that President George W. Bush announced Friday?

Don’t worry. There are plenty of safeguards.

For instance, the companies must prove by March 31 that they are financially viable. If they don’t, according to terms of their loans, all of the funds must be returned to the U.S. Treasury.

And how do they demonstrate they’re viable? Among other things, they must show they can fully repay the government loans.

So, if they can’t repay the loans, they aren’t viable, and therefore they must repay the loans.

There, now, don’t you feel reassured?

Sounds like Capt. Yossarian and his “Catch 22” crew were involved in drafting this plan.

There are other conditions:

•  Top executives will have to accept unspecified limits on their compensation packages and give up perks like their corporate jets. Talk about sacrifice.

•  The auto firms must renegotiate their contracts with labor unions to bring them more in line with salaries and benefits paid by non-American auto companies operating in the United States.

Unless, of course, they don’t want to. In that case, GM and Chrysler simply have to provide an explanation to the government as to why they won’t meet the labor targets.

It’s important to maintain “flexibility,” Bush said.

This is a horrible bailout plan. It is a prescription for allowing GM and Chrysler to blow through billions of taxpayers’ dollars with minimal oversight. And the government will have few options when the auto executives show up at the end of March, hands out once more, to say, “We can’t show we’re financially viable. But we need billions more to keep going.”

Furthermore, as the column below notes, there is a serious question whether Bush even has the legal authority to make the loans out of the funds set aside by Congress to aid the finance and mortgage industries.

But none of that seems to matter to those who argue we must save the automakers at all costs to protect our economy — even if their existing business models guarantee they will stumble ever closer to bankruptcy. The only good things that can be said of this plan is that Bush didn’t appoint a “car czar” and there is no mandate for how many “green” cars the auto firms must produce.


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