Lock the brakes on auto bailout
They arrived in tiny, energy-efficient cars this time, instead of swanky corporate jets. But the chief executives of the nation’s Big Three automakers had their hands out even more last week when they arrived in Washington, D.C. than just a few weeks ago. Now they want $34 billion instead of $25 billion.
What’s more, they were joined in testimony before Congress by the president of the United Auto Workers union. The fact that the head of the organization responsible for so much of what ails the Big Three was at the table, singing with the auto-executive choir, was emblematic of what is wrong with this whole scenario.
It’s like a cancer consulting with doctors on how to treat the patient it is killing.
No wonder some 60 percent of Americans tell pollsters they are opposed to bailing out the auto firms.
However, with the latest news showing November has the highest monthly job losses in 34 years, and total job cuts for the year now approaching 2 million, there is increasing pressure on Congress to give money quickly — especially to General Motors and Chrysler, which say they may run out of funds by the end of the month.
We still think that’s a mistake. Look at Chrysler, for instance.
As Sen. Robert Corker, R-Tenn., noted during the Senate hearing Thursday, the private equity company that owns the major interest in Chrylser, Cerebus Capital Management, has “lots of cash that it is unwilling to put into the company.” Instead, it wants U.S. taxpayers to contribute that cash.
GM and the United Auto Workers also want taxpayers to contribute large amounts of cash to keep their operations and jobs afloat. But the UAW is unwilling to offer major permanent changes in its contracts with GM. Instead, it offers to temporarily suspend things like the notorious “jobs bank,” through which GM pays some UAW members as much as $100,000 a year not to work.
And GM itself is unwilling to put forward a plan that retools its failing business model and cleans house for its inept top management.
Until those sorts of changes are forthcoming, any money that Congress gives the Big Three will be akin to giving painkillers to dying patients. It won’t provide real a cure.