No More Bailouts

Monday, December 8th at 10:39AM EST

16 Comments

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It’s official. Washington’s favorite word this year is “bailout.” It’s been overused by Congress’ elite in hopes of rescuing their corporate friends from poor decision-making. It’s been used to pick the pockets of the already hurting taxpayer. It’s become a euphemism for robbing Peter to pay Paul.

The last thing a struggling, hard-working family needs is another Washington bailout which forces them further into debt and financial turmoil – especially during these tough times.

Past bailouts have thus far failed. Whether it was Bear Stearns or the larger Wall Street bailout, these government handouts have not done what they promised. There’s no stability in the marketplace. The Dow continues to plummet or yo-yo, at best. The only goals the bailouts have actually accomplished are to anger the American people and leave them — and their children — to foot a massive bill.

Next week, the Democrat-controlled Congress is expected to call Members back to Washington, with President-Elect Obama’s blessing, to consider a second auto industry bailout. Yes, that’s right, a second one.

In September, Congress passed legislation that established a $25-billion loan program for the automotive industry. And, last month, Detroit automakers jetted back to Washington, asking for another $25 billion. A couple weeks later, the Big Three revised their proposal and are now seeking $34 billion — much of it they say they’ll need by the end of the year. Didn’t their mothers teach them to finish what’s on their plates before asking for seconds?

There’s little doubt that the American auto industry is in trouble. But, the Democrat-controlled Congress appears hellbent on a bailout. They’re reluctant to entertain all the potential reorganization options that may include short-term hardships but long-term, broad-based benefits. In fact, Speaker Pelosi stated that Chapter 11 bankruptcy – a form of bankruptcy that allows a corporation to reorganize their business without killing the company –is off the table.

Some have argued that the auto industry should be drawing on the money from the initial auto bailout instead of siphoning off additional money from the massive Wall Street bailout. In fact, the Administration and a bipartisan group of Senators has discussed restructuring those loans to be more helpful under the current circumstances. But, this commonsense approach gets little notice by Congressional leadership.

I understand that our nation’s auto companies are hurting and that times are tough for many of its employees. But what these companies need are restructuring not bailouts.

The Big Three must readjust their product plans to create vehicles that Americans want to buy. The issue isn’t that individuals are not purchasing cars; it’s that they are not purchasing American cars. Foreign companies are unveiling vehicles that Americans want to buy. They’re using technology and marketing that works. And because American auto dealers costs are so much higher- an estimated $2000 more per car- their competitors are able to put in more extras without pricing their products out of the market.

In addition, a wholesale reorganization of management practices is essential to keeping Detroit automakers alive. Take General Motors for example, GM is drowning under the high costs of employee benefits. Due to the negotiation of long-term retirement and health packages, GM currently supports more retired employees than present employees. Taking care of your retirees is good, but not to the point where it’s forcing you into a hole. The former head of the UAW, Walter Reuther, once said it best: “Getting more and more pay for less and less work is a dead-end street.”

As Commerce Secretary Carlos Gutierrez recently said on CNN, “There’s a line of companies of industries waiting at Treasury just to see if they can get their hands on those $700 billion.” If we use those funds for the automakers now, will troubled mortgage holders ever see any help? To add insult to injury, Congressional Democrats are reportedly working on a plan to send a $500 billion stimulus plan to the Obama White House on Inauguration Day. Clearly, they haven’t learned from their mistakes.

I opposed the massive Wall Street bailout package in October because I didn’t think it was the right remedy for what ails our economy, and I supported serious and fundamental reforms in its place.

Washington needs to stop handing out your money like its Monopoly money. Each dollar is hard-earned and the men and woman who worked so hard for it deserve more respect from their government than to be treated like an ATM. Our economy grew strong on the backs of Main Street; from the ideas and sheer sweat of innovators and entrepreneurs flush with the American spirit. Risk-taking is part of that adventure. But when government guarantees against failure, risk and reward becomes meaningless. Eventually, that will crush our economy- and that eventually may not be that far down the road.

President-Elect Barack Obama recently noted in an interview on 60 Minutes that “we shouldn’t worry about the deficit next year or even the year after,” but I am concerned that it is precisely that type of lax attitude that will pull the taxpayers and the economy into far deeper economic problems. Future bailouts and more debt will break the backs of American taxpayers this is something that our nation cannot afford.

16 Comments Leave a comment

Thank you

Incredible (Diary) Monday, December 8th at 10:57AM EST (link)

Thank you, thank you, thank you. The auto bailouts are something that I’ve been following since before all but a handful knew they’d need a bailout. You hit the nail on the head with, “they need restructuring”.

Why wouldn’t they do this through the bankruptcy courts? Are they also negotiating a pre-packaged C11?

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I am opposed to bailing out the automakers without getting something good in return, BUT

red_oakster (Diary) Monday, December 8th at 11:03AM EST (link)

I do think there are signs of credit easing among banks. So the bailout picture is more mixed than the congresswoman suggests. And from what I can tell, the Bear Stearns bailout is paying off nicely for the government (though AIG has been a disaster).

This blog is too heavy on the sloganeering and too light on analysis. The congresswoman would do well to consult with Paul Ryan and Sen Corker.

Credit "easing" among banks.

mbecker908 (Diary) Monday, December 8th at 11:15AM EST (link)

Yeah, right.

And just which banks will put up billions for GM and Chrysler? With or without a guarantee from the feds.

Bear Stearns is paying off nicely?

Shawn Gillogly (Diary) Monday, December 8th at 11:22AM EST (link)

You’re kidding, right? You really don’t get the issue. The issue isn’t whether or not the government gets the money back. The issue is that bailouts cause industry to sidestep the necessary restructuring and cause a repeat of the problem.

Chrysler was bailed out, and here they are again. The S&Ls and then Bear Stearns were bailed out, and the financial sector ignored the problems that were creating the need for those bailouts. And lo and behold, here we are again.

Bailouts don’t solve the fundamental industry problems. *That* is the issue. And whether or not we “get something in return” is immaterial, and indeed, naive pork-barrel politics. Rep. Bachmann is right, and you are missing the heart of the issue entirely.

And she is also right, at least in part, as to what has caused the Detroit 3 these issues. The extortion that is Michigan’s Gross Receipt Tax System is another contributor that crucifies them. And their consistent lack of market foresight and willingness to deal with economic realities tops it all off. None of those merit a bailout.

“Liberals are always talking about pluralism, but that is not what they mean. In public school, Jews don’t meet Christians. Christians don’t meet Hindus. Everybody meets nothing.”- Dennis Prager

It's important to recognize what has worked and what hasn't

red_oakster (Diary) Monday, December 8th at 11:32AM EST (link)

Look at the Bear Stearns paper. It is performing well. Liquidity is an important issue, and the government has an obligation to help. The commercial paper facility is working. The interbank guarantee is working. AIG is a mess. The record is mixed.

I believe in trading where we the GOP has leverage. Right now, the GOP has leverage on the auto bailout. I don’t support a bailout here unless we get something for it. My own preference again is for an extension of tax cuts on dividends or capital gains or both.

I just find Bachmann’s argument simplistic and inadequate for the basis of a conservative economic policy.

Here's a hint

Shawn Gillogly (Diary) Monday, December 8th at 1:03PM EST (link)

Repeating yourself is not interacting with an argument.

And saying “it’s worked” when all it did was convince other members of the industry they could get away with the same tactics is dubious, at best.

Short term aid is not a strategy. It’s band-aids on gunshot wounds.

I love you...carry on

speciallist (Diary) Monday, December 8th at 11:30AM EST (link)

Fight On Guerrilla Congress

Kudzu (Diary) Monday, December 8th at 11:53AM EST (link)

Congresswoman, thank you for your comments and insight into the battle on Capital Hill. We need more from you and your partners there to know what the House will do to counter this massive push to forfeit the sanity of this nation’s economy over to the unions.

What’s truely astonishing is that a few months ago these automobile manufacturers were the devil. They were the epitomy of evil as they help perpetuate pollution by shoving SUVs and trucks down our throats. However, now they need a bailout. They are too big to fail. They are… beholden to the unions who have strangled their companies to the point of bankruptcy.

I don’t get a bailout for my massive debt after my rough times (divorce, deployments, moving, etc…) and I have mouths to feed, not overhead.

Does the Congresswoman support Louie Gohmert’s Tax Holiday? I would imagine so but what is the support in Congress for the Congressman’s bill? We need to Fight ON!

It always did take two of you to take down one of me. – Jo Bob Priddy, North Dallas Forty.

Now on at http://kudzu630.wordpress.com/

Rep. Bachmann...

Diogenes314 (Diary) Monday, December 8th at 12:32PM EST (link)

If you ever get tired of the Minnesota winters, please consider moving to San Diego. The 53rd district, to be precise.

If San Diego is not enough

GregInFla (Diary) Monday, December 8th at 11:53PM EST (link)

we’d love you here in Florida! Bachmann for US Senate in 2010!

– A true evolutionist would let endangered species die off. Think about it.
– The sign outside the courthouse said no signs allowed. So I took it down.
– Atlas Shrugged is now on the non-fiction aisle at Amazon.

bailouts

indym (Diary) Monday, December 8th at 2:58PM EST (link)

I am a republican who voted for both President Bushes and John McCain. I support the bailouts with preconditions. I think several on this site have explained my position on this. Liquidity is important. Without it the affected industries will crumble and there will be a domino effect throughout the entire economy. There needs to be reform in theses industries. Rep Bachmann responded on Redstate after a deal had been reached between the White House and Congress. Republican congressional members understand what would happen if these bailouts had not occured. Trust me , they made sure the votes were there before stating opposition. Senator Richard Shelby has threatened a veto. Bet it won’t happen. I hate the bailouts like everyone else, but too much is at risk without it.

Lack of Faith

ss396 Monday, December 8th at 10:52PM EST (link)

I have been steadily writing to all my Congress-folks to stop this bailout, but I have little faith in the result. Both Senators Cornyn and Hutchison voted in favor of the original $700-billion, and it grates me no end to see both of them touted as conservative leaders. It just makes me sick. At least Rep. McCaul voted against that travesty, and has vowed to continue to fight against it. But he is pretty junior to take on Pelosi. Bless you, Rep. Bachmann, I pray for the efforts of you and McCaul.

But the White House is actually considering the bailout, instead of rejecting the concept out-of-hand. The so-called Republican leadership is supposedly examining the bill to make sure that the taxpayers are protected – SAY WHAT? If they’re examining the bill, that means that there will be a bill. You cannot write protections and taxpayer guarantees into legislation and somehow compel sound management from them. All the safeguards in the world are not going to prevent us taxpayers from owning big chunks of a derelict industry.

The big 3 have had 30 years to take actions that could have abated their crisis, if not forestalled it altogether. But they chose other paths instead. Only when facing immediate death do they suddenly get ‘religion’. I don’t believe them; they are not about to change their spots that quickly. Just because they drove a car to Washington I am suddenly supposed to believe that they have re-thought their lives? What crap.

The free market is doing what it is supposed to: weeding out the poor players, the stupid, and the incompetent. Bailing these jokers out solves nothing, and only prolongs the agony. Let ‘em go to Chapter 11, and a much stronger enterprise will emerge, and much more quickly. Because of people like you, Rep. Bachmann, I have not entirely lost hope. But my hope is on life-support.

If you pay someone to sit on his butt, you can’t be surprised when he does.

A Slight correction/distinction may be in order

GregInFla (Diary) Tuesday, December 9th at 12:02AM EST (link)

I agree that the costs of the bailout may very well make it more difficult to buy a new car. But you said: “The issue isn’t that individuals are not purchasing cars; it’s that they are not purchasing American cars.” Cars made in Alabama (Honda) Kentucky, South Carolina, and other non-Northern states are American cars. They are just not overly-costly-union-made cars. As a long-time GM owner, I bought a Honda Odyssey for my family two years ago because all three “USA” companies made statements that minivans would not be supported in the future, so they could sell SUVs. Their loss has been my gain. 50K miles of zero problems, proudly made in Alabama.

The Big Three have actually reformed the past few years

Mike gamecock DeVine (Diary) Tuesday, December 9th at 12:10AM EST (link)

The problem is the pensions for the retired and government regs. The fact is that they cannot survive as they exist now. They will downsize. The question is when.

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“One man with courage makes a majority.” – Andrew Jackson

"Loan" seems to be their new marketing term for BAILOUT

AHALgal Saturday, December 13th at 2:31AM EST (link)

Thank you Congresswoman Bachmann!

While the UAW spent $400 million in attempting to elect Democrats this year, I expect them to do what is best for their members. If this situation was so dire, then that money could easily go to assist their members.

Obviously, they only continue to seek their own hunger for power.

UAW blew the deal at 10:15 p.m. ET last night because they wouldn’t accept pay concessions for management.

This was never a bailout of the car companies who do nothing more than operate as limited manufacturing for pensions and over-inflated wages — it was a bailout for the UAW.

This small business owner hopes the Bush administration has the macho to withdraw from a UAW bailout.

Dow closed UP 64.59 — stick that socialist slimewads!