Elkhorn Creek Lodge

An Open Letter to My Senators About the Auto Bailout

Posted in economics by Eugene Podrazik on November 22, 2008

Dear Senators Enzi and Barrasso:

I wish to restate my firm opposition to the proposed bailout of the Detroit automakers; GM, Ford and Chrysler. In truth, this 25 billion dollar bailout is really a UAW bailout.  We’ve had enough of bailouts. We’ve had enough intervention, with my tax dollars, into the economy. In fact, the whole subprime mortgage crisis and the subsequent meltdown on Wall Street can all be traced to the corrupt activities of encouraged by the Community Reinvestment Act, ACORN, Fannie and Freddie. 

We’ve had the 700 billion dollar TARP bailout that just working like a real charm. And, somehow, we’re supposed to believe just another 25 billion dollars and we’ll have the Detroit big three automakers back on their feet and millions of Americans just clamoring to buy Fords, Buicks and Dodges. 

These three automakers have been on a slow slide into oblivion for decades. Because all three have never been forced to face up to the fundamental flaws in their business plans. Chief of which is labor costs that far exceeds productivity. 

Further, attaching “strings” will hope to accomplish what? If such “strings” will make the bailout successful, then such modifications of  the current business model would be readily apparent and would be in place with out the prompting  of Congress. Actually, such a business model exists. It’s call filing for bankruptcy; which isn’t the end of the world. There will still be a huge spare part industry for the GM’s, Fords and Cryslers already on the road. The truck divisions of these three companies remain viable and will have a ready market in any bankrupcy action. Moreover, there exists a huge automobile manufacturing infrastructure in the United States–domestic plants turning out Toyota, Nissans and Honda that Americans really want to buy. Domestic plants that hire thousands of Americans and spin off all sorts of business in their respective communities.

And, what other strings will be attached. Mandates to produce “green” cars, running on “alternate” fuels. Mandates to produce cars to meet cap and trade global warming goal? Never mind that global warming is a crock. Look at how the CAFE standards have distorted the market. Now, we’re going to mandate the production econoboxes that nobody wants if it weren’t for the artificial constraints on domestic oil production for a commodity, oil, that is in reality cheap and plentiful. And, come the day that oil does indeed run out, the market will readily identify a replacement far faster than any intelletoid bureaucrat. With all due respect, what does any one in the House or Senate really know about the thermodynamics and engineering that goes into designing a car or truck. You and I know that these “strings” will be an attempt to legislate car design. Not only will we have a UAW salary subsidy but we will have cars you couldn’t give away. May I suggest that said car be called the Lada.

If you insist on a bailout, lets just be honest and call it a $30 per hour UAW salary subsidy. Why don’t we just reimburse the Detroit big three automakers $30 per hour for its UAW employees and at least put the real reason for this bailout out into the light of day.

The GOP has taken a drubbing at the polls over the last two election cycles with some justification because is has strayed far from the fundamental principles of frugality with tax dollars, low taxes, low regulation and small government. When the subprime financial meltdown hit last September, the GOP no longer had the credibility to stand before the voters and speak the truth about Fannie and Freddie corruption. 

Therefore, now is the time to return to those small government roots and make a principled stand against further government intervention in the private sector. This is no longer the time to “split the difference” or “reach across the aisle.” This is the time to make bright-line distinctions and to put an end to any further use of tax dollars to bail out any business failure that happens to be big enough to hire armies of lobbyists. 

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