[Get the latest “Truth With Speedzzter” here]
Everyone agrees the Detroit 3 crisis is grave.
“A study by the Center for Automotive Research in Ann Arbor estimated that the failure of Chrysler LLC, Ford Motor Co. and General Motors Corp. would eliminate up to 3 million jobs, including those at parts suppliers and smaller businesses that rely on the automakers."
"State, local and federal governments would lose more than $150 billion in tax revenue over three years, the study said.”
And the crisis portends to be the last “political football” of Bush Administration . . . and the first of the OBAMAista’s takeover of Washington D.C.
Some conservatives are suggesting that saving the heart of America’s industrial base amounts to a politically-motivated “bailout” for the greedy United Autoworkers Union. The lame-duck Bush Administration is mirroring some of this skepticism.
"White House press secretary Dana Perino said Bush understands the importance of the industry, but that the carmakers' problems — decades in the making — cannot be blamed on the administration or the recent financial meltdown."
"'Look at the history of these companies, decisions they've made over time that got them to where we are today,' Perino said."
Perino and Bush 43 are obviously NOT readers of “Truth With Speedzzter.”
Moreover, such dismissive comments reflect a blind-eyed callousness to the reality that the federal government’s meddling in the Detroit 3's business for decades is at the rotten heart of the current crisis.
Peter M. De Lorenzo passionately takes such ignorant “let’em fail” rhetoric to task in his “autoextremist” blog:
"I am absolutely convinced that the people who hate “Detroit” and want it to implode have not even the faintest of clues as to what it really means if it were allowed to happen. To those instant experts out there who are reveling at the thought of a major part of our country’s industrial fabric collapsing, I say be careful what you wish for - because if GM is allowed to fail, it will take the entire domestic auto industry down with it - meaning thousands of suppliers and dealers in towns making up a cross-section of America will go under too."
The American auto industry’s tenuous future rests in the hands of a discrete group of uber-liberals who are hardly motoring enthusiasts.
Left-wing homosexual rights activist Representative Barney Frank (D-MA) – who was at the epicenter of the Fannie Mae and Freddie Mac credit meltdown – is now positioning himself to be Detroit’s white knight.
"Frank's legislation would carve out a portion of the $700 billion financial rescue program for the Big Three automakers, letting the government take an equity stake in them in exchange for the loans, said Frank's spokesman, Steven Adamske."
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"Congressional Democrats are pushing legislation to send $25 billion in emergency loans to the beleaguered auto industry in exchange for a government ownership stake in the Big Three car companies."
What would such a “stake” look like? Not very good for FoMoCo and GM shareholders . . . .
"The Treasury could take warrants to share in a portion of future profits and would have to be paid back before any other shareholder. The car companies would face tougher restrictions on awarding pay packages to executives and dividends to their shareholders than the financial companies that get a piece of the original bailout."
Alenskyite President-elect Barack Obama is apparently pushing for even a more radical plan:
“President-elect Barack Obama is pushing Congress this year to approve as much as $50 billion to save cash-starved U.S. automakers and appoint a czar or board to oversee the companies.”
Presumably, Obama’s “Auto Czar” (or board of Auto Czars) wouldn’t be a hard-core, product-savvy, enthusiast "car guy" like “Maximum Bob” Lutz. Instead, it would likely be some sort of souless veteran beltway bureaucrat with a bent toward bean-counting, and a bias toward the environmental, trial lawyer, and union constituencies of the OBAMAcrat party.
Echoing Obama’s “strings attached” rhetoric, “House Speaker Nancy Pelosi called for congressional action, saying failure by one or more of the big U.S. automakers would have a ‘devastating impact’ on the U.S. economy. Assistance must be conditioned on `rigorous independent oversight’ of carmakers and restrictions on executive compensation."
Barney Frank further opined that ``A collapse of the American automobile industry would be the worst possible thing that could happen at a time when we are already weakened.”
Maybe not. The salient question is whether the proposed fix is actually worse than the disease.
A federal “Auto Czar” or "central planning committee" would likely be the captive of the greeniacs and the unions. The temptation to micromanage the Detroit 3 would be overwhelming. Principles of vehicle choice based on free market assumptions (not that we remotely have a free market now) would be forever sacrificed for the “good of the People.” Any well-founded industry resistance to draconian increases in Corporate Average Fuel Economy standards would evaporate overnight. Any return to independence for the Detroit 3 would likely take years.
The failed United Kingdom experience with nationalization of its auto industry ought to be a sobering lesson for those who extol the virtues of letting Washington bureaucrats assume complete and total control of the domestic auto manufacturing sector.
The damage a micromanaging Auto Czar or buraucratic group of "appliance motorist" "central planners" could do to the culture of the Detroit 3 could take decades to repair.
As for any “soft landing” of the Second Supercar Era and Detroit’s continued motorsports involvement, forgetaboutit! A liberal Naderite Auto Czar, empowered with billions in taxpayer dollars, an OBAMAista mandate, and who is more in tune with the Sierra Club than with the National Hot Rod Association would kill high-performance and factory racing quicker and deader than those metaphorical bulldozers at the end of the 1971 film “Vanishing Point.”
Certainly the federal government should take actions to level the playing field it created between the unionless Japanese invaders and the Detroit 3. And paying back Detroit for decades of unfunded mandates and market-killing regulations by shoring up their short-term financial situation is in order.
But a de facto nationalization of the American auto sector under an unelected dictator such as Obama’s “Auto Czar,” special-interest-driven "central planning" and hamstringing the Detroit 3 from developing products consumers actually want under the guise of Nader-esque “rigorous independent oversight” is akin to using an atomic bomb to “rescue” an industry held hostage to a world that federal interference created.
The Detroit 3 and our automotive liberties might not survive the rescue.