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Old President, Meet the New President
Tuesday, November 11, 2008
John McKinnon, White House Correspondent for The Wall Street Journal, discusses the details of the meeting between President Bush and President-Elect Obama and highlights some of the key policy differences that are coming to the forefront.
What do you think: Should taxpayers bail out the auto industry? Comment below!- About the Brian Lehrer Show »
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"What do you think: Should taxpayers bail out the auto industry?"
China's selling their US Treasuries to bail out their workers, thereby providing for health and infrastructure services and avoiding civil unrest. Therefore we should too.
I don't know. The last time this was done via Chrylser, the gov't made money. I think it shouldn't be an either or kind of thing.
How about the government take over the medical pension part of the retirees in exchange for production of natural gas vehicles and more fuel efficient vehicles. The pension and health costs are supposedly hurting the industry. And say for the next 10 years a special revenue tax that could go towards environmental clean ups across the country etc..
Or perhaps a revenue tax that could go towards building out high speed rail.
But what do you then say to Japanese and German makers (I know the parts come overseas) who make the cars here who are not burden by the old union contracts.
Taxpayers should bailout the workers.. Basically help in protecting the fund for retirement plans and medical benefits (with some reductions).
There should be financing of the auto industry to develop fuel efficient cars and retooling of factories here in the US. Taxpayers should own a stake in the companies; cut executive pay in half; require the auto industry to cut hundreds of millions of dollars in expenses by eliminating lobbying, the lawsuits against California's energy efficiency laws, and reduction and marketing, advertising. -
There is a viable market/industry to vehicles - The Japanese, Chinese, Koreans, Germans, Swedes can do it - Why do we have incompetent businessmen in this country
Does anyone know just how much money the Big THREE have spent in the last 10 years alone in lobbying and lawsuits trying to prevent the California efficiency laws from taking effect and in lobbying the federal government against improved CAFE standards? - Just curious as to how much they have wasted which could have been spent on modernization and research
if the big three are allowed to collapse, there is talk of massive causalities downstream in related industries - parts, manufacturing, dealerships and more.
if some kind of independent study can be performed and it's verified that an auto industry could spread to other sectors, then yes, a bailout with many strings attached is in order.
conditions should include modernization and streamlining of operations, focus away from flooding the market with lux SUVs and towards creating small and fuel-efficient hybrids designed to go head-to-head with import brands, and an effort to get health care and pension costs associated with retired workers under control.
there should be a mandate that the big three return to profitability asap, and pay back the tax payer.
Unlike my first comment this one isn't sarcastic.
The US govt could supply incentives to motivate auto makers on energy innovation.
currently any energy innovation marketed by ford and gm are 100 percent developed by japanese carmakers. Thanks, japanese govt!
and during the post vietnam war, after the us pulled out of se asia japan moved in. they even built roads in thailand, then car plants there, for example, just to sell cars.
now japan own those markets. thanks again, japanese govt! (Unless i'm mistaken the us government has a similar program only for one US industry -- arms.)
there are ways the us taxpayer can bail out us car companies. but throwing good money after bad ain't one of them.
No.
Subverting corporate Darwinism propagates defective business practices ("moral hazard").
For decades, the American auto industry has suffered severe myopia and deserves to feel the pain of its ignorance. Remember the gasoline shortages of the early 1970's? How did the American auto industry react?
If an auto manufacturer is too big to fail, than it is too big.
Let the chips fall where they may.
Yes, with lots of strings! The big three need to start producing cars and trucks that are fuel efficient that people want to buy. The bail out money should go to rebuilding and retooling the industry, not for CEO and management bonuses or stock dividends. Strict timelines and accountability need to be part of the package.
I largely agree with Leo from Queens, with the exception of pandering to the unions. If the unions wish to remain at the "Big 3" they will have to wake up to the reality of working in 21st century America. Promises made to current retirees should be promises kept (the albatross they are) but ALL union contracts should be renegotiated. That aside, my original post (until I read Leo's) was going to say "let them fail, it's a mismanaged industry that encourages selfish and irresponsible consumer decisions and corporate greed"... then it softened to "no money, what so ever, without a powerful seat at the table." It sounds like this is what Leo is suggesting.
I agree with Ricard from Summit. Maybe the govt ultimately made money on the Chrysler bail-out, but it set a terrible precedent. We bypass the big 3 and let their managers vanish into the dust-bin of history. Instead the govt should fund electric car R&D, private-sector recharging stations around the country and the small electric car companies in setting up factories in Michigan to ramp up production.
The auto industry has a consistent history of greed. Charles Wilson, executive of GM said "what's good for the GM is good for the country." Not true. I remember the 1950s when GM was brought in as a transportation consultant for many cities around the US .. They advised Los Angeles and other cities to pull up street car tracks and substitute with buses (GM buses perhaps?). In Southern California this ws a disaster because buses had to travel with cars along the freeway whereas street cars had tracks separate and above the freeway.
Then in 1973 with the gas crises, and later with additional gas crises .. there was ample warning about the need for gas efficient cars. Japan understood the need but the US car manufacturers responded with large SUVs which swallowed gas in large gulps.
The auto industry must pay in someway for their disasterous decisions. Consider the large money bonuses the execs got for this wrong-headedness. Maybe the execs should return their large salaries and bonuses??
The industry must not be rewarded for their many many bad decisions. Bad signal for future.
I also agree with Richard from NJ, in any case where tax payer money is used to aid a company that is "too big" to fail. The company is too big. The government should aid them in exchange for a controlling share of the company (regardless of the actual dollar amount of aid, as it is saving the company) then the govt should sale the company piecemeal to break up the threat to the economy.
What's the history of govt. assistance to the US Auto Industry to date?
I know they get lots of export loan guarantees, post/9/11 insurance, free ride on spending pensions on operating expenses.
what happened to our fetish for the free market?
Let me get this straight OBAMA wants to bail out the auto industry an industry who made crap cars and went out of business?
If we give them money then THEY have to make hybrid and fuel efficent cars and when the governement tells industry what to make it's SOCIALISM.
Didn't the United States Government act to guarantee loans to Chrysler?
Why can't the government guarantee loans to the automobile industry, and pressure some/all of the banks to which we have given money to make the loans.
We should absolutely not bail out the auto industry. Detroit has sabotaged the transition to a sustainable society for decades. It's time for them to radically reform or pack their bags.
I do hope, though, that there's increased pressure on Toyota, Honda and co. to unionize their workforces.
I am from a small town in the Ohio where several surrounding towns all depend on the local GM plant. The towns would literally dry up and die if this plant gets closed. It is a true domino effect, plant closes, local business close, school levies don't pass, people can't pay taxes, forclosures, etc. We have to think of the WORKERS. I agree that the unions have become too powerful but all those people out of work would have a terrible impact on these little towns which are already struggling.
Absolutely not. The US auto industry is going bankrupt because they produce cars no body wants to buy (as they are awful), a bailout will merely delay the inevitable. The bailout of Chrysler worked because Chrysler had very exiting products coming out (and it only sort of worked as Chrysler is going bankrupt after all). Lastly, the best bailout of all would be universal healthcare, as this would take off a lot production costs for Detroit.
Sure, bail out the auto industry! While they are at it, could they also bail out the publishing industry? Magazines, newspapers, and book publishers are all in trouble and shutting down as well. Is an autoworker's job more important than mine?
(And publishing enriches lives, not carbin footprints)
The question is:
1) What happens if we don't bail them out?
2) What can we make them do for us if they take the deal? Breaking them up and also getting them to agree to work much harder to producing fuel efficient vehicles would be good for the economy all around.
Doris: >>>>Not true. I remember the 1950s when GM was brought in as a transportation consultant for many cities around the US .. They advised Los Angeles and other cities to pull up street car tracks and substitute with buses (GM buses perhaps?). In Southern California this ws a disaster because buses had to travel with cars along the freeway whereas street cars had tracks separate and above the freeway.<<<<<
Doris, do you know of any books or articles on this. I would like to read more about it. What you say makes sense. In Paris, there are dedicated bus lanes on many of the streets and there are barriers between the car part of the
road and the bus part.
Brian - Next time you are in a parking lot, count how many GM,Ford and Chrysler cars are park there! It might surprise you that most Americans, particularly in the New York area are buying foreign cars! There are many more of them in the parking lot than GM, Ford and Chrysler cars.
Isn't this the land of the free home of the brave? Where only the strong survive?
At least that's how it is in Jersey.
Why is this not "Socialism"?
Poor design and product develpment should not be rewarded with a bailout. This company should be held responsible for creating SUV's and other gas guzzling vehicles that ruin our environment.
GM should be sold to the highest bidder.
I think we should offer loans, but with concessions from the Big 3. If Detroit had invested the money they spent lobbying the Hill to keep CAFE standards from rising, the Japanese wouldn't be crushing them in sales. As far as health insurance, it was companies like GM that lobbied for decades against government provided health insurance.
We must demand that they produce cars that meet the fuel efficiency of European, Japanese and even Chinese standards today - not in 2020 or 2030. If the Chinese can produce cars that are much more fuel efficient than Detroit now, than we shouldn't have to wait 12-20 years.
maybe if we had national healthcare US car companies could make money.
Who makes hummers, tanks etc for our wars if these firms fail?
slightly off comment, but does anyone know who this new Bank (that's taken over many bank locations in NYC) called TD Bank really is? Our thought is that TD either stands for Tax Dollars Bank or Treasury Dollars Bank.
If this is true, maybe we'll start seeing TD Cars soon.
It would seem that, distasteful as it is, bailing out the auto industry is the lesser of two evils. So lets make a virtue out of necessity by imposing stringent go-green requirements on the industry as a whole.
Specifically, doubling the average fleet mileage requirements, and halving the allowed emissions, in say, 5 years (experts may want to weigh in on a more appropriate number), with a schedule of further restrictions in the years that follow.
What's "centrist" or "moderate" about rewarding a Colombian government that openly flouts the established rules and funds right-wing paramilitary groups to crush labor rights?
Keep moving those goal posts...
Last week on CNBC's Fast Money program, one of the panelist suggested that there is no talk of strategy accompanyng all of the talk about an auto bailout. The auto industy's problem is there is too much capacity. In order to correct this, companies will have to shrink or some will have to go under. Pumping more money into certain companies will not correct this situation. The money would be better spent paying it directly too those employees displaced by the inevitable downsizing of the industry.
Bailout for GM is a poor choice because it represents a single industry in a changing business model (i.e., poor products, competition from Japan, etc.), but more importantly, while it does infiltrate jobs in other sectors, the auto industry does not represent the fabric of the American economy as the banking system does.
Please let them fail. This is America newer cleaner companies will sprout up. These companies are too big and the UAW has brought this upon themselves.
Someone has to challenge this guy's assertion that GM has a good business model. They have made crap cars for 30+ years. Just read Consumer Reports. I owned american cars for years until they kept disappointing me. I have owned 8 Honda's and one Toyota since my last American car and I have not been disappointed. Let him explain why GM continues to rely on the push rod engine which has been obsolete since the 80's.
GM should be allowed to fail. this would require them to restructure their costs, come up with a viable business model and make unions face reality in terms of their demands. govtt/taxpayer $$ are better spent on direct benefits to affected workers, affordable healthcare for these workers that is not employer based and infrastrucure projects in affected regions to create new jobs
Erin from Pound Ridge, I understand what you are saying and the fall of the auto industry would mean a lot of heartache for small towns, but if these towns were either born of the auto industry or grew with the industry, why shouldn't they be allowed to die with it. You seem to be saying we should support a greedy inefficent mismanaged industry to support inefficient or mismanaged growth? In a market based society, where and how people live will have to be as fluid as where and how they work. Otherwise, we should cut the chase and go Socilalist.
The MTA mismanagers, and New Yorkers bleed out their paychecks, with another fare hike. GM couldn't plan well, now they can't pay their workers and taxpayers have to assume their payroll. When will the CEO heads of INCOMPETENT and INEFFECTUAL organizations, see THEIR heads roll so we can see THEIR pain?????????????????
Right on, Darrell. I have mechanic friends who are routinely amused and dismayed when they open the hood of GM cars. They are terribly engineered, and the free market should have but an end to their foolishness decades ago, one way or the other.
What about expanding US manufacture of foreign autos? Some Toyota lines are 85% assembled in the US as opposed to GM's 75%. Why not if we are just worried about manufacturing jobs and how they interconnect to retail and advertising?
I think it was GM that killed the electric car program. It was incredibly successful yet they destroyed all the cars they had made. I think they should be required to bring the program back especially since they already have a working technology. Also, I think they should be required to make plug-in hybrids. I do believe that it is okay for the government to demand this. Big business has had plenty of time to run the government at this point I don't think it matters much who is running who they are almost one in the same. At least the government has to answer somewhat to the whole nation - not just shareholders.
Sure, bail them out, with all the conditions that previous commenters have suggested. But also acknowledge that this crisis demonstrates the failure of market capitalism. It works--except when it doesn't. Otherwise, we wouldn't be bailing out the banks and the auto industry. So admit it, and let's move on to a better system!
Its not just about the retirees and unions.
The GM products are out of touch with the market. The Toyotas and Hondas offer better features, better reliability, better fuel economy, and overall much better product for the dollar.
Feeding this monster is not going to make it's leaders more responsible or teach them how to respect their customers and employees, and it is not going to save jobs or bring relief to those who are laid off.
Let this beast fade into extinction. Other more adaptable companys will take its place.
NO NO NO. Watch the documentary "Who Killed the Electric Car" particularly the extras. The auto industry colluded with Big Oil not just to destroy the idea of fuel effiency/independence, but also to destroy efficient public transportation in this country. You only have to visit LA to see a perfect example of their success.
I think this is a case of those living by the sword will die by it. It's Karma, Obama.
Unfortunately I smell another bogus bailout. BTW, do you really think Bush is actually against this bailout for his mates? Give me a break. If Obama falls for such an obvious ploy and caves on Colombia, I'm not optimistic. Don't underestimate the so-called lame-duck. Watch the back door of the White House and count all the silver when you move in Mr President-Elect.
Why not just bailout every private business in the U.S.? The restaurants that are experiencing a slowdown, the money losing retailers, painters and contractors, travel companies & airlines, nail & hair salons, and most especially real estate companies.
In fact, let's just drop the facade that we still have free markets and capitalism, and formerly change our system to "Corporate Socialism".
Yes bail out and OWN everyone. What's that called, communism, socialism or mafia.... what?
Yes, Steve from Cresskill, I believe this is just where Obama is heading - toward Socialism. His campaign reeked of it all along.
This from GM (talk about getting right to it):
seeking a $10 billion aid from Washington.
GM's Statement:
"General Motors congratulates Senator Obama on his historic win. He will assume office at an extraordinary time, with a number of national priorities that will require his and Congress' immediate attention. GM welcomes President-elect Obama's pledge to support our nation's domestic auto industry in its ongoing efforts to transform its business and develop new technologies.
This support comes at an especially critical time as our industry confronts one of the most difficult economic periods in our nation's history caused by the global financial crisis. And, this support will enable a competitive U.S. industry to contribute significantly to our nation's economic revival, in employment, technology, energy security, and other important areas."
Unlike most people (I suspect) on this blog - I did not vote for either Obama or McCain.
adsf: The Humvee H1 is NOT made my GM. GM simply licensed the name and built the H2 and H3, which are consumer-grade vehicles that could never be used in war situations. (In fact, they aren't even very good for non-combat off-roading.)
I would appreciate it if a labor economist were included when such discussions are held.
1) There is a mantra run out when discussions of heavily unionized companies occur: So-called “legacy costs” are outrageously burdening the companies, dragging down their ability to achieve economic stability. The retirement benefits received by former employees represent benefits not received by the workers during their work lives. These are monies that could have been earned during those times—and spent and benefited the communities’ local economies then—but were preferred by the companies and their shareholders to have at those times to improve the companies’ abilities to earn a profit.
The failure of those companies to earn those profits should not result in losses to the workers who in effect loaned them to the companies in a contractual agreement for future benefits. (Perhaps it was a sub-prime loan, but it didn’t appear so at the time.)
2) The taking away of these benefits will not reduce the basic life needs that they fill for the retirees. These needs will instead be transferred from the private sector to the public sector: Medicaid, for health care needs (or, to the already overburdened and higher cost emergency rooms), and to food pantries for basic nutrition.
In other words, either way, taxpayer dollars will be involved. Taxpayers should get a piece of the companies for any support that keeps them alive—and profits when the economy recovers.
Similar to when a parent bails out their kid by co-signing a loan, I think helping the auto industry makes sense with strings attached. One of the biggest strings should be that the companies create green technology and hybrid technology as most of their focus. This sparks new industry, will create jobs, will help to solve the global warming issue, and in doing these things, give the money back to the government and help set the world economy in a forward direction. It also addresses the primary reason why we have such problems in the first place - the loss of good jobs which creates an inability to pay bills, which creates a housing catastrophe, which makes the banks collapse. The financial sector does not exist without people working and making money that can be invested.
Brian: I second Rachel's point, obviously. When the leadership of GM campaigns against universal healthcare (all the way back to Truman's attempts to install single-payer healthcare in the 1940's), blaming labor unions for insisting that GM afford its workers at least some form of healthcare is beyond hypocritical.
Please consider the long view here. Spokespeople for the exact same CEOs that devoted their careers to killing socialized medicine can now come onto your show and imply that the UAW is at fault for trying to protect its members. The argument makes itself, unless, of course, you actually look at the history behind it.
GM and Ford have been mismanaged for decades. Their products are not competitive and therefore are not desired by the American taxpaying public who has voted with their dollars to support the auto industries in Asia and Europe by purchasing Toyotas, Honda, Kias, Audis, etc. The US car companies should file for bankruptcy as other companies do, e.g. Circuit City, when they are no longer viable. Maybe when the Big 3 are forced into bankruptcy, the management and all those who work for these companies will be shocked into realizing that they need to make significant changes to survive.
Everyone needs to remember that a company that files for bankruptcy protection continues to operate and has an opportunity to work itself out of bankruptcy and during that time continues to employ people.
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