Several weeks ago, Congress passed an infamous, pork-laden $830 billion welfare handout to Wall Street gurus and banking big wigs to allegedly reduce the burden on the economy. Congress rushed to the "rescue" by passing a plan which granted bold, non-negotiable powers to the Department of Treasury and handed blank checks to bankers. As of press time we are yet to see any measurable, positive results.
This column warned at the time that "Congress will act so hastily that the only winners will be the fat cats on Wall Street and the government powerbrokers who see the opportunity to consolidate their authority at the expense of hardworking Americans who do not fit into either of the above categories." As predicted, Congress acted without hesitation, rushed to pass a bill that made Hank Paulsen the most powerful financial kingpin in the world, and threw away almost a trillion dollars in the process.
Conservatives and some reasonable moderates who opposed the original, outrageous bailout were accused of allowing the country to go to ruin, similar to the way New Deal flacks in the mid 1930s assailed Supreme Court Justices Van Devanter, McReynolds, Sutherland, and Butler as the "Four Horsemen of the Apocalypse" for opposing the constitutionality of FDR’s specious programs.
Since that time, a $25 billion package has been proposed for the beleaguered American auto industry that is apparently on the brink of collapse. Late on Wednesday, Nov. 19, it was reported that Senate leaders had decided to temporarily hold off on this issue, perhaps buying time until Barack Obama is sworn in this January. While Congress temporarily places this bailout on hold, it is a fine time to ask a few important questions of our policy makers and ourselves.
First, Congress was able to hurry along a near-trillion dollar package to help the tycoons who ran wild on Wall Street and in the banking arena, but have balked at the "cheaper" $25 billion bailout package for the "Big Three" auto manufacturers; Chrysler, GM, and Ford. Why have the feds gleefully allowed a no-strings rescue of the white collar variety while looking the other way when it comes to the hard hats and blue collar workers trying to hang on to their jobs and livelihoods in Detroit?
Second, everything the federal government touches turns into a disaster: housing, education, emergency response, and the list goes on and on. We need to seriously consider whether or not the federal government is capable of managing the auto industry. From a public policy perspective, why should the taxpayers, just weeks after investing in badly run banks, spend even more money on companies that need an act of God, not an act of government to turn them around? The federal government struggles to deliver the mail. Why should anyone believe they are capable of saving or running the American automobile industry?
Third, since 90 percent of Americans told pollster Peter Hart that the death of U.S. auto industry would do great harm to the future of the country, where does this massive number vanish to when it comes to buying American vehicles? A January 2007 AP-AOL Autos poll found that American consumers favored Japanese cars to American cars 44 percent to 29 percent. If this 90 percent feels so strongly about the American auto industry, why were they buying non-American cars over domestically produced vehicles?
Three weeks ago when this writer went out to purchase a new car, the first and foremost consideration was how much of the vehicle—from start to finish—was produced in the United States. The result was the purchase of a "Big Three" produced vehicle manufactured 70 percent in the U.S. This is called Economic Patriotism, something all of us should do by choice, not by government fiat. I am not suggesting that American cars are right for everyone, however, if American consumers are as worried by this situation as they suggest, one would expect them to be buying the American vehicles.
Finally, we must ask why we allow pundits and politicians to pin the problems of the American automakers on the men and women working on the assembly lines, engineering rooms, in the supply chain, and at the dealerships. In 2007, GM CEO Richard Wagoner—who helped lower GM stock from about $90 per share to below $3 each— pulled in $15.7 million dollars and his top two deputies made $9.3 million and $9 million respectively. Ford’s CEO Alan Mulally "earned" $22 million in 2007 according to Reuters. Until these gentlemen take responsibility, it is hardly fitting to blame workers or retirees with the failures of the Big Three.
The bottom line is that any attempt by the feds to take ownership or management of the Big Three will be as equally disastrous as the dilemma facing Detroit today. The only considerations that policy makers ought to have at this stage include saving the pensions promised to those who earned them, preserving as many of the three million jobs presently at risk as possible—whether they hold union cards or not, and fixing America’s broken trade policy that puts vehicles made in America by Americans and for American companies at a serious, competitive disadvantage to foreign-owned companies.
If these goals are not met, we can dubiously add this proposed $25 billion to the growing pile of wasted money floating down the Potomac and chalk up another lost opportunity to restore a responsible trade policy that works for our own countrymen, not against them.
Nathan R Shrader holds an MS in Political Science from Suffolk University. He can be reached at [email protected]