Congress has returned for a post-election lame duck session and topping its agenda is whether to approve a tax-paid bailout of the Big Three automakers in Detroit. Leading the charge for the $25 billion proposal is GM's Rick Wagoner.
But there are lots of pros and cons on the proposed bailout, which if approved would essentially give GM, Ford and Chrysler a $25 billion infusion of operating cash, along with some degree of strings, depending upon what Congress approves. Approval is not guaranteed.
Straightline readers are taxpayers and serious auto enthusiasts, so your opinions ought to count heavily in the public debate on this issue. What follows are links to respected sources presenting both sides of the debate, plus links to the latest in commentary from the automotive side of the Blogosphere.
For the Bailout: Center for American Progress
This liberal think tank in Washington, D.C. favors the bailout but with strings, and presents its case in an excellent and comprehensive post on its blog, The Progress Report.
Among its major points in favor of the bailout, CAP links to a piece in The New Republic that argues the Chapter 11 alternative favored by many bailout opponents would be quickly followed by Chapter 7 liquidation,which would be an economic calamity for the nation.
Against the Bailout: The Heritage Foundation
This conservative think tank has published multiple articles and analyses in recent days, including "Questions Congress must ask the automakers,"
and "The Detroit Bailout: Unsafe at any Cost."
Among its major points against a tax-paid bailout, Heritage argues that the automakers failed to challenge excessive compensation demands by the UAW, with a result that Detroit's business model cannot compete with lower cost producers in Japan and South Korea.
Lots of excellent coverage at The Truth About Cars, including this report from Bertel Shmitt that Chinese companies are, with encouragement from the central government,making plans to buy GM and Chrysler.
Also at TTAC is essential reading - "Man Up" by Ken Elias who explains what GM should do if it hopes to be credible in the current debate.
Elsewhere on Edmunds.com, Phillip Reid cannot stand the thought of a world without Chevy, Buick, Caddy, etc.
Former GM manager Lori Roman comes from a family that has been seeped in GM jobs for generations, but she says a bailout is the wrong way to fix the Big Three. And Eric Peters, a journalist who has covered the auto industry for more than a decade, is less than enthusiastic about a bailout.
Finally, if you haven't yet read Peter DiLorenzo at AUTOEXTREMIST on this issue, go here. He is passionately in favor of a bailout and isn't bashful about expressing his opinion about those who oppose the idea.
I hope these links help folks sort out their own views on this issue, the resolution of which - whether this week in the lame duck Congress or after Barack Obama is inaugurated Jan. 20, 2009 and a new Congress comes to the nation's capital - could change the face of the auto industry around the world forever. I'll update this post with more links as they become available.
UPDATE: A Payne-ful Look at Bailout
Long-time Detroit journalist Henry Payne has a thoughtful piece on NRO that reminds of a possible middle way between tax-paid bailout and private sector bankruptcy, public receivership.
And at Seeking Alpha, Andrew Snyder sees in GM a mobile home with a "monstrously obese woman clinging to a bucket of fried chicken inside." But he loves GM, really, he does.
Suzanne Denbow at Ride Lust expects the Senate to reject the bailout, but doesn't see a vote happening until at least Thursday.
UPDATE II: Name Your Conditions for a Bailout
Chris Hafner and company at Amazon.com's fine Car Lust blog want to know what conditions you would attach to a federal bailout, if one is to be approved by Congress. And if you aren't sure who are your senators and congressman, go here to THOMAS, enter your zip code and there you are.
If GM is going to survive, the Chevy Volt is almost certain to play a major role. Guess what just happened to show up at the Edmunds.com offices earlier this week? Editor Karl Brauer lays out two potential scenarios of the Volt's future. Why isn't GM putting the Volt on display in Congress and saying, "Look, just help us get this thing to market."
Former GM manager Lori Roman comes from a long line of auto company employees, but she says a federal bailout of Detroit's Big Three would be like sending arsonists to fight a fire.
UPDATE III: Ooops!
GM's Rick Wagoner is predicting economic calamity for America if Detroit doesn't get a bailout, with millions of jobs going down the drain. But even The New York Times, which normally is supportive of any proposal to expand the federal government is skeptical of Detroit's claims.
Is nobody in Detroit thinking about these things? ABC News' Blotter reports that Wagoner, Mulally and Nardelli flew to DC yesterday in private corporate jets to plead for tax dollars. Robert Farago of The Truth About Cars slices and dices their testimony. Don't miss the link to the draft bailout bill.
And Mitt Romney - who made a fortune as a corporate work-out wizard (his dad had a Detroit link once upon a time, too) thinks bankruptcy is the best solution.
Categories: Carnival of Cars