Memo to Congress: Just Say No

By Caomhin

Congress failed the taxpaying citizens of this nation greatly today by refusing to tell the auto manufacturers what it needed to tell them, “no.”   It is a travesty what is unfolding in the halls of Congress and even more so that the UAW has taken its propaganda war to seemingly ever local newspaper in this nation warning of the second coming of the Great Depression if they have to reap what they sowed.  That is indeed what they would be doing.  We would not be “allowing them to fail” we would be allowing them to see years upon years of terrible management, unresponsiveness to the marketplace, and fat, bloated union contracts come tumbling down around them.

They can survive this, of course, but they’d rather not do anything to rock the boat that they are accustomed to guiding.  Have we heard the UAW come out and offer to switch to 401(k) plans from their current pension plans, or offer to pay a little more for health insurance, or accept lower wages so that higher numbers of workers are not forced to be laid off?  No.  Have we heard the CEOs of the Big Three reveal some great change in their business model that inspires confidence, one that shows how they can reduce production costs, increase efficiency, redesign and revamp car plans in a manner conductive to the profit motive?  No.  We’ve heard nothing but the same from them.

The limited liability that shareholders enjoy protects them from loses other than what they have invested into a corporation.  It is an assumed risk when one purchases stock that they may lose their complete investment.  It is harsh but this is the reality of all investments.   I mention this because the American tax payer is not a shareholder in the auto manufacturers.  The American taxpayer is not asking to be a shareholder in these corporations.   If Congress wants to invest in these companies, they can buy stock.

What you are hearing from many a politician is the words written and paid for by the auto manufacturers lobby.  You’re hearing the money that was funneled to politicians by the unions and CEOs that if you don’t give them money than your world is going to come to a screeching halt.  You’re witnessing an incredible display of fear mongering.

The argument that you can’t let an industry fail can be applied to any product and any market.   For example, if the telecommunications market was on the verge of bankruptcy we could apply the same logic.  Without the telecoms we would face massive cutbacks in the technology sector, in retail, in the ability to reach emergency services.  We would see a massive slow down in corporate responsiveness, a complete crawl of the dissemination of information, etc.  They could use this argument.

Every single sector of this economy can claim this same argument.  I vehemently opposed the original bailout as irresponsible, recklessly through together, having no concrete plan of operation, and for rewarding bad decision making on the part of private corporations.  It distorted the free market, punished responsible and financially sound companies by preventing them from growing, rewarding mismanaged companies by giving them a tremendous infusion of cash and artificially keeping them in business, and tremendously shook confidence in the market by consumers.   It and subsequent bailouts and the policy of keeping interest rates at such low rates has created the environment that is ripe for hyperinflation which will punish low wage earners, retirees, and the unemployed even more so than they would have otherwise been facing.

The auto manufacturers have had problems for years and for years they have dragged their feet, refused to change their operations and address their many issues.  There is nothing that they are proposing that would encourage me to personally make an investment in their companies, although I will say that at least Ford tried to improve their cash position as opposed to GM and Chrysler, let alone to see a few thousand of my tax dollars go to their companies.  Chapter 11 bankruptcy is an option as is drastic and complete overhauls of their operations and union contracts.  A sound proposal to private investors demonstrating a commitment to becoming profitable is a start.  If a line of credit is what they want and they cannot get, than what does that tell you about the effectiveness of the first bailout aimed at freeing up credit markets as well as the ability of these companies to pay back these loans if they can’t get it from previously released tax payer funds?

Another question you have to ask yourself is: what if $34 billion is not enough?  They haven’t even offered up a Plan B, so I’ll draw that conclusion for you.  They’ll come looking for more.  If they get it now they’ll get it then, too.  They will have no incentive to fix their operations.  Why would they?

Since the Democratic takeover of Congress in 2006 and now with a wider majority, it has become painfully obvious they are quickly developing an extremely serious gambling problem.  Once an addict starts pumping money in the bet, an addict can’t leave.  They’ve already rationalized that they’ve put so much into it that they can’t walk away now; they just need a little more to get another chance.  They’ll hit it big eventually, so they believe; they just need that one more chance.  This is the road we’re heading down.  For the health and benefit of all involved, we need to pull them away from the table right now.


1 Response to “Memo to Congress: Just Say No”

  1. 1 » Memo to Congress: Just Say No Trackback on December 3, 2008 at 1:51 am

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