What could be more revolting than using our hard-earned tax dollars or those of the next generation to bail out General Motors, Ford and Chrysler, especially General Motors?
What would be moral or practical about rewarding the corporate stewards who stubbornly helped engineer the energy crisis, blocked fleet efficiency standards that would have saved the country hundreds of billions of dollars and perhaps saved the U. S. industry from its present perils, torpedoed their own technology breakthroughs with electric cars and, if you want to go back 70 years, collaborated with the oil and rubber companies to stall the development of efficient mass transit in America so that people would have to buy more cars?
Two answers to the first question:
It would be more revolting to use taxpayers' money to bail out Bear Stearns, American International Group, Washington Mutual, Wachovia, Fannie Mae, Freddie Mac, IndyMac and all the other mortgage companies and financiers who brought on the worst world financial crisis in 75 years. They were venal in the extreme while the automakers, at least recently, were only shortsighted and stupid. It is also more revolting to reward banks that facilitated the credit crisis with a tax windfall of $140 billion, which the Bush administration did surreptitiously last month.
Second, it would be more appalling not to rescue the domestic auto industry, the bedrock of what remains of the manufacturing colossus that was the United States and the engine of our victory over the axis powers. As Gen. Wesley Clark said, we could need it again.
You would think that the millions of Americans whose jobs and security depend on the domestic carmakers would be persuasive, but to the Bush administration and Republicans in Congress they aren't. You wonder why they would be philosophical about using public funds for executive bonuses, dividends and acquisitions in the financial industry but be loath to saving a few million first-rate blue-collar jobs.
That, of course, is the answer: union jobs. The demise of U. S. automakers would mean the demise of the United Auto Workers. To these royalists, that would be a symbol easily worth the country's pain. If you have a chance to kick a labor union, why wouldn't you do it? The common refrain the past week has been that the industry's troubles are the fault of the UAW and the companies not standing up to union demands for good health benefits and other perks.
People started buying Toyotas and Hondas instead of the gas-guzzling behemoths made by Detroit because GM's assembly workers got fully paid health insurance? It makes no sense. Even profligate American consumers gravitated over time to better-made and efficient models.
You would think Bush would be more thoughtful about his legacy. It is not likely to happen so fast, but if the collapse of the domestic auto industry is chalked up to Bush's watch, he would be the first president since Hoover to have presided over a net loss of jobs. As it is, the job gain under Bush is going to push 3 million, compared with 22 million during Bill Clinton's eight years.
Congress and the administration extended low-interest loans of $25 billion to the industry in September to help it retool for a new generation of somewhat more efficient cars, but the automakers say it is futile without unrestricted cash to meet payroll and debts in the coming months. It remains to be seen whether Detroit will produce cars that are truly competitive with the efficient Japanese models. GM's celebrated Volt, which will cost more than $35,000 and not improve mileage much, won't do it, but the Chevrolet Cruze might. It would get more than 40 miles a gallon. GM could have done it in the '90s if it had wanted.
The track record on government bailouts has been pretty good — when they're done under Democrats. Clinton's rescue of the Mexican peso with $40 billion of loan guarantees, carried out over the protests of the Republican Congress, worked out well, making money for the U. S. treasury.
After the first oil crisis, Chrysler begged for a $1 billion bailout in 1979 to keep operating until it could retool to make more efficient cars. The much-maligned Jimmy Carter worked out a slightly different deal. The government guaranteed $1.5 billion in bank loans. Chrysler repaid the loans in four years plus $350 million in interest, the U. S. treasury made money from Chrysler stock warrants, and millions of jobs were saved for another generation.
Lee Iacocca isn't running GM, Ford or Chrysler, and the most inept administration in history has made conditions far more daunting, but the stakes are far greater. We should take a deep breath and help the bums.