As unsavory as the idea of using taxpayer dollars to bail out private industry is, the financial rescue of American automakers approved Wednesday by the U.S. House is the best of a bunch of bad options.
It seems incredible to call $14 billion a drop in the bucket, but after a $700 billion bailout of the financial sector and a series of other recent costly measures, that's what this package to automakers is. It's a short-term fix that should preserve tens of thousands of jobs through the winter, give automakers time to develop and commit to long-term survival strategies, and allows for a government transition to new leadership that can address more permanent solutions to the crisis.
The House approved the plan late Wednesday on a vote of 237-170. It will take $14 billion in federal money originally committed to helping carmakers create more fuel-efficient vehicles. That was an unfortunate compromise necessary for passage on Capitol Hill and for White House approval. It also is much less than what automakers were asking for - $25 billion initially, then as much as $34 billion.
The bailout plan, which still faces an uphill battle in the Senate, would get money to General Motors Corp. and Chrysler LLC in a matter of days. It would create a "car czar" who would be appointed by President Bush and would issue the loans and have the ability to pull them back if automakers fail to cut deals with labor unions and creditors to become more viable.
The government intervention and control is concerning, as is the potential for the companies' hard-working union employees to take the fall with crushing contract concessions. The deal weakens commitments to environmental efforts and shifts dollars away from a necessary transition to more fuel-efficient vehicles. And the $14 billion won't prop up for long GM and Chrysler, which are losing money at staggering paces. Ford Motor Co. says it has enough cash to get through 2009.
There are many drawbacks to the measure passed last night in the House. But something must be done, quickly. The evidence of that was in an Associated Press story that was published in Wednesday's Times. It detailed how inaction in Washington - essentially letting the automakers slip into bankruptcy - would prove equally costly to taxpayers. Those costs would come from lower tax collections by governmental bodies at all levels, and the payment of extra unemployment, pensions and other benefits to unemployed or retired auto workers. Not to mention the economic and societal strains on communities that would suffer thousands of job losses.
The Center for Automotive Research estimates that if the Big Three automakers stopped making cars next year, but returned to 50 percent production levels in 2010 and 2011, it still would wipe out nearly 2.5 million jobs next year.
That's why, as unpopular as an automakers bailout is, it is necessary. The Senate should pass the current measure, and the president should approve it.
Then, immediately after the presidential inauguration and the arrival of new members to Capitol Hill, Washington must work with automakers to develop a long-term strategy that preserves jobs, and makes America a world leader in developing fuel-efficient and electric vehicles.
It seems incredible to call $14 billion a drop in the bucket, but after a $700 billion bailout of the financial sector and a series of other recent costly measures, that's what this package to automakers is. It's a short-term fix that should preserve tens of thousands of jobs through the winter, give automakers time to develop and commit to long-term survival strategies, and allows for a government transition to new leadership that can address more permanent solutions to the crisis.
The House approved the plan late Wednesday on a vote of 237-170. It will take $14 billion in federal money originally committed to helping carmakers create more fuel-efficient vehicles. That was an unfortunate compromise necessary for passage on Capitol Hill and for White House approval. It also is much less than what automakers were asking for - $25 billion initially, then as much as $34 billion.
The bailout plan, which still faces an uphill battle in the Senate, would get money to General Motors Corp. and Chrysler LLC in a matter of days. It would create a "car czar" who would be appointed by President Bush and would issue the loans and have the ability to pull them back if automakers fail to cut deals with labor unions and creditors to become more viable.
The government intervention and control is concerning, as is the potential for the companies' hard-working union employees to take the fall with crushing contract concessions. The deal weakens commitments to environmental efforts and shifts dollars away from a necessary transition to more fuel-efficient vehicles. And the $14 billion won't prop up for long GM and Chrysler, which are losing money at staggering paces. Ford Motor Co. says it has enough cash to get through 2009.
There are many drawbacks to the measure passed last night in the House. But something must be done, quickly. The evidence of that was in an Associated Press story that was published in Wednesday's Times. It detailed how inaction in Washington - essentially letting the automakers slip into bankruptcy - would prove equally costly to taxpayers. Those costs would come from lower tax collections by governmental bodies at all levels, and the payment of extra unemployment, pensions and other benefits to unemployed or retired auto workers. Not to mention the economic and societal strains on communities that would suffer thousands of job losses.
The Center for Automotive Research estimates that if the Big Three automakers stopped making cars next year, but returned to 50 percent production levels in 2010 and 2011, it still would wipe out nearly 2.5 million jobs next year.
That's why, as unpopular as an automakers bailout is, it is necessary. The Senate should pass the current measure, and the president should approve it.
Then, immediately after the presidential inauguration and the arrival of new members to Capitol Hill, Washington must work with automakers to develop a long-term strategy that preserves jobs, and makes America a world leader in developing fuel-efficient and electric vehicles.
