Auto Industry Bailout or Bargain?

Posted by: Wed, Dec 3, 2008

I still have mixed feelings about Congress doling out more money to the Big 3 Automakers, but considering what is on the line I would say it is needed. Speaking as a resident of Michigan who has more than one family member employed in some way by the auto industry, Congress must approve some form of help or we are all in trouble.

According to the Center for Automotive Research if the Big 3 go under the country will lose another 3 million jobs. Image the economic impact on our financial system if that happens. In a direct quote:

“Our model estimates that a complete shutdown of Detroit Three U.S. production would
have a major impact on the U.S. economy in terms of lost wages, reductions in social security receipts, personal income taxes paid, and an increase in transfer payments,” said Sean McAlinden, CAR chief economist and the study’s leader. “The government stands to lose on the level of $60 billion in the first year alone, and the three year total is well over $156 billion.”

After reading that it seems $25 million is just a drop in the hat.
Congress vs. The Big 3
The crisis that the auto industry faces is in part their own, but it also has to do with the economic recession that the country is facing. Standard math car sales are down over 40% – that’s a lot of revenue to lose. I do agree with many of the critics, the Big 3 MUST cut unneeded expenses. That does not mean employee wages, they have already been cut by 50% for new employees. That means sell the luxury jets and stop giving bonuses, especially to top execs who already make much more than the middle class American. Eliminate concept automobiles until the economy picks up and profits are there again.

The people of Michigan are glued to the news wondering if they will still have a job at the end of the year. GM alone will be out of money come the end of December and they have already extended the normal holiday shut down for many. With an unemployment rate of 9.3%, we are already struggling to survive in this state residents just can’t afford the collapse of the auto industry.

In favor of the Big 3 – they already have a new labor contract with the UAW that will come into effect in 2010, eliminating legacy benefits that are not needed. They also have new more fuel efficient or hybrid cars that will be hitting the market in 2010, in hopes to increase automobile sales.

In favor of Congress – The Big 3 MUST stop the ridiculous spending. They have to cut unnecessary expenses in order to stay on budget – just like the American families have had too.

Download the Report from The Center for Automotive Research

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2 Responses to “Auto Industry Bailout or Bargain?”

  1. Kenjamin says:

    Dec. 4, 2008

    They got themselves into this mess now they need to get themselves out!

  2. Kelly says:

    Dec. 10, 2008

    “I do agree with many of the critics, the Big 3 MUST cut unneeded expenses. That does not mean employee wages, they have already been cut by 50% for new employees. That means sell the luxury jets and stop giving bonuses, especially to top execs who already make much more than the middle class American.”

    I agree with those statements. The execs need to trim their OWN fat, so to speak. Have you read the GM apology letter to the public, regarding the bailout? If not, you should look it up. It reads like more of a threat than a real apology.

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