The Auto Industry Bailout

The Auto Industry Bailout

“The part of the General Motors (GM) request for money that is very clear is that, in exchange for $16.6 billion, the company will fire 47,000 people…The Administration knows that it has to save GM as part of steadying the economy, but it has put itself into a policy position where killing some jobs is the excuse for saving others” (McIntyre). We see how the economy is affecting all of us every day. Gas is constantly going up and so is the price of all goods. Plane tickets are also on the rise because of this trickle down effect. Automakers are not adjusting their industry fast enough to keep up. GM is still making vehicles that get less than 20 miles per gallon and they wonder why Americans are not purchasing new vehicles. When large companies fall it makes room for smaller businesses to flourish. We should not continue to bail out auto companies because these businesses have had poor business habits and are not continuing to better. If we let this empire fall, then maybe we will have a new industry will rise out of the ashes of the falling industry to meet the needs of the consumer.
Mark Zandi of Moody’s Economy.com told Congress back in December that it could take up to $125 billion to bail out GM and Chrysler. When GM and Chrysler asked for $17.4 billion we had no idea how much more that they would ask for. In addition to the $17.4 billion GM received another billion and now are asking for yet another $30 billion if you add it all up you see that it is nearly $50 billion. According to an article in time.com, “GM says it needs more money for the federal government or it will run out of cash next month” (McIntyre).
The government should let GM sink. Businesses have rise and fall that is the way the economy works.

Instead of bailing out these companies who have no interest in thinking of the big picture of the little guy, maybe we should be thinking of ways that we could invest our precious funds in several businesses that will better the economy and environment in the long run. Perhaps the government could invest in a business that will make jobs for people instead of cutting them. “It may be the only time in U.S. history where the government will pay to put tens of thousands of its own citizens out on the street” (McIntyre). We should not be rewarding bad business habits by giving more money to waste only to see more people suffer. We need to take action in things that will be better now and in the future.
“Analysts believe that GM going into Chapter 11 would put hundreds of thousands of Americans at the car company and its suppliers out of jobs…Congress and the Administration may have to keep GM on life support indefinitely” (McIntyre). That would be a good argument if the company had shown by the government giving them money they could save jobs. However this is not the case, GM still continues to make poor decisions and invest poorly. Instead of CEO salary cuts GM cuts 47,000 jobs. Does America really need to be investing in a company that truly only thinks about profit and not the people who work so hard for them?
After spending billions upon billions in bailing out companies that fail to meet our expectations, are we really going to sit by and watch our government, give more of our money away? We should cut our losses let the businesses go under and make room for more businesses. We should reinvest in smaller businesses that have a chance in doing good and thus creating more jobs. Job loss is going to occur in either situation, it should be on our terms. Fighting for businesses that will in fact work and be better for the economy.


Bibliography

http://www.usnews.co/blogs/flowchart/2009/02/18/9-bailout-surprises-from-gm-and-chrysler.html By Rick Newman

www.time.com GM Bailout: Billions to Put People Out of Work By Douglas A. McIntyre