Last week, my colleague John Richardson wrote an article titled “5 Reasons to Save the Big Three.” While I do not necessarily believe that a bailout in some form should be ruled out altogether by lawmakers, I do think there are a number of solid reasons to oppose government intervention at this time. So I thought I would offer a contrasting perspective.
Most Republicans are against any bailout based on their doctrinal “free-market” ideology (yes, the same philosophy that got us into this mess with the deregulation of Wall Street investment banks under Phil Gramm during the Clinton Administration). So we know we shouldn’t be looking to that side of the aisle for the moral high ground in this debate. The Democrats, under the leadership of Pelosi in the House and Reid in the Senate, are in a very precarious spot. On the one hand, the Democrats have been given a clear economic mandate by voters to clean up the mess caused by “eight failed years of Bush economic policies.” On the other, the Democrats have some very powerful interests to consider, namely the UAW and its thousands of blue collar voting members in Michigan and the Midwest. This balancing act has caused most Democrats, including Obama, to lean cautiously in favor of some type of federal intervention.
Following the first round of hearings, House Speaker Pelosi said: “Until they show us the plan, we cannot show them the money.” President-elect Obama also agreed that taxpayers can’t be expected to “pony up more money for an auto industry that has been resistant to change.” This week, the Big 3 are getting their second – and likely final – chance to convince lawmakers.
Bankruptcy or bailout? Here are 5 reasons why Congress should think twice before dolling out the money to the auto industry.
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