Should We, the Taxpayers of the United States of America, bailout Detroit Automakers (GM, Ford and C

I typically don't post "political" items on my blog, however, it's difficult to not have an opinion on the way our elected officials are attempting to deal with our economic uncertainty. I'm not necessarily bashing on just persons in Congress or the Senate, but also they way business leaders and we, as consumers, are handling our current "economic crises."

The most recent activity that truly made me look up from my "daily routines" has been the recent talks on Capital Hill with the big three automakers (and the UAW). Currently, the talks are moving toward a "$15 billion government rescue of the American automobile industry." Although I believe that should actually read "taxpayer rescue," but who's really paying attention anyway?

There are so many facets to this situation that it would be difficult for me to describe each lens I've attempted to look at this situation through. However, on the surface, I truly struggle with how our elected officials can justify pouring taxpayers hard-earned dollars onto a flaming, sinking ship thinking it will help keep it afloat.

Just for curiosity, I threw together a quick, one-question poll asking the question I used in the title of this article and posted the question via Twitter. As of the time I published this article, here are the results thus far:

poll response: 4 yes, 17 no

As one of my Twitter friends said, "if anyone thinks that the answer to bailing out the auto industry can be put into a neat yes/no answer, you're dreaming." I agree with that statement, and yet also think that ultimately, the question begs a yes or no answer. Obviously, if the answer were yes, in any way, shape or form, then conditions must apply ... hence the ongoing talks and negotiations on Capital Hill.

Why is it that we just can't say "No?" What are we to do when other "American" industries begin marching onto Capital Hill? Where's the money going to come from? Heck, where's the money going to come from to bailout the auto industry in the first place? What about the other $700 billion for the financial industry?

I understand these are extremely complex issues and there is no "cure-all" for our economy. However, the current process truly concerns me ... especially when we're about to enter into a new administration that has already promised "more spending" on a wide array of programs.

Just in case you're wondering, for as long as I can remember, I have driven a Ford. I did so for a number of reason, but one of those reasons was because it was an "American" automobile. Sure they may have some foreign parts in them, but what doesn't these days? Recently, I traded in my Ford for a Toyota. I did so primarily because I wanted a more fuel-efficient vehicle and the only hybrid offering in Ford's lineup (or GM's or Chrysler's for that matter) were SUV's. Now, prior to owning a Ford Fusion, I owned 2 different Ford Expeditions, a Ford F-150 4x4, a Ford Bronco (the full sized one) and a Ford Mustang. So, please don't tell me I never did my part. I would have happily traded in my Fusion for a hybrid version ... if there were such a thing.

Again, I understand the issues that the big three automakers are dealing with today are much more complex than whether or not they offer hybrids which compete with Honda and Toyota, but it's also hard to ignore the fact that Honda and Toyota aren't on Capital Hill even though they employ thousands of Americans too. I found it ironic too that Honda was opening a plant the very same day as one of the meetings going on in Washington D.C. I also thought is was funny how Ford and GM said they would sell their corporate jets to save money, most likely because they were "criticized for flying to Washington for the last round of hearings on separate private jets."

I'm concerned about the tens of thousands of employees that have been and will be affected by this. I'm not just talking about the automobile manufacturers either. I know there are tens of thousands of jobs tied to and dependent upon the big three automotive companies. I'm also concerned about the families and children of these people. I'm concerned about my own family and whether or not my 401k will dwindle even further.

For now, I guess all I can do is pray for these employees and their families ... and voice my concerns.


We can't say no for the obvious reasons. It's not just an auto industry, it's a tire industry, windshield industry, interior industry and etc, the list goes on.

If you think I'm just worried about other manufacturers, I haven't even touched on the little people. My Father's best friend bought a GM franchise a few years back (and my father runs the used car section of it), if GM goes under, what the hell happens to his franchise? I personally have no idea, but I know he's stressed a little bit.

I'm not saying that the big 3 weren't stupid. I'm not saying the CEOs shouldn't be held accountable. Nor am I saying that flying in on corporate jets begging for money is kosher.

I'm saying, people need to look at the bigger picture and a simple Yes/No does not allow for solutions to the big picture.
# Posted By Todd Rafferty | 12/9/08 4:27 PM
It should also be noted that the Ford CEO said he'd take $1.00 salary until things got resolved. The other two CEOs didn't and balked at the idea.
# Posted By Todd Rafferty | 12/9/08 4:29 PM
Did I mention I _like_ Ford? ;-)

Thanks for the comments. Great points.
# Posted By Stephen Withington | 12/9/08 4:34 PM
Yeah, my Father, who is confusing me in his old age*, was impressed with the CEO of Ford for stepping up like that.

(*) explanation:
* Grew up with my Father being a die-hard Chevy / Buick fan.
* Suddenly he sold his bar and became a Ford Salesman.
* Is now a used car manager for a GM franchise.
# Posted By Todd Rafferty | 12/9/08 4:37 PM
Part of me would like to see them go beg money from their gas buddies at Exxon Mobil who are sitting on billions of "record breaking" profits as they cry that gas inventory is low!!! Everytime the government asked for cleaner and more fuel efficient vehicles back when they had money in their banks, the auto makers would come back and say that if the government passed any laws that they would raise the cost of vehicles by around $4000 on average, and now they are begging us for money. They knew this was coming when they had money and what did they do? Nothing, but push to people that buying an huge gas guzzler truck was the "cool" thing to own to people that live in the suburbs and cities who never take their cars out of the paved road. As I said, part of me feels that way, because we the people are just as responsible for buying those cars and I believe that companies are entitled to make their profit without harassment, however when these companies impact the people to a point where it's almost an utiltity (why is gasoline not treated as electricity or water???) I think it's up to the goverment to step in before it becomes a burder like right now.
my 2 cents
# Posted By phill.nacelli | 12/9/08 5:13 PM
Did these same automakers (who failed to reinvest the profits of the 90's) ever give any money to the taxpayers? While I understand the greater implications on the economy, it is very frustrating that these companies can do as they please and ignore consumers and policy makers alike, then come running back to the government and taxpayers when the effect of their cause is realized!
# Posted By Daryl James | 12/9/08 5:22 PM
@all: btw, I have no issues with raking these executives over coal.
# Posted By Todd Rafferty | 12/9/08 5:52 PM
Ford has said they don't want to take on a loan right now - good for them. I don't think we should bail out any of them. Let them fail. American auto manufacturers have failed in the past and, whilst not great for anyone involved, it wasn't a disaster for the country overall. Robbing Peter to pay Paul is simply delaying the crash - and potentially making it much worse if the funded companies go under in the end anyway!

The American car manufacturers have ignored the trends for decades and they deserve to fail. Japanese manufacturers are successfully opening plants in America, hiring American workers and are able to turn on a dime in the face of a changing economy (one Toyota trunk plant retooled to produce smaller, more efficient vehicles with no big fuss - a lesson Detroit should have learned years ago!).

Car companies are not comparable to banks. Car companies do not underpin the financial infrastructure of the country in the same fundamental way.

I'm not thrilled that banks needed a bail out but financial stability is important to the health of the country - and other nations have had to bail out their banks too.
# Posted By Sean Corfield | 12/9/08 6:04 PM
I don't buy the 'too big to let fail' argument that keeps getting tossed around. If they are 'too big to fail', then they are certainly too big to keep propped up so that they can fall later on.

Bankruptcy is the real solution here. Let any of the big 3 file for bankruptcy, and I would bed that another (probably foreign) manufacturer would buy their assets out of the bankruptcy proceedings. Yes, there would be a loss, but not a total loss.

While I would have sympathy for the 'average Joe' working on the assembly lines, I would have no sympathy for the UAW who (IMHO) is one of the two largest contributors to this whole mess.
# Posted By Damon Gentry | 12/9/08 7:34 PM
@phill, i agree, i've never thought about the gasoline as a utility perspective. interesting points.

@Sean, i think we're mostly on the same page regarding the big three automakers ...

however, i do beg to differ regarding the comparison to the financial bailout. sure, my investments are suffering (especially since a portion of my 401k is invested in _Global_ real estate) ... yet i think the financial markets are closely related to these big three automakers considering the fact that each of them have a significant portion of their income (or lack thereof) tied to their finance divisions. sure, we as consumers gobbled up 0% interest loans, "employee discounts" and anything else we (the consumers) perceived as "a great deal." but who's to blame here? or what about people who get in over their head with credit card debt and then turn around and blame the bank for giving them the credit to begin with? well, let's turn the tables around here ... who did the underwriting of the loans? who loosened the guidelines to get more consumers on the books? granted, there are a great number of other examples and sure, there are a plethora of mortgage bankers, etc. who truly took advantage of the situation too.

anyway ... i believe these issues are inter-related issues and i should probably save my rant on the financial industry for another time. funny thing is, there are thousands of small community banks and credit unions thriving in this environment right now because they were better positioned to deal with this in general since they typically had tighter underwriting guidelines (with the exception of those banks/credit unions that simply process applications and turn around and sell their loans to larger financial institutions). not to mention the numerous examples of what's been happening with our (the taxpayers) investments thus far into some of these financial institutions ( - think AIG!

@Damon, i'm not sure i buy the "too big to fail" argument either. there are numerous examples of American companies emerging from bankruptcy in better shape than before they entered it.

yes, the UAW has done a great job on behalf of the average auto worker, while placing some pretty interesting (and stiff) rules on the employers. i agree this is a complicated issue and i struggled on whether or not to rant on the UAW's contributions to the current problems. however, i do believe that the executives and those who made the larger strategic decisions to steer the companies in the directions they've chosen do carry a majority of the blame here.
# Posted By Stephen Withington | 12/9/08 8:57 PM
@Damon "If they are 'too big to fail', then they are certainly too big to keep propped up so that they can fall later on."

I totally agree. Whenever this happened to the financial institutions, I heard commentators saying "rip off the band-aid quick and get it over with". It's the same with the auto industry.

Let's not forget that business is cyclical in nature and that some of the weaker parts may need to be killed off in order to make way for future and better progress.
# Posted By Daryl James | 12/9/08 9:04 PM
I'm just wondering if NOW is the perfect time to let the Detroit 3 fail. I mean, the economy is a mess already, and no doubt, the pain would be severe - in the short term. People will still need cars, and Toyota/Honda/Nissan can't fill the void totally.

A basic principle of capitalism is that the void will be filled - someone will purchase the assets and create new cars. Only those who do a good job of it will succeed.

Still, thats easy for me to say, half a continent away from Michigan!


# Posted By David | 12/10/08 8:51 AM
btw, i'm leaving the poll open for now if you're interested in casting your vote:
# Posted By Stephen Withington | 12/10/08 9:47 AM
No if you want to stand on your principles. Yes if you don't want your car industry and economy to go down the drain.

That being said I think that should go after the obligatory "Fat Cats" who have been paid these huge bonuses...while the little guy is suffering.
# Posted By David | 1/30/09 4:27 AM

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