by Deb Cupples | In September, Congress approved a $25 billion loan to America's "Big Three" automakers (GM, Ford, and Chrysler) and some supply companies. The purpose: to help those companies build more- fuel-efficient cars: something they could have done over the last 30 years but either failed or refused to do. When I heard first heard about the proposal in August, I found it troubling.
Apparently, that $25 billion wasn't enough. Now, U.S. Automakers are lobbying for another $25 to $50 billion bailout. Reportedly, the Senate will consider it Monday (today).
My question: what do our politicians hope to accomplish? Seriously.
Wanting some idea of what sort of shape the auto industry is in, I looked at last year's Annual Report for General Motors -- which I think is the biggest of the so-called Big Three.
GM's 2007 total net sales and revenues were $181+ billion, and its net losses were $38+ billion (page 46). GM's debt was a whopping $193+ billion (page 227). In December 2007, GM employed 266,000 people (page 15). GM's operating costs were $185+ billion -- about $15 billion per month. (page 51)
That's a huge company with huge costs and debts. What on Google's somewhat-green earth would be accomplished by lending GM $25-$50 billion?
I'm no expert, but isn't that like fighting a house fire with a watering can?
Now consider that not all of the $25-$50 billion would go to GM: the company would have to share it with the other members of the so-called Big Three (Ford and Chrysler).
That said, I seriously wonder what is motivating our Washington politicians to insist on lending tax dollars to our nation's automakers.
The seemingly good news, according to The Crypt, is that House Speaker Nancy Pelosi responded to outraged taxpayers by proclaiming that heavy strings would be attached to any tax dollars lent to the auto industry -- in contrast to the conspicuously weak strings attached to the far bigger bailout of AIG and multiple banks.
My original question becomes relevant again: what can be accomplished by lending even $50 billion collectively to the Big Three?
If the answer is "little to nothing," then why is Mrs. Pelosi even talking about "strings"?
At the risk of sounding repetitive to the point of autism, the big question is: Should Congress lend the Big Three any more money?
I also find it puzzling that attaching "strings" has become the phrase of the month in Washington. We taxpayers have already committed up to $700 billion to the big bank bailout, up to $200 billion to the Fannie and Freddie bailout, and more than $100+ to the AIG bailout.
That's (up to) $1 trillion. That's the sum that should have had heavy legal strings attached. (Just so you know, $1 trillion is about 30% of our nation's annual budget and 10% of our entire national debt.)
Incidentally, I do not believe for a minute -- or even a second -- that most Washington politicians are just too stupid to know that handing string-free money to ethically-unencumbered executives would result in great benefits to us taxpayers and our nation's economy.
UPDATE: At the Wall Street Journal, an NYU professor suggests that GM simply file for bankruptcy protection and reorganize the business. I don't know whether the author is right or wrong, but it's an interesting read.
Memeorandum has commentary.
Other Buck Naked Politics Posts:
* Cutting Executive Pay Would Save Jobs
* Bush "Op-Ed" Riddled with Self-Contradiction & Non-Facts
* More Sleight of Hand re: Bailout Funds?
* Waxman Wants Executive Pay Data from Banks Getting Bailout Funds
* Are Bailout Funds Being Misused?
* Lehman Execs Redistribute Shareholder Wealth (to Themselves)
* AIG Execs Redistribute Shareholder Wealth (to Themselves)
* Execs Made Millions While Driving Companies into Ditch
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