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Monday, December 8, 2008

A Letter To Virginia Senators Warner And Webb, And Representative Wolf

Another bailout? Another failure in the works? Why won't Congress learn?

If you are from Virginia, feel free to copy this letter and send it in:

Dear [Congressional Representative],

I am writing this letter to ask you to vote “Nay” on the proposed bailout of the Detroit “Big Three” automakers.

While it is true that the American economy has been in a recession since last December, it is also true that we cannot kick-start it by placing yet another burden on the children and grand-children of the American taxpayer, especially a burden of a program that is doomed to failure.

As a case in point, I show you the $700 billion bailout of Wall Street that was supposed to fend off a market crash. Not only was that bailout a complete and total failure, but it saddled a $905 billion debt on our children and grand-children. And even beyond that, the pork that existed in that bill was nothing short of unpardonable. After all, those toy wooden arrows, wheat research grants and subsidies for Puerto Rican rum didn’t do a damn thing to shore up the markets.

And now, the Federal Government wants to make the same mistake again, only this time with Detroit.

There comes a time when you simply must let a business fail. Detroit has reached that time. The legacy costs they have incurred over the years are too much for them to overcome and certainly not worthy of the hard-earned dollars that the American taxpayer will be forced into paying for them.

As a case in point for this, I show you the Jobs Bank program that the United Auto Workers negotiated with the Big Three. In this program, workers are literally paid not to work. How long can any business maintain such a ridiculous policy? It is true that there is talk of “suspending” this program, but that won’t help since it means the program could come back and force more legacy cost on the automakers. It needs to be killed completely along with several other concessions to the UAW that have contributed to the legacy costs that are right now killing Detroit.

The best way to fix the problem is to allow the Big Three to go into Chapter 11 and re-organize. This is the most viable option as is evidenced by the other big automakers in the United States who have plants in California, Tennessee and South Carolina. None of them are in trouble nor are they asking for any kind of bailout nor are they beholden to any labor unions. If the Big Three want to survive, they should look to Toyota, Honda and BMW as models for restructuring.

One last point I want to make. Small businesses all over Virginia are in danger of failing due to the bad economy. Hairdressers are losing business because people don't have the money to get their hair done as often. Garages are losing business because people are putting off auto repair for as long as possible. Painters, plumbers and carpenters are losing business because people are putting off home repairs as long as possible. But despite the fact that small businesses here in Virginia are in danger of failing, no one has been proposing a government bailout for us.

Please apply that same standard to Detroit.

Thank you.

1 comment:

Tarheelman 1993 said...

I like what Lee Iacocca proposed to congress back in 1979 for Chrysler..he requested that the government guarantee loans instead of asking for bailout money. If Lee Iacocca was asking for the 25 billion (or whatever the amount might be), I'd probably give him a chance. The man is brilliant, and he dug Chrysler out of the grave with his expertise.
Unfortunately, I don't see anyone at the big 3 that are even close to the intelligence and forsight as Iacocca.
That being said, I'm not against the government helping an important sector out (I do have a certain "New Deal" mentality--please do not hold this against me), but what has been offered is not helping the auto industry out in the long term. Accountability within the auto sector, and not federal intervention, is the path that needs to be followed. Capitalism will prevail, even if it's painful for this industry in the short term.