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Should Congress Bail Out the Automakers?

If Michigan-bred Mitt Romney doesn't think Congress should bailout the auto industry, then the plan to save Detroit might need a set of jumper cables. Mitt wrote today:

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor, and retiree burdens, technology atrophy, product inferiority, and never-ending job losses. Detroit needs a turnaround, not a check.

But not everyone agrees with Mitt's persuasive case. In an attempt to persuade Congress that it must act, the big-three automakers may have given themselves a flat tire. Yesterday, the CEOs of GM, Ford, and Chrysler flew into Washington on private jets (which cost about $36 million each) so they could make in-person appeals for $25 billion of taxpayer money. Looks like first-class wouldn't suit the first-class beggars.

For more on how much the companies spend on private jets, and for some arguments in support of a bailout,

.

ABC News reports that a private jet trip from Detroit to Washington, DC costs about $20,000. Ford's CEO takes the company's private jet back from Detroit to Seattle each weekend, while making $28 million as his annual salary. Meanwhile, thousands of employees get laid off, and the companies are asking the public for billions.

Still, if the car companies fail average Americans, not just jet-setting CEOs, have much to lose. The automakers and their affiliates make up 2 percent of the American workforce, and nearly one million Americans participate in GM's pension program, which would cost taxpayers hundreds of billions of dollars if it collapsed.

What do you think the US government should do?

Source

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Join The Conversation
PeachyKeen19 PeachyKeen19 7 years
You're welcome amybdk, glad you liked the video. I also found what Bill Ackman had to say interesting and I also agree with you about building up infrastructure mentioned by Ackman. All good points. But as so many of you have mentioned I'm also torn, sometimes I don't think the companies should limited aid or none at all. It's bit back and forth.
liliblu liliblu 7 years
I'm not against the loan to the automakers. I believe there should should be a detailed plan for where and how the money should be used. I don't think there is a huge upside to these companies going brankrupt. There are too many jobs at stake. Jill you made great points yesterday. I also think that we should stop comparing the airlines and the auto industry. That comparison does not work.
StolzeMama StolzeMama 7 years
I look at it this way. The government should not be in the business of loaning money. If the big 3 needs a loan, go out and secure one through a bank. If you can't do it than tough noogies. maybe you need merge...
KibzeeLovee KibzeeLovee 7 years
stop bailing out these criminals that knew what they were doing and thought they could get away with it! it's not like the rest of us are swimming in gold while they are suffering. i think it would be best for everybody if we first thought about questions like who will really get the money and what else can they really do to fix this? also why they thought it was a good idea to take their private jets on the way to ask the american taxpayers to bail them out. they truly have some nerve.
Meike Meike 7 years
"What’s more important is that GM has changed dramatically from some of the outdated perspectives that I’ve seen in this thread. We’ve radically restructured our union agreements, and starting in 2010 our workforce will be compensated at levels similar to Honda and Toyota employees in the US, making it easier for us to turn a profit on small cars. We’re creating vehicles that are consistently the best in their class – do some Googling on the Chevy Malibu, the Cadillac CTS, and the Chevy Traverse to get an idea of what I’m talking about. And despite all of the hype about fuel economy, GM brands are among the top in average MPG." Riiiiight, except GM did have a car that outclassed all cars from all companies during its time (1996-1999) and even today's cars. Top in average MPG is laughable when the notion could have been moot today if GM continued their research on electric vehicles. EVs were the direction to go and it should be the direction we strive for today. Yes, the EV1 did cost more to produce at the beginning but as soon as it would have been accepted into mainstream, GM would have seen, not immediate but gradual profit. That goes for any new piece of technology. It's always expensive at first until it's widely embraced by the public. I guess Big Oil threatened GM and won them out of the project. And, no lying about battery technology either.
Meike Meike 7 years
"What’s more important is that GM has changed dramatically from some of the outdated perspectives that I’ve seen in this thread. We’ve radically restructured our union agreements, and starting in 2010 our workforce will be compensated at levels similar to Honda and Toyota employees in the US, making it easier for us to turn a profit on small cars. We’re creating vehicles that are consistently the best in their class – do some Googling on the Chevy Malibu, the Cadillac CTS, and the Chevy Traverse to get an idea of what I’m talking about. And despite all of the hype about fuel economy, GM brands are among the top in average MPG." Riiiiight, except GM did have a car that outclassed all cars from all companies during its time (1996-1999) and even today's cars. Top in average MPG is laughable when the notion could have been moot today if GM continued their research on electric vehicles. EVs were the direction to go and it should be the direction we strive for today. Yes, the EV1 did cost more to produce at the beginning but as soon as it would have been accepted into mainstream, GM would have seen, not immediate but gradual profit. That goes for any new piece of technology. It's always expensive at first until it's widely embraced by the public. I guess Big Oil threatened GM and won them out of the project. And, no lying about battery technology either.
kranky kranky 7 years
Jill- That's a good point, but up for debate. People still bought tickets when the airlines went into Ch. 11. You could make the argument that if GM went into bankruptcy, the price of cars would go down far enough that people would buy them sans warranty. It's all braingames though. No one knows what would happen if the Big 3 goes down.
StolzeMama StolzeMama 7 years
pr at work :P
bluesarahlou bluesarahlou 7 years
Oh I love them amy, I really do ;) I giggle every time I see them!
StolzeMama StolzeMama 7 years
:rotfl: I forgot to take out the spaces haha
StolzeMama StolzeMama 7 years
:r o t f l: embrace the suck
amybdk amybdk 7 years
:headslap: D'oh! Sorry Lesley! (not Lindsey)
Jillness Jillness 7 years
Thanks, Leslie! That was very informative! Another thing about bankruptcy, is that it voids warranties. In products like cars, warranties are essential to get people to purchase them. Unlike the airlines, who could go bankrupt, regroup, and still have people purchasing their services, I don't think that would happen with cars. If GM would go bankrupt for example, people would completely stop buying their cars and they would have no chance to regroup and rise again.
amybdk amybdk 7 years
Thanks for the inside perspective, Lindsey. Much appreciated! Sarah... I thought you liked my white socks with sandals?! Boo!
kranky kranky 7 years
Hi Lesley- Welcome to the board and thanks for providing information and an insider's perspective. I did know about the Union renegotiations, but not about the vehicles you mentioned. It's great to hear about the positive things going on at GM. I hope that your CEO brought this stuff up at the hearing. :) Best of luck.
lesleyhettinger lesleyhettinger 7 years
My name is Lesley Hettinger, and I work in Social Media Communications at General Motors. This is a really important issue, not only for the future of our company but also for the future of our nation, and I really appreciate you guys giving some space to this debate. Here are my thoughts – the Big 3 support the jobs of almost 3 million people throughout the country, and Congressional inaction means that many of those 3 million will lose their jobs. But, I agree with many posters in the thread – jobs alone are not a good enough reason to save GM. What’s more important is that GM has changed dramatically from some of the outdated perspectives that I’ve seen in this thread. We’ve radically restructured our union agreements, and starting in 2010 our workforce will be compensated at levels similar to Honda and Toyota employees in the US, making it easier for us to turn a profit on small cars. We’re creating vehicles that are consistently the best in their class – do some Googling on the Chevy Malibu, the Cadillac CTS, and the Chevy Traverse to get an idea of what I’m talking about. And despite all of the hype about fuel economy, GM brands are among the top in average MPG. I encourage you to checkout this Free Press article... http://www.freep.com/apps/pbcs.dll/article?AID=2008811200422 Just my two cents.
kranky kranky 7 years
:rotfl: Thanks blue!
bluesarahlou bluesarahlou 7 years
You want this one kranky? :rotfl: It's : r o t f l : just take out the spaces! amy...gotta switch it up from time to time...can't always be wearin teva's with socks! ;)
kranky kranky 7 years
Dang it! Just imagine a little yellow person laughing in post #67.
amybdk amybdk 7 years
Someone has a new avatar!!
kranky kranky 7 years
:ha:
bluesarahlou bluesarahlou 7 years
(Testing out my new favorite phrase) I think the automakers need to "embrace the suck".
kranky kranky 7 years
Bloomberg is reporting that the Senate has reached a concensus about the bailout: www.bloomberg.com/apps/news?pid=20601087&sid=a6szHA.vC6Uk&refer=home No details given, though.
popgoestheworld popgoestheworld 7 years
This is a sucky situation and I'm a bit torn. I guess in the end I think we should give the $ but demand all kinds of restructuring etc. Otherwise we'll be giving the money in the form of welfare checks anyway.
kranky kranky 7 years
diadem - no, I don't think it was the sole cause, but GM union workers like to think it is. (Isn't it amazing that the Democratic Party encompasses unionists and environmentalists?) The standards certainly didn't help the industry though. Clearly, I have Northern roots. But I grew up in the South... I didn't realize it, but I guess I'm anti-Union.
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