Why giving the Big 3 automakers (more) money is flat out stupid

We’ve already witnessed in record numbers the reports of misuse and abuse of our $700 billion dollars in tax payer “bailout” money with businesses such as AIG funding lavish retreats and other executives continuing to receive bonuses in spite of running their respective companies into the ground. Not to mention, the sheer lack of accountability in these public companies as to what they’re doing with the money is utterly amazing. Moreover, we’re now seeing several other large companies such as AMEX changing their businesses into holding companies to be able to stand in line for free handouts. What’s more you ask? Well, we’re only hearing about what the government tells us, the bailout has already cost over 3 trillion dollars, not the $700 billion congress sold the American people on.

Now, we turn our heads to the news to see the big 3 automakers are crying for help and Pelosi and President-Elect Obama have willfully obliged their requests for help and are pushing through congress attempts to fund them with an additional $25 billion dollars in help. Additional as in, they’ve already received help back in the late 70’s and early 80’s in a similar manner.

Here are some reasons (if they’re not already evident) why giving out money to these guys is a recipe for disaster and will make things worse than they already are for consumers and workers of those companies:

  • Their tax dollars are being used to destroy their own jobs.
  • These inefficient and failing companies will squeeze billions of dollars from a credit market that would have sent funds to new smaller and much more efficient businesses which will likely create more lasting jobs for the future. Not to mention, it raises the cost of borrowing for all of the workers, from buying their homes to various other purchases.
  • They have already been provided bailout money nearly 30 years ago and they’re back in the same situation.
  • This screws over every other business that has ran efficient and been successful in managing their companies as it penalizes them by rewarding the failures with capital and other resources they would not have had otherwise and it raises costs of borrowing for those efficient businesses. Why would you reward the failures and hurt the good businesses?
  • There are already 100’s of thousands of auto employees whom have been laid off and have been successful in finding new employment. Whether that mean with those other huge car manufacturers here in the US, or other manufacturing companies. You certainly wouldn’t be smart in putting additional pressure on the other guys when they could easily expand and employ this workforce.
  • As the giants crumble, hundreds of new business are created and new opportunities are opened. Allow the new businesses to freely grow, encourage their creation through incentives.
  • This raises the cost of all American cars, as naturally the more efficient car makers would have gobbled up these guys. So, in essence, Americans are paying and will pay more for every car they buy because these companies are rewarded with bailout money.
  • We have no guarantee what they will do with the money, shafting non management employees will be first on their list though when the going gets worse. Don’t count on management to cut themselves until last.
  • These companies have ran themselves in the ground and will simply do the same again, and this time at our expense. They can blame economic conditions or whatever they want, bottom line their ineffective management put them in the situation they are facing. We cannot and should not enable them to do further damage and cause further losses at our expense.
  • We are opening a massive can of worms, soon you will witness more and more companies crying for help, asking for hand-outs, but soon it will be us, when they bankrupt our country.

Combine the above points with the summary of what has already gone on with bailout money for banks and you should have major reason to lobby your senators and representatives in congress (and President-Elect Obama) to kick this stupidity to the curb, and quit enabling the problem to worsen. Seriously people, we are merely delaying the inevitable and costing ourselves much, much more in doing so. Please, put aside partisan politics, use common sense and fight against these guys from adding more to our National deficit in the name of saving what cannot be saved.


(some of these points are paraphrased from this Heritage article)


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