A few weeks ago, CEOs from Detroit’s Big Three flew to Washington in their private planes asking for $25 billion. They were ridiculed for flying private jets and Congress sent them home, demanding they needed a comprehensive plan to even consider loaning this kind of money to the automakers. They came back yesterday, making the 500+ mile road trip in hybrid cars, with a $34 billion plan. Let’s check out what these plans have to say.
Providing Cars and Trucks People Want to Buy. “
Now that’s a plan I can get behind. I don’t see any reason not to give them $7 billion.
Success in the automotive business is based on product. No element of our Plan is more important than accelerating the development of new vehicles our customers want and value.”
Well, now that they understand that to make a business profitable, they need to make cars people actually want, let’s hand over that $9 billion they’re requesting. Businesses have been succeeding and failing for as long as I’ve been on this planet, and forget the fact that Ford has enough liquidity to make it through the year, as long as the light bulb finally came on…
Taxpayers will be provided with a means to participate in growth in the company‘s share price based on successful execution of the Plan.”
I’ll let George Mason economist Don Boudreaux handle this one:
I remind these executives that each American is already perfectly free and able, with no action from government, to “get a stake” in these companies. Of course, few Americans now choose to do so – a fact that reflects the considered judgment of millions of people that these companies are unworthy recipients of investment funds. If millions of investors, spending their own funds, refuse to invest in GM, Ford, and Chrysler, why should Congress force them to make such investments? Why should we trust that Congress will make wiser investment decisions with other people’s money than these people themselves make with their own money?”
And from G.M.’s president, Frederick A. Henderson:
The first $4 billion is crucial. We wouldn’t have asked for the $4 billion if we didn’t need it.”
That will make the taxpayers feel better. And what about the other $14 billion GM’s demanding? Sure, the Big Three’s plans are more comprehensive than what is outlined here, but it still doesn’t warrant Congress loaning $34 billion and holding taxpayers’ responsible. We’ve argued many times at Heritage that this loan is more likely to extend the status quo rather than lead to reform.
The CNN/Opinion Research Corp. survey found that 61 percent are against the loans, while 36 percent support them. The poll also found 53 percent who said they don’t believe that aiding the automakers would help the broader economy.”
The people have spoken. Comments are open. What do you all think?