Whitman news since 1896

Whitman Wire

Vol. CLIV, Issue 10
Whitman news since 1896

Whitman Wire

Whitman news since 1896

Whitman Wire

Support for yet another auto industry bailout

The auto industry is asking the federal government for yet another bailout. Many believe that only GM and Chrysler should be granted the funds because Ford can use their savings to wade through the tough economic times. General Motors and Chrysler, however, do not have the savings Ford has, and both risk filing in bankruptcy court.

Some believe that the next bailout is necessary, yet others believe the companies are asking for another handout.

Sure, Capitol Hill was a little hurried in bailing them out the first time. However, they ask for taxpayer help again since a company that has losses will only incur more loss if not subsidized to spark innovation towards a prosperous future.

The question is not whether or not bailing them out rewards mediocrity and negligence in the boards and upper management of the auto industry while preserving America’s future. The closure of one auto giant would impact the whole nation since the auto industry reaches out to all the states.

When one of the big three goes down, their demise has effects everywhere in the U.S. The auto companies are an integral part of the Midwest’s economy; every state and city has a car dealership and mechanics shop, which rely on the auto industry for business.

The ripple effect could be catastrophic as all the affiliated mechanics and car dealers will be out of jobs which would worsen the economy by increasing unemployment.

Think about all the auto mechanics who will go under, many of whom are even now barely getting by.

Imagine the healthcare catastrophe as one of the largest American employers files Chapter 7 or 13 bankruptcy protections. All the retirees, many who are too old to work   would then find themselves without healthcare protection, placing more strain on an already defunct government system.

The effects of the jobless from the auto companies would also affect the housing market as those unemployed would be unable to make their mortgage payments. The ripple effect would be far greater as the unemployed create more foreclosed homes and make the housing situation worse than its current state.

Lessons can be learned from the 1980 Chrysler bailout, since oil prices were as high in the late 70s as they are now and the UAW was willing to negotiate (about.com).

The Chrysler “K car” came about as a result of the Chrysler bailout, which according to the Chrysler Web site was the car of the decade.
The “K car” began with Plymouth Reliant and Dodge Aries as a lightweight, modest horsepower and the best gas mileage at the time with 26 city/40 hwy mpg (allpar.com).

If the auto companies were to declare bankruptcy, their demise would lead to even worse deterioration of the economy. The nation might lose out on an opportunity to spark American innovation in the future of green transportation.

As a nation, many feel it is not the taxpayers’ responsibility to fix corporate mistakes. However, by punishing corporations, we punish ourselves, the taxpayers. Eliminating an auto company has repercussions across the nations and would affect the communities that we all live in.

The bailout of the auto companies is only in our best interests.

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    Kevin TrosianApr 23, 2009 at 11:07 am

    Why are the car companies getting bailed out, when their industry relies on low interest rates, for auto leases, and treating cars as disposable, as consumers recycle them every 3-5 years? Kevin Trosian, http://tower12.blogspot.com/