why not have the employees take a five dollar an hour pay cut and LOAN it back to the car dealers. It would give them the incentive to help make it work and show they have faith in the company.
How to Bail Out General Motors
Imposing tough conditions would improve the odds of success and discourage many other firms from seeking costly government handouts.
Published Nov 15, 2008
From the magazine issue dated Nov 24, 2008
Member Comments
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Posted By: contemplative @ 12/19/2008 8:35:55 PM
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Posted By: dwh75051 @ 12/11/2008 9:39:55 PM
Is it GM, Ford and Dodge's duty to tell anyone they should not buy a truck or SUV?
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Posted By: Exmedic113 @ 11/30/2008 6:17:18 PM
GM has way too much production capacity, they have way too many dealers, way too high a union cost, and inept management. They have blown 80 billion dollars in the past 4 years alone. This down turn is not going to be a 6 month, or even a 1 year deal....it may be years....2 or even 3 before it begins to recover. You give them 25 billion no strings attached, and they will be back in 6 months. As sad as it is, bankruptcy is the only way to deal with sooooo many, and such deep issues. A bail out is a band aid on a terminal sucking chest wound. 25 steel manufacturers became three, how many airlines have gone bankrupt, and we think GM is worth saving, simply because of the consequences of bankruptcy are worse? Stupid basis on which to make a decision.
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Posted By: Californio 1 @ 11/25/2008 1:19:02 AM
This whole GM bailout is a bad idea to begin with. The managers over there are inept and have been for nearly 20 years and I see no change in sight or even recognition that they've done anything wrong. Add to this the unions and you have a no win situation, no matter how much cash you hand them. Their management needs to be fired and their unions broken and then and only then we might see some positive change in that company that might turn it around. Until some or all of that occurs we'll just be throwing good money after bad.
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Posted By: davie divergent @ 11/24/2008 5:05:03 PM
Another requirement should be the end of denial about global warming and the need for fuel efficient cars (read: not SUVs and pickups). This also falls into the category of making cars that people want and need instead of just what GM, et.al., want to sell (big, high profit dinosaurs).
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Posted By: martialguy @ 11/23/2008 4:28:59 PM
The economy team needs to look at crisis areas and addresses them head-on one-by-one.
To deal with mortgage default crisis, the government can create a system or agency that allows government to do the following without red tape:
1) Pay off mortgage in for-closures to banks by BONDS
2) Create a BUFFER PERIOD during which these bought-out for-closed property can either: A) be REFINANCED with fixed low interest and payment level that the current owner can manage in the long run or B) be REUSED OR RESOLD while the current owner be discharged of the current mortgage without affecting personal credit history
3) Provide DEFAULT INSURANCE for the restructured mortgages by government's own mortgage default insurance company or agency
For near-bankrupt companies with plummeted stocks; the GOVERNMENT CAN TAKE OVER ONE-THIRD OF SHARES, allows financing for employees to own one-third; and leave one-third for the public
Building roads and promoting green energy are for long term. The more urgent need is to make industries competitive. For instance, it is not efficient for many countries to produce whole vehicles. All automakers are seeing sales plummet due to current global crisis. It is more efficient and competitive for a country to produce an automobile part that is cheapest for the required qualities; such as auto body in the USA, engine in Japan or Germany, upholstery in China. SPECIALIZATION needs to go hand-in-hand with global free-trade because it allows all to grow without impeding competitors??? growth. -
Posted By: RO in Reno @ 11/23/2008 1:14:23 PM
When we see the comparisions between labor costs between Toyota and the big 3 two things stand out.
First Toyota hires a lot of part time and contract labor avoiding any benefits, the problem will come thirty years from now when these employees find they are too old to work and have no retirement or health care.
As for the big 3 we see benefit costs about equal to the hourly wage paid. something very wrong with this lack of balance and it seems to be largely in the healthcare costs.
The fact is the cost of health care is out of control and has been for some time.
Fix Health care and a whole lot of America companies would be far more competitive than they are now.
But the Republican stance that everyone should copy Toyota is at best very shortsighted. but thats typical. -
Posted By: Jonalist @ 11/23/2008 7:53:20 AM
Obama is quite satisfied that American Coal will not be a factor in his Natural Gas movement so use of Coal in a Fuel-Cell may be a long while in waiting for the US Government to endorse. By that time the government work published so far may get lost in the Obama Shuffle for finding a way to communicate and protect 5,000 or more large Natural Gas Refill/Electric Charge able parking lots, 100 or more 18-wheelers for each region in the US for transporting government Natural Gas plus those for military organizations, and approx. 500 or more smaller trucks per region for transporting, add to that all the airplanes, helicopters, buses, motorcycles, motorboats, ships, tugboats etc. all Natural Gas fuel type. Then adding costs of all the refilling stations each 100 or so miles for all those vehicles for all the USA makes some pocket change issue a super whopper of a organized labor force which must be US Government.
Congressional Interest in CTL
Previous Congress (109th)
H.R. 4761 - Deep Ocean Energy Resources Act of 2006
H.R. 5965 - Progress Act
H.R. 5653 - Investment in American Energy Independence Act of 2006
H.R. 5890 - American-Made Energy Trust Fund Bill
S. 1920 - Renewable Diesel Standard Act of 2005
S. 2446 - American Fuels Act of 2006
S. 3325 - Coal-to-Liquid Fuel Promotion Act of 2006
Current Congress (110th)
Coal-to-Liquid Fuel Promotion Act of 2007
S. 154
S. 155
H.R. 370
Projected Congress (111th)
Unknown
What is the hush hush in using the supercomputer to resolve the problem issue Congress is undertaking against The 'Big Three' Automakers? Is there some reason why the government does not force them to participate in solving the problem that way? I might ask, what is going to happen to the state of Michigan much less the city of Detroit that depends on revenue by the 'Big Three'? -
Posted By: Jonalist @ 11/23/2008 5:20:31 AM
Obama is quite satisfied that American Coal will not be a factor in his Natural Gas movement so use of Coal in a Fuel-Cell may be a long while in waiting for the US Government to endorse. By that time the government work published so far may get lost in the Obama Shuffle for finding a way to communicate and protect 5,000 or more large Natural Gas Refill/Electric Charge able parking lots, 100 or more 18-wheelers for each region in the US for transporting government Natural Gas plus those for military organizations, and approx. 500 or more smaller trucks per region for transporting, add to that all the airplanes, helicopters, buses, motorcycles, motorboats, ships, tugboats etc. all Natural Gas fuel type. Then adding costs of all the refilling stations each 100 or so miles for all those vehicles for all the USA makes some pocket change issue a super whopper of a organized labor force which must be US Government.
Congressional Interest in CTL
Previous Congress (109th)
H.R. 4761 - Deep Ocean Energy Resources Act of 2006
H.R. 5965 - Progress Act
H.R. 5653 - Investment in American Energy Independence Act of 2006
H.R. 5890 - American-Made Energy Trust Fund Bill
S. 1920 - Renewable Diesel Standard Act of 2005
S. 2446 - American Fuels Act of 2006
S. 3325 - Coal-to-Liquid Fuel Promotion Act of 2006
Current Congress (110th)
Coal-to-Liquid Fuel Promotion Act of 2007
S. 154
S. 155
H.R. 370
Projected Congress (111th)
Unknown
What is the hush hush in using the supercomputer to resolve the problem issue Congress is undertaking against The 'Big Three' Automakers? Is there some reason why the government does not force them to participate in solving the problem that way? I might ask, what is going to happen to the state of Michigan much less the city of Detroit that depends on revenue by the 'Big Three'? -
Posted By: Jonalist @ 11/23/2008 5:09:21 AM
If The 'Big Three' Automakers made their own Steel that would be one certainty to solving their manufacturing problem but CEO's are not trying to resolve issues of inappropriate vehicles and do not make an effort to communicate to the UAW Workers that are doing the work and that is the most important issue cause they are being black listed like Obama wants to blacklist the Coal Industry and formally see that it Bankrupts in no way of seeing it into a world of Liquid CoalProduction for Fuel-Cell use which is not associated to burning Coal and is a cleaner operation. Coal is what fueled the Jet Fuel issue of the military aircraft but the USAF is to cut that by 50% by using a mixture of 50% Natural Gas Synthetic Fuel with Jet Fuel & complete all aircraft usage by 2012 and if all Commercial Airliners do the same that will be another 50% cut in the need of Jet Fuel derived from Coal.
Germany is founding aircraft that will operate on Fuel-Cells preferrably Methane but could easily make them Liquid Coal Fuel-Cells and that could make the production increase. Many Mobile Homes are to be tested in a four different Methane Type Fuel-Cells feature to consider mass marketing possibilities.
However, there is only one Coal To Liquid Fuel (CTL) processing facility planned in America and fourteen under consideration, while China has 400,000 planned by 2025, South Africa has a 150,000 (bpd) Operational CTL Plant, Australia has two CTL Plants the Anglo American/Shell is a 60,000 (bpd) In Planning Stages and Altona Resources plc, Jacobs Consultancy, MineConsult which is 45,000 (bpd) In Planning Stages. One ton of Coal can be processed into 2 barrels of high-quality Liquid fuels. There is sufficient reserve to meet projected demand for electricity and up to 4MM bpd CTL industry for over 100 years. The United States has the most Coal (Millions of Short Tons) (1) Anthracite and Bituminous: 123,834, (2) Lignite and Subbituminous: 143,478.
That is not the problem, what is the problem is other nations that depend on Coal for their Economy will run out before The USA does and then their chatter will be ... 'What America Also Has A Problem Distributing Their Coal To Us'. -
Posted By: Jonalist @ 11/23/2008 4:58:28 AM
The automakers insecure of the $25 billion request could be worse. Congress still seems to be hiding the intelligence capable Supercomputer from all America in solving problems, but how can a problem solve if it is abuse now what is being shown of those that got a problem. I think it would be a issue of seizure to mandate a overseer to the automakers whom can handle the situation as a whole rather than single issues until at least some resolve to their crisis occurs, shrinking corporate jet use is a good direction to take since that one single issue could be playing a larger role as a disadvantage to a CEO's income as compared to other workers & ordinary American's whom cannot deliver their own mail you might say and depend on the USPS ans UPS or FEDx now that DHL is out.
How then can Obama claim victory when his jet size actually increased & so did his use of it esp. traveling to Hawaii so many times, or how can Obama's issue of a Hybrid Government Vehicle Fleet be a good direction knowing that 5,000 or more need a parking multi-level lot with refilling capability for Natural Gas according to his specifications. I do not see how a Hybrid Government Vehicle Fleet would be better than the cheaper direction that Monorail Systems could prevail without all those parking lots for job commuters, grocery shoppers, tourists, and run of the mill Corporate CEO's with nothing better to do than follow the misrepresented mailbag around the world in a jet. But I am not talking James Bond right now thats a UK vehicle Ford seems to have some value left in yet to be distributed. I am a member of The Picken's Plan, my name is Charles jones in case you want to search for me and see what I got up my sleeve. -
Posted By: McLovinB @ 11/22/2008 5:42:21 PM
"Why run these risks when the 6.5 percent unemployment rate seems headed toward 8 percent and almost a quarter of the 10 million jobless have been out of work for six months or longer? Just to satisfy a purist "free market" ideal? "
The answer is simple. America and the American people are a going concern. These companies are not.
The plan you put forth in the article seems like a nuts and bolts approach for lining the pockets of incompetent and overpaid management.
The free market ideal that you dismiss with one sentence is what built America and guards its dreams. GATT, NAFTA, The World Bank... all are intended to advance the ideals of free trade that improve the lot of people worldwide. Or did those treaties and institutions just create a world of suckers for US companies to prey upon? The world is watching, America. Protecting failure is what America USED TO chide and punish banana republics for. Soon, America wll not be able to grant itself MFN status! A LEVEL PLAYING FIELD has been the mantra of protectionists and charlatans for decades when attacking OTHER countries for protecting agriculture or sunset industries.. What will this bailout do for your level playing field? What foreign competitor can put in a call to Washington or any other government and pick up a hundred billion dollars more or less?
Liberal principles? Indeed. First America tricks the world into a war. Now it tricks the world's countries into accepting trade liberalization principles that it cannot adhere to itself.
What does America stand for? Wars? Oppression? Communism? Expedience? Amnesia? Studs Terkel said it is the latter. Hard to argue there.
Here is what America should stand for: Find the bad guys and put them away. Then help the victims. Do not punish the good guys. It is as American as Apple PIe.
Your idea is to take money from the good guys (taxpayers, lenders, Treasury bondholders) give it to the bad guys (management) to help the victims (labor?).
Seems pretty backward to me. Whatever madness Americans might eventually come to accept as a bailout, people around the world will see it as it is: a slap in the face of reason and American principles. -
Posted By: McLovinB @ 11/22/2008 4:47:08 PM
Look. It is this simple. Let me say it slowly. See the Japanese guys over there? Yeah. The ones building new factories, developing new technology, using no government funds, making cars that people want, keeping employees happy, saving the environment, pleasing the consumers. Yeah. Those guys. See them? OK. Now listen Detroit CEOs:
DO WHAT THEY DO!!!!!!!!!!
If you cant or wont, then it is already too late. They will beat you eventually or maybe the Koreans and Indians will because, well, you are incompetent, sloppy, lazy losers. You are the kind of people who fly corporate jets to Washington to ask for money. You make Sarah Palin look like a genius. She pays 150k for clothes, you pay 150k for a seat on a plane, what is the difference?? You have been paid enormous sums to make excuses and stupid mistakes for decades. Go ask Michael Moore if you want the real dirt.
Dont bore me with slogans about competitiveness and tough choices and all of that nonsense. Can you make cars or not? Fish or cut bait. If your business model does not work, FAIL IT. Let someone else use your resources efficiently if you cant. Get your jalopy out of the road!! Schumpeter would have wanted it that way. If the Japanese have built up an advantage of 2000 dollars per car or whatever, they have done it through better processes, better labor negotiations, better planning, better training, better logistics, better marketing, and a better sense of trends, and they did it on the cheap.
Now if the advice above seems, well, harsh to some readers, then you are nice people. You need to be sending money to Nigerian scammers by Western Union. If the advice seems obvious, then let me just add. Wasn't there ANYONE, I mean ANYONE, in Detroit ten years ago, with all the MBAs, JDs, etc. to tell Detroit that things would end badly with outsourcing everything except for the wild bet on SUVs? I bet there were people who warned them. I just bet the CEOs listened to good advice to end the hubris and idiocy.and then.. the CEOs just laughed and laughed and lit their cigars with 100 dollar bills.
Take away their 100 dollar bills.
Give GM to the American people.
Give it to people who can manage it properly for the good of all stakeholders.
Buy all of the stock and give it to workers. Let them work it out or sell the assets in their own interests. -
Posted By: McLovinB @ 11/22/2008 4:41:58 PM
This article misses the point of moral hazard. Keep in mind that this bailout is being used to shore up NOT competitiveness, but the bank accounts of people who fly in corporate jets to claim that they need money. These are the people who made cars that people do not want to buy. They have done it for a long time. Ford's CEO this year had higher compensation than the top 37 Toyota executives combined.
So giving all of these gifts to the BIG3 CEOs who created this situation... What do you want? An encore?
I think that the article gets into the finery of running an auto company that is frankly none of my business. You know what? I dont care. I dont want to be a GM CEO. I dont see why lenders should shoulder the burden of GM's poor decisions. If GM could not produce cars profitably, then why should I have sympathy for people with multimillion dollar salaries? The laborers did what they were told to do. Nuff said. An energy policy? It is called COP6 KYOTO PROTOCOL. Detroit lobbied to keep the US from signing that treaty so they could make their SUVs. Then Bush gave people money to buy them YIppee. The Big 3 should be skewered just for that. Other auto companies in other countries supported the Kyoto Protocol as the the right thing to do. THEY SUPPORTED SOCIETY, not the other way around.
I tell you one thing, the Japanese automakers did not manage their companies with US taxpayer money.
If the US government takes a controlling stake in any of these Detroit companies, I have some advice. Get yourself some Japanese management. You will never need to bail them out. The reason is that they are not helpless whining babies. -
Posted By: Poorboy42 @ 11/22/2008 12:38:41 PM
Labor costs need to be cut. By Lache's estimates, GM's hourly compensation -- wage plus fringe benefits -- totaled $71 in 2007 compared with $47 for Toyota's U.S. plants. Health benefits for retirees (many in their 50s, having retired after 30 years) are expensive. These cost contributed to GM's massive cash drain,$31 billion since 2005. But the United Auto Workers opposes concessions. Government aid, says UAW President Ron Gettelfinger, is needed "so that auto companies can meet their health care obligations to more than 780,000 retirees and dependents." The bailout should be more than union welfare.
I saw this article by Robert J. Samuelson in News Week, and I just wanted to Throw Up!!! Now Retirees get the blame for the GM Problems. Now I would guess that GM and UAW had a labor agreement at one time that included a 30 year and Out clause "I doubt it is still in the labor agreement" But first off this was done at the bargaining table and I am sure that GM got something in return. But I would also guess that a number of these retirees were encouraged to take an early out package which included Medical Health Care as part of their package. (That was my case at Embarq) and now the Media wants to blame the Auto Industry problem on what it cost for retiree health care!
Now don't get me wrong, I personally feel that Labor Cost are far to high in the US Auto Industry and I think that did cause part of the problem.But to blame it on "Retiree Health Benefits" just makes my blood boil. -
Posted By: mail@schoolbusmart.com @ 11/22/2008 9:35:08 AM
Consider these points:
>Why break the backs of the working people (Main Street America?
>Why not go after the billions of dollars that Management has squandered, and continues to pay themselves, and continues to squander?
<Why not make Management return their windfall profits? Houses? Cars? Bank accounts?
<Why not make Management take 25% pay cuts in return for "bail outs" - and no perks- in exchange for keeping their positions?
<Why not use bail outs to employ our Young Adult Geeks out of college to push through new technology and new marketing to turn the American Public???s thinking around to buy environmentally sound and less expensive vehicles? Detroit convinced the public that they needed gas guzzlers. Public opinion can be changed.
<Why not pursue Corporate America for "Crimes Against America" (for their lack of leadership and not taking their fiduciary responsibilities seriously), greed, and wastefulness - and round them up to Guantanamo for investigation for seven or more years?
<Unions have their weaknesses, and like Corporate America union management???s greed must be curtailed, but this country has worked hard to protect labor, without whom a "Free Market" society would not be able to create or accumulate wealth. Without the workers, the rich would not be rich. Working Americans make the goods, buy the goods, and create the wealth that makes the wealthy wealthy. Duh! DO NOT BREAK THEIR BACKS. -
Posted By: mail@schoolbusmart.com @ 11/22/2008 9:23:01 AM
Consider these points:
>Why break the backs of the working people (Main Street America?
>Why not go after the billions of dollars that Management has squandered, and continues to pay themselves, and continues to squander?
<Why not make Management return their windfall profits? Houses? Cars? Bank accounts?
<Why not make Management take 25% pay cuts in return for "bail outs" - and no perks- in exchange for keeping their positions?
<Why not use bail outs to employ our Young Adult Geeks out of college to push through new technology and new marketing to turn the American Public???s thinking around to buy environmentally sound and less expensive vehicles? Detroit convinced the public that they needed gas guzzlers. Public opinion can be changed.
<Why not pursue Corporate America for "Crimes Against America" (for their lack of leadership and not taking their fiduciary responsibilities seriously), greed, and wastefulness - and round them up to Guantanamo for investigation for seven or more years?
<Unions have their weaknesses, and like Corporate America union management???s greed must be curtailed, but this country has worked hard to protect labor, without whom a "Free Market" society would not be able to create or accumulate wealth. Without the workers, the rich would not be rich. Working Americans make the goods, buy the goods, and create the wealth that makes the wealthy wealthy. Duh! DO NOT BREAK THEIR BACKS. -
Posted By: jwag1701 @ 11/21/2008 10:07:35 PM
I "like" how everyone is jumping on how overpaid the workers are. How about the plumbers, heating cooling techs not to metion doctors, lawers, etc. Government bailed out the lendind companies who loaned money to idiots who bought house they knew they couldn't afford.. To the people who commented on how "overpaid" the autoworker is, I can only hope the mismanaged company YOU work for goes bankrupt and you end up in the street where you belong
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Posted By: nunatak @ 11/22/2008 6:52:55 PM
>"Government bailed out the lending companies who loaned money
> to idiots who bought house they knew they couldn't afford."
Yup, the banks financed flippers. Unfortunately this cliche is a patently poor excuse to paint all manner of mortgages gone bad. It's risky enough when a homeowner has to take out a 30 year mortgage. In that time one hopes the value of their home increases, as do their wages, and their equity. No one has a crystal ball which predicts this with 100% certainty. Now as housing values decrease, competent people lose their jobs, and equity is withdrawn to balance personal financial commitments -- 30 years seems like an awful long time.
What's worse is that without a manufacturing sector, how much is a property worth to someone earning minimum wage? Without a large immigration bump, how long before the boomers sell their property to a shrinking population that's over supplied?
Free markets are the ultimate levelers, but what buffers the wild swings of an unregulated market, and the obfuscated drag of a heavily regulated one? It can only be one in the same -- fair, accountable government.
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Posted By: jwag1701 @ 11/21/2008 10:04:52 PM
I "like" how everyone is jumping on how overpaid the workers are. How about the plumbers, heating cooling techs not to metion doctors, lawers, etc. Government bailed out the lendind companies who loaned money to idiots who bought house they knew they couldn't afford.. To the people who commented on how "overpaid" the autoworker is, I can only hope the mismanaged company YOU work for goes bankrupt and you end up in the street where you belong
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Posted By: kitcey @ 11/21/2008 3:48:20 PM
The past 90 years has proven that unions are exactly what is wrong with this country, and now the Democrats want to increase union membership in this country? The mafia, the Democrat, the union leadership, and the lazy worker who can't be fired all stand to gain, while law and order, democracy, the hard working American worker, corporations, and the American financial system will lose from increased unionization.
Detroit, Michigan is the epitome of what is wrong with liberal politics, regulation, high taxes, and unions.
Not a dime for the Big 3. -
Posted By: C. MacLean @ 11/21/2008 3:25:37 PM
Why are we talking about trying to prevent the Big 3 from failing? The auto industry in America HAS ALREADY failed.
The question is how do we minimize the fallout for the American economy and the American psyche.
Suppose the Big 3 declare, not Chapter 11 bankruptcy, but Chapter 7 - complete liquidation, the mother of all fire sales.
Sell off the intellectual property, the patents, the buildings, the land, the inventory - every last bit of it. In the spirit of true American entrepeneurship, some enterprising capitalists will buy up the pieces and in 5 years re-invent the industry in ways we can only dream of now. Mitt Romney comes to mind, as does Lee Iacoca, and even Donald Trump. The brains, chutzpah and money is there - all they need is the opportunity.
Put the proceeds into a fund for the pension/health plans, and if there's any left over, to the stockholders.
Any taxpayer money should go to the communities involved - declare the whole state of Michigan a federal disaster area, just like communties devastated after hurricanes and floods. Appropriate money for unemployment benefits and job retraining - all those idle factories and workers can start churning out wind turbines and nuclear reactor parts. We did it for WWII, we can do it again to bring our energy industry into the 21st century. Again, there are savvy inventors and investors waiting in the wings for just this opportunity.
The auto industry as we know it is history. Hold a wake, let everyone get good and drunk, and then let's bury the dead and move forward.
As Americans we are known for our innovation, our enthusiasm, our work ethic, and our pioneer spirit. We can harness them all, but we need the one item that seems to be in short supply - courage.
If we are truly the land of the brave, let's show the world just what true American spirit can do. -
Posted By: hdeitz @ 11/21/2008 12:46:09 PM
This is clearly the right direction for the gov't to take if it is going to provide financial aid. These guys have been building poor quality, big inefficient vehicles for too many years against the will of the buying public. Why else is Toyota and Honda taking marketshare. The Big 3 are living in the past and should not be freely rewarded for continuing to build non competitive vehicles.
What's next? Maybe the CEO's and executive management teams should help resuce their own companies by refusing to accept salaries and bonues for the next few years.
Chrysler should be excluded from the bailout, loan or whatever they finally decide to call it. We bailed them out once, Mercedes bought them and tried to turn them around with little to no success. Now that they're privately owned thay should go back to the investment community for help not the US Gov't.
Ultimatley it's competition and free enterprise that will push these companies to success or failure.
Let them eat cake!
The UAW hasn't helped by inposing their will on these companies -
Posted By: gjstewart @ 11/21/2008 11:17:37 AM
This is a question as much as a statement so I would appreciate anyone who can enlighten me. Has not governement intervention in the form of a 25% tarrif on imported Trucks and SUVs already sealed the fate of these companies? While I understand the desire to protect high paying jobs with good benefits it seems that the crows are coming home to roost.
If the government encouraged these companies via a tarrif to focus soley on a high value added product (who's value was created largely through a distortion of market forces) it seems odd to think that they can now impose any sort of sensible regulation/terms for loans to help them out of this mess. Clearly the government was attempting to help both the unions and the Big Three to afford unsustainable wage and benefit packages and we are not discovering the back lash of these practices.
I am not defending the management of any of the Big Three and personally believe that letting them succeed to die on their own is the best policy. That being said I am suprised by how little commentary there has been on the government's roll in this mess. To hear congressmen lambast Big Three for poor management strikes me as odd given that the government seems to have set the stage for the Big Three to move into producing SUVs etc instead of more economical cars.
Again, I do not advocate for any help for these manufacturers as I believe they are in an unsustainable position without the kind of debt relief available via bankrupcy.
As I stated at the beginning of this comment, I am by no means certain my assessment of this situation is correct and would love to be enlightened. Given the lack of commentary in this direction there is probably a very obvious counter arguement which I am unaware of.
Thanks
Greg Stewart-
Posted By: McLovinB @ 11/22/2008 7:18:05 PM
Wow. Is that backward.
The government gave the Big3 what they lobbied for time and again.
The government's role? The government's role was bending over backward to give them tariffs, tax breaks for SUV buyers, cheap labor and markets through NAFTA, and a cheap dollar.
With all that, GM STILL STILL STILL could not make a dime.
Blame government? Government was and is Detroit's lapdog.
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Posted By: PeckGrant @ 11/21/2008 9:13:31 AM
When a government bailout comes to mind most people think billions of dollars going to already rich CEO's. This is not the case. If it were the case it would be highly illegal, and then the bailout would not work as planned and they would still go under. My thoughts are that the government does not need to help out the big three whatsoever, and what happens will happen. There will be new auto makers to take GM's place some possibly being Honda and Toyota. I think there will be a shift in the way we look at cars. They will become cheap, safe, and fuel efficient. Cars will be simple, and functional.
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Posted By: abcdefg@ymail.com @ 11/20/2008 8:49:05 PM
The big three are going bankrupt and the goverment is not helping. The goverment has anounced that they will not be helping the big three. I believe this is perfectly acceptable. I say this because the big three need to help themselves before they receive help from the goverment.
The big three auto makers need to do a little budgiting. The budgeting they need to due is cut the wages of the workers. The workers will not like this but, it is either lose your job or take a pay cut. This doesnt just go for the regular factory workers either the leaders of the companies will take a pay cut as well. This will help to solve some of the budgeting problems.
Why would the goverment issue loans to a company or three in this case that have billions of dollars worth of debt. Just ask yourself if you were in charge of a bank would you issue a person with lots of debt a loan. So it is just a bad investment. The economy will suffer but it will get better. -
Posted By: bighappy @ 11/20/2008 8:24:45 PM
Interesting timing. Before elections they argued that they had more than enough cash. Obama could lose the elections if he had announced his bail-out support.
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Posted By: McLovinB @ 11/22/2008 7:17:22 PM
Both candidates were asked pointedly by a sneaky bunch of Detroit lobbyists if they would support the automobile companies.
Both candidates said
Yes. Yes. Yes Indeed.
Hey. Wouldn't you?
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Posted By: fanof41 @ 11/20/2008 2:16:43 PM
Thank you, Mr. Samuelson, for articulating my thoughts exactly -- but far better than I could.
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Posted By: fanof41 @ 11/20/2008 2:15:38 PM
Thank you, Mr. Samuelson, for articulating exactly what I've been thinking about this! I've appreciated your writings for many years now. Your book, "The Good Life and It's Discontents", has remained with me ever since I read it when it cam out.
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Posted By: radionation @ 11/20/2008 8:57:22 AM
I belive that the artical is spot on, if this bailout is even possible, whats to say that the companies best minds are not going to have this happen again, maybe following some strict guide lines would help out with the cash crunch and the bailout money, but that can only anger a larger amout of the workers in the unions. Even if the unions allowed this to happend I personally dont see any of GM's employees balancing its chechbook any time soon. Then again bankrupcy is always an option, sure when u get a scrape (or a gash for this matter) it will eventually heal with the proper medicaion and time, but i dont think that America has time for it to heal. Lets think about why for a seconed why GM went under in the first place, bad money management, poor sales, and the erratic gas prices swinging around the personal preference for many of the American buyers, obviously there is a problem with the way GM does business, but in all reason, let the one fall, if your a big business owner and you know that your watching AIG next to you fall under, you better be on your best behavior with your money and how you spend it. So all in all, GM, if it does fall, and the bailout isnt there to cover for it. then so be it, its a fault that they must take, hopefully and eventually our economy wont suck for the next generation behind us.
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Posted By: ballboy14 @ 11/20/2008 8:56:07 AM
The U.S. government is not the best but them having to fix every single financial problem isn't always a good thing. America's economy right now is not very good and one of the main problems is money because jobs these days are very hard to find. GM is in a critical state and I personaly don't want to see them go out of business because my family has worked for GM for several years and most of them have retired but GM has been a good car production company for years. I drive two GM vehicles which are both part of the Pontac branch and they are a 1996 Pontiac Firebird and a 1999 Pontiac GrandAm SE and right now they are both running great for me and my Firebird has got just about 300,000 miles on it but the problem with buying American made cars, trucks, vans, etc. is that they are priced way to high and people can't afford to buy them and also that many of them are not very fuel efficient and that is why people are starting to buy the foreign made vehicles. Now I would like to see GM get the $48 billion that they own and get back the business that they had a few years ago but I know that it isn't going to happen.
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Posted By: Lala_Bug16 @ 11/20/2008 8:55:00 AM
I think that the auto industry is quite mind boggling. They are pretty much the only american cars and now there is a chance that soon they will be gone. We will then have to turn to foreign vehicles. GM is the main big one right now, coming close with bankruptcy and to soon to follow are Ford and Chrysler. That isn't the only issue, there are also going to be millions of people without a job. There have already been many people that have been layed off and soon pretty much everyone will. What is our world coming to? First the banks and now the "Big 3" is going down.
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Posted By: erika911 @ 11/20/2008 8:54:54 AM
I believe that the government should not bail out General Motors. I believe that it is really unfortunate that General Motors is going down the drain. Having this huge problem causes a larger amount of unemployment rates. I think that it is a really important company but I also feel that all good things have to come to an end at some point and time. Nothing can last forever. General Motors should not pick up loans to help bail them out. I think that having GM take out loans will help get them out of bankruptcy but after that point they will have to be able to pay the loans back which may get them into more debt or even the exact spot they are in now.
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Posted By: erika911 @ 11/20/2008 8:54:36 AM
I believe that the government should not bail out General Motors. I believe that it is really unfortunate that General Motors is going down the drain. Having this huge problem causes a larger amount of unemployment rates. I think that it is a really important company but I also feel that all good things have to come to an end at some point and time. Nothing can last forever. General Motors should not pick up loans to help bail them out. I think that having GM take out loans will help get them out of bankruptcy but after that point they will have to be able to pay the loans back which may get them into more debt or even the exact spot they are in now.
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Posted By: gamer_sis @ 11/20/2008 8:52:48 AM
The unions are creating and stimulating this crisis of the Big Three. They will not, and cannot, accept the fact that cuts and wages need to be cut. There is a large difference between the white collar and the working employee, if GM just creates a fairer and more equal pay for both divided sections, then it may help them financially. The government should not have to step in and give them 25 billion dollars, because that will only prolong the inevitable to happen, bankruptcy. If the American government intervenes for one ???big??? company, other businesses will desire compensation or aid in the future, it will create a chain reaction of dependency that is unaffordable. Unions need to decide on two choices, less pay or no job at all.
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Posted By: Rikkardo @ 11/20/2008 8:52:46 AM
I think that we should bail out General Motors. They are a big company that sales a lot of good vehicles. If they go bankrupt there will only be two companies and that could lead to a monopoly. Our government does not want a monopoly. I agree with revhank we should take the money from the other bail out that is being used for bonuses. Why should our tax dollars be used for bonuses when it could be used to bail out a good company. Also our government has bailed out Chrysler in the past. It is unfair to General Motors for us to not bail them out.
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Posted By: drizzleonyou @ 11/20/2008 8:52:29 AM
"Congress demands that companies produce more fuel-efficient vehicles (35 miles per gallon by 2020, up from 25mpg now). But politicians also want low gas prices." I do belive that we need to lower gas prices and reserch more into hybrid type automobiles. With the lower gas prices and high gas milege the demand for more gas would lower. People would be able to drive farther to find jobs or to their current job, this will inturn increase jobs. How? I dont know but it will. But I just hope a smug storm doesnt start to form with all of our new hybrids and lower gas prices because that would suck.
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Posted By: Merideth @ 11/20/2008 8:51:14 AM
The article says that it may be useful for General Motors to go bankrupt, but I don't know if they've thought of the millions are families who are also going though this. Personally, my dad works thereand has for 29 years. He could retire next year, but hes only 49 years old and still has 3 kids to fully put though college. Like everyone eles, never in a million years we thought that GM, one of the largest companies in the world would come to this. In my dad's plant alone, there is over 1,400 people who work there and are greatly effected by this. My families money spending has already greatly decreased, along with many other family's. With everyone spending less money on everything, many small bussinesses will also suffer majoryly. I know that in Michigan, the economy will get worse, especially with the "Big Three" going under. I say that the bailout is a good idea, but its not smart or likely. The automakers is what holds or makes the economy, without them, I can see the economy failing, or going into another great depression someday.
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Posted By: fdklsaflkd @ 11/20/2008 8:50:48 AM
This is not any of the governments business. GM has gotten there self into this mess and they can get themselves out. There are many other big companies that are getting close to bankruptcy, is the government going to help them too? Giving GM, or any other of the top 3 automakers for that matter, would only be delaying the inevitable. They need to have a written plan of how they are going to spend the money before the government should even think about giving them anything. Yes it would make the economy worse then it is, but that is what it???s going to take for them (GM) to learn how to spend money wisely.
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Posted By: Joeymurray @ 11/20/2008 8:49:47 AM
After reading this article i concluded that there was one point in the article that I really felt was strong and really showed how Americans feel about the big businesses. I think that the following quote from the article shows how we should deal with the bankruptcy attempts by other companies "but also???by the sacrifices required???to make the process sufficiently unpleasant." I feel that this would be the best course of action for America because if we just have all of the big companies in America thinking that they can just fail and our government will save them this destroys the base of capitalism in which American society is held up upon.
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Posted By: xhenon @ 11/20/2008 8:49:21 AM
i dont think its a good idea to give more money to these companys because if they were a good business they wouldnt need the bail out. theres obviousely some reson there ding poorly so lets just let them crash then we can put ths money that were giveing them to a more useful and more needed perpose. some stuff we could use the money for is for the war or to make new jobs that will be more useful instead of one thats failing.
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Posted By: aaronw @ 11/20/2008 8:48:40 AM
I think that we should help out GM because of the massive destruction it would do to the US economy. From reading this article I think that we should help out GM because of all the the people that it will hurt. If they did go bankrupt what would we do with the millions of people that will be unemployed? Many other Businesses that rely on GM will be hurt too causing more job loss. Our economy can not take this kind of hit right now, that???s why I think we need to bail the auto makers out. I do not think it is fair that we helped Chrysler back in the 1970's and not help GM today. I think if they made the right legislation the company can be saved without doing major damage to the economy and government.
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Posted By: ajfizzle @ 11/20/2008 8:48:20 AM
I believe that the "Big Three" should not be bailed out. By the United States bailing out the Big Three this could create even more problems for our future. Yes it will be very bad in the beginning and lots of jobs could be lost but over time more and more companies will be expected to be bailed out. If we do not bail out the Big Three than this will show other companies that they must have to sacrifice for their actions and if they got to far in debt and can not get out it is their fault. So in the future this will help the economy grow and be strong because they will not rely on the government for help when they get in trouble. The companies must learn from their mistakes.
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Posted By: Sk8erChiks13@aol.com @ 11/20/2008 8:46:14 AM
In my opinion the bail out might not be the best idea out there. If the govrnment gives GM a loan it will not even save all of the company and jobs are still going to be lost. The government needs to take that money and give it to every eligible American over the age of 18. This way the citizens will spend their money on something to help stimulate the economy. If an American citizen in Michigan has several thousands of dollars laying around they are either going to buy something to help the economy. Health Care, New Vehicle, House Morgage, or several goods. Either way the money is going to some part of the economy, if they buy a new GM truck more power to them they just help out GM with their debt. Slowly but surely, I believe our parents tried to teach us that growing up, yet no one uses it anymore.
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Posted By: Christina6103 @ 11/20/2008 8:46:11 AM
With General Motors' $48 billion dollar debt already, it is unreasonable for them to expect the government, in this economic crisis, to bail them out. As a company, it is their responsibility to make sure that they are doing everything possible to meet the consumers' demands and make the company run smoothly. If we were to loan General Motors the billions of dollars they need, we would be setting an example for every other company. It would give off the impression that if someone else was doing poorly, we would save them, too. GM needs to take responsibility for their failure and fix it fast, or face the consequences. That is how the world works, and they should not expect anything different. I especially disagree with the bailout if it entails using taxpayers' money. That, our country cannot afford, and it is not our responsibility to make up for GM's loss.
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Posted By: johngorveatte @ 11/20/2008 8:45:34 AM
The Big 3 must have some sort of government aid to keep our local and national auto industry alive. First, I feel it sad that a "rescue plan" is needed for our economy in the first place. Now that we are talking about the Big Three (especially GM), this issue becomes personal. Living in Michigan, these companies that fuel our state/local economy, these unemployment cuts will affect thousands of jobs and families throughout the state. These proposed changes would not only cripple Michigan's industry but also obliterate many suppliers throughout our nation. Also, the fact that this economic crisis is now in the hands of a new President, the situation becomes a larger one. His resistance to some of the changes that need to be made could become an issue in Congress and in the White House.
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Posted By: America22 @ 11/20/2008 8:41:48 AM
sss
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Posted By: revhank @ 11/19/2008 4:41:14 PM
Let's retrieve the $14 billion from the Wall Street bail-out that's going directly to executive bonuses and give that to GM. Then let them get the other $11 billion they claim to need from the Russian government. Since they seem to be moving a great deal of their operation there, Mr. Medvedev might be glad to help them out.
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Posted By: jonesie1984 @ 11/19/2008 3:47:08 PM
I'm not so sure the government fixing every financial mess is a good thing. America is a nation built upon ingenuity. If we don't have the bright minds to lead companies into the future, it's only natural that they should crumble. Nothing lasts forever. Unfortunately, as a nation we are starting to resemble ancient Rome. The average person lives quite reasonably in America.
The auto companies must become more resourceful in their production. Creating new products that are affordable and oriented with the future will be crucial. I'm not opposed to the government protecting our market. Why not impose taxes on imported vehicles? To my knowledge, this is not happening, or happening enough. There should be some sort of incentive in buying an American-made vehicle, providing that Big 3 Auto puts out a product we need and want. -
Posted By: kel0606 @ 11/19/2008 1:48:27 PM
I think this has sparked so much controversy because of this feeling that the auto industry is so representative of America -- their failure is America's failure. What if Wal-Mart, the world's largest private employer, was in trouble? Many of their suppliers surely would go out of business without Wal-Mart, so I would argue that would be even more far-reaching than a failure of GM. Would you support a government bailout for them out, too? Can you imagine the ROARS of disapproval over something like that? And it's a slippery slope. How much impact does the failure of your company have to have to ask for a government bailout? Detroit got themselves in this positon, andthey need to get themselves out of it, WITHOUT government intervention.
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Posted By: tired and old @ 11/19/2008 11:23:16 AM
OUR GOVERNMENT IS AS SCREWED UP AS THE AUTO INDUSTRY.
POSTAL EMPLOYEES IN MAJOR CITIES WORK UNDER EXTREME PRESSURE, MANY TIMES IN HOSTILE WORK PLACES. NEW EMPLOYEES GET TREATED LIKE C R A P. TRAINING FOR A POSTAL WORKER IS A JOKE. POST OFFICE MUST HIRE VETS, THAT HAVE SERIOUS MENTAL PROBLEMS. REMEMBER THAT SOME WORKERS SHOOT UP THEIR WORK PLACE AND FELLOW WORKERS.
POSTAL WORKERS GET HIGH PAY ; UNFORTUNATELY, THE POSTAL SERVICE NEEDS MORE EMPLOYEES TO REDUCE HEAVY WORK LOADS.
GOVERNMENT ANSWERS PROBLEMS BY RAISING PAY AND RAISING THE PRICE OF STAMPS, THIS DOES NOTHING TO REDUCE WORK LOADS. -
Posted By: pete305 @ 11/19/2008 7:51:22 AM
if we are to change the pay structure for the american workers ,we have to start at the top and align them with the Japanese first, then we can work down to what everybody wants to blame, those horrible union guys who have set a higher standard for all blue collar workers, no matter if you belong to a union or not you have benefited and you will suffer along with them, so wish whatever fate you like.
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Posted By: sprintmusic111 @ 11/19/2008 3:24:47 AM
Watch the film "Who killed the Electric Car" . These guys sold out to the oil companies and the dealerships at the expense of YOU and I, just to protect their bottom lines but screwed us in the long term. I know that without the bailout it could be catastrophic to our economy, but they screwed the tax payer you and I to make themselves rich and now they want us to bail them out. WHAT A JOKE! Watch the movie make your own conclusions you WILL SEE that they deserve EVERTHING they get.
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Posted By: sharkman @ 11/18/2008 10:29:41 PM
Our elected officials have no right to spend tax dollars on any publically traded companies.If they cannot build a product that sells then you loose.File chapter eleven and start over.I do not think they can be bailed out GM is a sinking ship let it sink.Before the government gives tax dollars away like there free go ahead and post all of the automakers white collar workers sallaries and let Joe public see the real problem.In five years this country has lost millions of construction jobs but no bail out for us. The idea of these idiots with more money to throw into thier own bank accounts is utterly rediculous and an end of our system.
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Posted By: George Summers @ 11/18/2008 9:06:47 PM
The Us public needs to buy Chrysler outright, after union, management, and creditor concessions. Pay GM for its entire "Volt" electric vehicle organization, patents and research, including plans for the original EV" of the 1990's. Merge this with Chrysler to vorm "Volts Bargains of America" and get our EV mrket rapidly implemented at affordable prices.
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Posted By: George Summers @ 11/18/2008 9:03:07 PM
The US public should buy Chrysler outright, and buy ALL of GM's holdings, patents, and people, after labor, creditor, and management concessions. The combined assets would become "Volts Bargains of America" and the US EV market could be rapidly launched.
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Posted By: firemanprado @ 11/18/2008 7:12:22 PM
I think we should loan 35 billion dollars on the condition that every car they sell under that name ford ,chrysler,gm is built in the united states ,all the new plants retooled for more fuel efficiant cars is also built in the united states including the parts, just think what kind of jobs that would creat plus bail out money to families to refinance there houses to lower there paymentsl ,so they can buy cars from those working americans .then let the auto companies finance and warrantie those cars that should make them turn out some better viechicles if they own part of them through finance
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Posted By: bighappy @ 11/18/2008 10:27:11 PM
It will gurantee 50% cost increase for every car (american labor, especially unionized, is expencive). You can calculate the consequences.
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Posted By: harpcm1 @ 11/18/2008 6:19:52 PM
Dear Sir,
I read your article about the GM bailout and I have one question for you. Are you being willfully disingenuous or are you just plain ignorant? First of all, it's highly problematic when a vastly overpaid millionaire "journalist" criticizes auto workers for being over paid, and by implication, lazy. I worked on GM's assembly line in the 1980s and I still bear the physical injuries, such as carpal tunnel syndrome in both arms and a repetitive motion shoulder injury which causes tremors in certain positions. I knew coworkers who, after 25 or more years on the line had deformed bodies attributable to their jobs. And you, in your overpaid "wisdom" state they are overpaid, pampered workers? I know if you performed their job for one day, you would be crawling on your hands and knees and crying for your mama. you also conveniently fail to mention that the hourly disparity in American and Japanese auto company's hourly worker benefits are due almost completely to the fact that Japan has universal health care while our criminally irresponsible government does everything to block health care for Americans. Your article is a joke! Not only could i write a better article, I could do it for much cheaper. Once again, don't touch the golden parachutes of the idiot executives whose bad decisions led to the failure of the auto industry, blame it on the workers & let them lose their jobs and pensions! You deserve to be unemployed. A displaced-by-Bush auto worker.-
Posted By: George Summers @ 11/18/2008 10:30:16 PM
In order to deal with a problem, the problem must be acknowledged by the one who must change. Honda of America, nor Toyota, have the union nor management salary and benefit structure that the U auto industry has. Until the UAW is ready to shoulder its share of the blame - and ghange- I say to hell with them!. Give a retooling loan to Honda to go into the "exclusively in the US" Electric Vehicle business and lets put the UAW "tyranny" dynasty to death. It's time. I was an idiot to think there was any chance for reform where this group is involved. "Semper Ridiculous"
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Posted By: bighappy @ 11/18/2008 10:19:43 PM
I understand your problem and appreciate hard work, but Toyota workers feel much less pain and discomfort after day job. because Japanese use robots which unions resisr to implement, constant lack of funds also does not help. Even inside USA Toyota spends 40% of Big 3 on health, depite sky-high USA medical costs (another problem which Obama will not able to resolve by expanding medical insurance, but this is another subject). And becides health care, your salary and pensions are also bigger.
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Posted By: harpcm1 @ 11/18/2008 6:19:09 PM
Dear Sir,
I read your article about the GM bailout and I have one question for you. Are you being willfully disingenuous or are you just plain ignorant? First of all, it's highly problematic when a vastly overpaid millionaire "journalist" criticizes auto workers for being over paid, and by implication, lazy. I worked on GM's assembly line in the 1980s and I still bear the physical injuries, such as carpal tunnel syndrome in both arms and a repetitive motion shoulder injury which causes tremors in certain positions. I knew coworkers who, after 25 or more years on the line had deformed bodies attributable to their jobs. And you, in your overpaid "wisdom" state they are overpaid, pampered workers? I know if you performed their job for one day, you would be crawling on your hands and knees and crying for your mama. you also conveniently fail to mention that the hourly disparity in American and Japanese auto company's hourly worker benefits are due almost completely to the fact that Japan has universal health care while our criminally irresponsible government does everything to block health care for Americans. Your article is a joke! Not only could i write a better article, I could do it for much cheaper. Once again, don't touch the golden parachutes of the idiot executives whose bad decisions led to the failure of the auto industry, blame it on the workers & let them lose their jobs and pensions! You deserve to be unemployed. A displaced-by-Bush auto worker. -
Posted By: tired and old @ 11/18/2008 5:31:35 PM
EMPLOYEES WHO WORK IN THE AUTO INDUSTRY WILL ATTACK FELLOW AMERICANS FOR BUYING FOREIGN CARS THAT ARE GOOD ON GAS MILEAGE.
THESE SAME EMPLOYEES GET EXTREME PAY RAISES FOR MAKING INFERIOR PRODUCTS.
SOMETHING TO THINK ABOUT ! -
Posted By: truthorlier @ 11/18/2008 3:59:28 PM
Pres elect Obama campaign promised" he would not give any tax breaks to companies shipping jobs overseas." Well, Mercury Milan has a transmission made in Japan and 40% parts made in Mexico and 40/50% in Canada/US; AND cars are assembled in: MEXICO !!! So, he must rescind all tax breaks to the Big 3 before they get any bailout loan!! And Chevy is made in CANADA. DUH!!! Lier liar pants on fire!
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Posted By: tired and old @ 11/18/2008 5:26:58 PM
WHAT IS A LIER ?
A BIT PREMATURE ON THE PANTS ON FIRE THING !
OH ! WELL.
I GUESS A MAN IS GUILTY BEFORE HE THINKS OR ACTS OUT THE CRIME ?
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Posted By: truthorlier @ 11/18/2008 3:55:21 PM
Pres-elect Obama promised he "would not give any tax breaks to companies sending jobs overseas!" Well, Ford, Chrysler and GM have cars and parts made in Mexico, Japan and Canada. So if he is credible, he must cut all tax breaks to the Big 3 BEFORE any loan!
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Posted By: tired and old @ 11/18/2008 2:56:15 PM
NEWS FLASH !
THE FEDERAL GOVERNMENT HAS DECIDED TODAY TO ELIMINATE ALL TAXES.
EVERY PERSON THAT IS NOT IN BILLIONAIRE STATUS MUST NOW SIGN OVER EVERY PENNY THEY EARN TO THE FEDERAL GOVERNMENT.
EVERY PERSON IN THE BILLIONAIRE CLUB WILL BE LOOKED UPON AS "G O D " AND THUS ENTITLED NOT TO DECLARE INCOME.
EVERY BILLIONAIRE WILL RECEIVE A BAIL OUT FROM THE FEDERAL COFFERS TO COMPENSATE FOR THEIR LIVING EXPENSES.
GREED RULES ! -
Posted By: JerseyGeoff @ 11/18/2008 11:53:17 AM
Instead of a bailout, time for hr 676 the Conyers-Kucinich bill to expand medicare , modified to cover the UAW and retirees.
This is the only sustainable solution thal lets the automakers get back to making cars. Among industrialized countries, only the USA does not have a single payer healthcare system-now the auto industry, like other industries is being killed by health care issues -we cannot continue to try to have an industrial base without single payer care!-
Posted By: txxcc @ 11/18/2008 12:41:57 PM
Honda, Toyota, Nissan, Hyundai, Mercedes, BMW and others all make cars in the US and all provide their employees with HC and pension benefits, same as GM. Yes, GM has a huge number of retirees but they have been paying into their retirement fund for nearly 70 years longer than Honda, et al. The problem is that GM spent their retirement funds, first in the 80's and again in the past 5 years. In the 90's, GM sold its non-core businesses to replenish the retirement fund - Hughes Aircraft, EDS, DirecTv and others - for over $30 billion. The problem is that they couldn't keep their hands out of the retirement funds and now have a problem. They have no retire fund, no more assets to sell (they are trying to sell Hummer - perhaps someone might pay $100m, which GM sends in about 3 days), and huge debt. The legacy costs now have to be paid-for out of operations, not the retirement fund. Don't buy GM's marketing smoke that they have some kind of disadvantage compared to their competition. It is self-inflicted.
Unfortunately, the US government has the same problem. The Social Security trust fund, on paper, has over $5 trillion, but all of that money has been spent (over the past 30 years) as soon as it came in. A single-payer system won't relieve any industry of costs - like Social Security and Medicare, there has to be a payroll tax which both the employer and employee contribute.
The US government hasn't EARNED the right to manage more money. 42 out of 50 states have budget deficits (even before the credit crisis). 24 out of 50 states have underfunded pensions for their civil servants. Social Security is projected to go broke in 25 years, and that assumes the $5 trillion in the fund is actually available, which it isn't. Medicare is in trouble. Medicade is in trouble. Is there any government run program that isn't mis-managed?
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Posted By: urbnsurfr @ 11/18/2008 11:50:36 AM
David Thomas, I believe your idea for universal health care is dangerous, expensive and counterproductive. Government bureaucracies require 2/3 of their funding in order to pay the bureaucracy (look at HUD as a good example, though I haven't check this figure since the 1980s). People won't leave their jobs to start new businesses because they'll need steady income to afford all the taxes to pay for health care.
Your point about the rich wanting to get richer is right, except for one thing: people get rich by taking risks. They take risks based on rewards. If you eliminate 2/3 of the reward through taxes, they are not willing to take the risk. Fewer risks taken means fewer jobs created.
Furthermore, if you give everyone health care for "free" (it costs them but hidden in the taxes), then according to the laws of economics, as cost goes to zero, demand goes to infinity. We'll raise taxes to pay for ever-increasing health care costs, thus reducing the rewards of the entrepreneurs and thus reducing their willingness to take those big risks.
Finally, why do the rich always have to pay for the poor? Do you think the rich steal from the poor? What laws do they break? Why do you reward them for playing by the rules and doing well? You already have to make roughly $80K per year in order to pay "your fair share" of taxes (divide the cost of govt by number of tax payers). If you make less, then some rich guy is already carrying you. Why not have him take over your mortgage payment? Why not have him subsidize your grocery expenses? If you want to climb on the rich guy's back, why stop with health care? Food and shelter seem more important to me....-
Posted By: TruthForward @ 11/18/2008 12:41:32 PM
The rich and poor need each other.
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Posted By: davidthomas@kc.rr.com @ 11/18/2008 11:30:35 AM
The single best move the US government could make to bail out the big 3, stimulate innovation and job creation and get the economy booming is immediately institute universal health care. The first move would be to move everyone onto the US government health plan, then allow vouchers to pay for private insurance which met the same standards. Businesses would all benefit from having health care benefits removed from their costs and new businesses could start up and attract top talent who are now stuck in non-productive jobs because they can't buy health care on the open market - or if they can, it's rotten insurance at an unreachable price.
I know, all you who work in the health care industry find this a terrifying proposal, but everyone knows it must happen. And sooner is better than later. Don't let the perfect be the enemy of the good. Do it now, and if there are mistakes or unintended consequences fix them when they appear.
How do we pay for it? Tax the rich. Don't worry, it's not going to dampen my ambition to get rich. And you know darn well that the rich will still get richer, cause they own the companies that will benefit from reduced employee costs and a healthier employee population. Net result? A booming economy, a healthier nation and in the long run, lower health care costs as a portion of the GNP.-
Posted By: nunatak @ 11/18/2008 2:31:54 PM
... or perhaps tax all shares sold ? if much of Europe and Canada can afford to compete and still offer high quality universal health care, why not the USA? is it too much to request that this burden be removed from the shoulders of the employer and transfered to the engines of greatest income? isn't it government's job to balance disparity? if not .. what are they good for?
when an equilibrium is upset there is usually some short term pain and a lot of squawking. but what we seem to be facing here is strategic change -- not some minor tactical mollifications. the old system has been broken. let's not rebuild it the way it was only to see it fail us again.-
Posted By: bighappy @ 11/18/2008 10:35:53 PM
Health care in USA costs 5 times more than in Europe or Japan. Only way to gradually reduce it - forbid medical insurance, except hospitals care. Obama wants to implement something completely opposite - expand insurance.
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Posted By: LIKEITIS @ 11/18/2008 10:35:25 AM
THE BIG THREE ONLY EMPLOY 355,000 PEOPLE............THAT IS MINICULE IN TERMS OF LACK OF COLLATERAL THAT THE BIG THREE HAVE..............GM IS ONLY WORTH SOMETHING LESS THAN 2 BILLION...............THE 6 MILLION WORKERS TOTAL INCLUDE THE MIDAS MUFFLER PEOPLE, THE AUTO PARTS STORES MOST OF THE FATERMARKET SALES..................ALL OF WHICH, WITH ALMOST NO NEW CARS BEING BOUGHT, WILL BE IN SOUND AND SECURE BUSY BUSINESSES!
HOW ABOUT 25 BILLION DOLLARS OF PUBLIC WORKS PROJECTS FOR THE SLIMY AND TORN UP DETROIT AREA..................MANY OF THE OVERPAID UAW WORKERS COULD DO SOME GOOD FOR THEIR OWN FUNKY COMMUNITY AND MAKE A LIVING AT THE SAME TIME!
THE UAW HAS DECLARED THAT IT WILL NOT RENEGOTIATE, SO..........THAT MEANS THAT THEY ARE READY TO GO THE WAY OF THE AMERICAN GAS GUZZLER...............THE LOGIC THAT UNIONS OFTEN DISPLAY, AND GOOD RIDDANCE!
THE COE OF GM MADE 16 MILLION LAST YEAR, THE CEO OF TOYOTA MADE 903,000..............SAME LOGIC AS PAYING THE UAW WORKS AS MUCH MORE THAT THEY MAKE THAN THE TOYOTA WORKERS MAKE.
GM, FORD, CHRYSLER HAVE EARNED THEIR REPUTATIONS AS NUMB TO THE REALITIES OF BUSINESS, IT IS HIGH TIME THAT A CEO THAT MADE 16 MILLION PER YEAR WHILE HIS SHIP SUNK FADED INTO OBSCURITY (AS IF THAT BASTARD HASN'T ENOUGH TO RETIRE ON) AND MADE ROOM FOR SOMEONE WHO IS WILLING TO ENDURE THE HARDSHIP OF A 1 MILLION DOLLAR JOB UNTILL HE ACTUALLY IS SUCCESSFUL AT HIS CHOSEN PROFESSION!
SAME STORY ABOUT THE UAW WORKERS, IF THEY WERE IN ANY WAY WORTH THE MONEY THAT THEY MADE.............NO NEED FOR THIS ARTICLE!-
Posted By: tired and old @ 11/19/2008 11:35:40 AM
MAFIA CONTROLS SOME UNIONS, UNKNOWN IF U.A.W. IS ONE.
INDUSTRY GIANTS ALWAYS HAVE ABUSED THEIR WORKERS ( EXAMPLE : COAL MINE OWNERS ).
EXTREME, ALWAYS GOES TOO FAR.
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Posted By: TruthForward @ 11/18/2008 10:18:33 AM
Is this supposed to save jobs? Is this supposed to save small businesses?
We have been doing trickle down economics so long (how long..); So long that we don't even know how to do different. This is a trickle down bailout. ...
To help employees, and small businesses... The money must go directly to them somehow.
There is no guarantee that GM won't still file for bankrupcy, or lay off thousands. And frankly, any conditional bailout to GM won't hold water: Because GM can just later claim that the conditions will ruin them. So conditions may not be legally enforcible.
Why don't we.. Make a law that suspend morgage payments for 6 months, the interest will continue to accumulate but
..people will not be on foreclosed; they save money and will survive unemployment longer; they will also have their severence and unemployment insurance moneys so they may survive unemployment comfortably for a year (hopefully they will find jobs sooner). For those who rent, something else can be done.. maybe pay it off for a few months.
Tempararily suspending mortgage payments to banks (they still get interest accumulations) will cost the US Treasury nothing! And will directly help employees who are laid off!
For small businesses, the Treasury can guarantee low interest loans, if the business was in good standing before the crisis. That's direct help, and may also cost the Treasury nothing!
When will the trickle-down myth stop?-
Posted By: jeremyvanholden @ 11/18/2008 2:05:21 PM
That would be an awesome idea except for the fact that if there were no mortgage payments coming in then pretty much all lending would stop. The banks can't make new loans if money from old loans is not coming in. Is that not what we are already learning by the decreased lending due to all of the bad mortgages? How would you like it if you owned a business and the government passed a law that said your customers don't have to pay you for six months. It would probably cause serious cash flow issues and make it impossible to pay your vendors. Then your vendors couldn't pay their vendors. So pretty much you are asking for a shutdown of the entire economy.
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Posted By: austin c @ 11/18/2008 9:09:09 AM
The CNN poll on big 3 fed bailout was 75% No and 30% yes.
In a local ABC TV poll in a deep blue new England state: 69% No, 30% Yes. -
Posted By: tappedout @ 11/17/2008 8:11:42 PM
You can rest assurred a Detroit bailout will occur, but it would be more efficient to pay unemployed auto industry workers directly rather than keeping their companies afloat. By subsidizing the Big 3 we simply forestall the inevitable. The situation is similar to helping the victims of Katrina. The residents of the flooded areas of New Orleans were due relief, no one disputed that. What didn't make sense was to help them return to homes built below sea level, inhabitable only as long as a levee in their back yard held. We accepted blame, built a better levee, paid everyone to move back and promised to pay if it happens again. We would have been better served to use those same dollars to relocate everyone and plant grass where their houses stood, at least never to be faced with that particular problem again.
The situation in Detroit is identical. Taxpayers will provide relief one way or the other. If we don't kill the cancer we will never see the end of bailout requests. The auto industry isn't capable of making the cuts necessary to become profitable, which includes closing plants,cutting executive compensation and eliminating the UAW. Shut them down and watch how quickly enterprising Americans rush to fill the void.
Discuss