Federal Aid to Detroit Seems Likely

Discussion in 'Economics' started by poyayan, Sep 18, 2008.

  1. poyayan



    WASHINGTON — After a series of government interventions in the private markets, one seemingly more astonishing than the next, lawmakers found themselves confronted on Wednesday with the question of when and where to draw the line on future aid.

    But with billions of dollars in financial backing already authorized for Wall Street, and with Election Day fast approaching, Congressional leaders seemed uninterested in denying help to large employers of blue-collar Americans.

    Even as lawmakers in both parties unleashed a barrage of questions about the wisdom of a government rescue for the American International Group, support seemed to be growing quickly on Capitol Hill for $25 billion in loan guarantees to assist the ailing auto industry.

    Both presidential candidates, Senator John McCain of Arizona and Senator Barack Obama of Illinois, have voiced support for the loan guarantees — an unsurprising stance given the critical importance of the main auto-producing states, Michigan and Ohio, to the electoral map this fall.

    The chief executives of the three big American automakers — General Motors, Ford and Chrysler — met on Wednesday afternoon with House Speaker Nancy Pelosi.

    When they emerged, they expressed optimism that the loan guarantees would be included as part of a budget resolution that is needed to finance government operations through the end of the year.

    “The support that we got was again very encouraging,” said Robert L. Nardelli, the chairman of Chrysler. “The conversations I have had all day on the Hill have been very encouraging, very candid, very straightforward and so as we conclude the day, I would say it was successful.”

    Alan R. Mulally, the chief executive of Ford, was even more upbeat. “It was a great day,” he said. When a reporter asked what Mr. Mulally might say to people who viewed the loan guarantees as a bailout, he replied in a chipper voice, “I would characterize it as an enabler.”

    Ms. Pelosi sharply criticized the Bush administration on Wednesday over the $85 billion bailout of A.I.G., saying it was evidence of mismanagement by President Bush. But she expressed strong support for the automakers’ loan guarantees, which would be used to help the companies meet new fuel efficiency standards that Congress adopted last year.

    “We see that as a way to rebuild and strengthen the technological base of America,” Ms. Pelosi said at a news conference in the Capitol. “It would certainly help people in the auto industry, but it’s not only about the auto industry, it’s about the auto industry, it’s about our economy, it’s about America’s work force.”

    She added: “We consider this a major investment in innovation.”

    Republican Congressional leaders, too, said they were in favor of helping the automakers. Representative Adam Putnam of Florida, the third-ranking House Republican, said at a news conference that it was up to auto executives to convince lawmakers of the need for government assistance.

    “It’s incumbent on them to make the case to Congress that it is a loan guarantee, that it is a wise investment of taxpayer dollars, and I think that they are on the Hill this week making that case,” Mr. Putnam said. “The reports that I have heard from my colleagues is that they have been fairly persuasive.”

    The Senate majority leader, Harry Reid of Nevada, expressed his own support for aid to the automakers at a news conference on Wednesday morning. Mr. Reid said the loan guarantees, which would cost taxpayers $7.5 billion, were needed.

    “I think it’s extremely important that we try to do something,” he said. “These are jobs. These are cars that we should be selling — or manufacturing in America, not someplace else.”

    Still, some fiscal conservatives reacted angrily to the prospect of more taxpayer money being used to prop up private companies.

    “The federal government’s propensity to bail out failing companies in struggling industries ought to be troubling to all taxpayers,” said Representative Jeff Flake, Republican of Arizona. “Aside from the fiscal impact of spending money that the federal government doesn’t have, these bailouts will likely have the opposite of their intended effect.”

    Mr. Flake added: “Federal bailouts may stave off short-term economic damage, but the long-term economic outlook will be much worse if the market is not allowed to make its own adjustments. While the Bush administration certainly shares blame for these bailouts, this Congress may designate itself as the ‘Bailout Congress’ if we follow through on a rumored bailout of the auto industry.”

    But such skepticism was likely to be overshadowed by the huge stakes in the presidential race. Mr. McCain, the Republican nominee, had seemed cool to the idea of loans for the auto industry last month, but at a campaign stop on Wednesday at an auto plant in Orion, Mich., he sounded like a staunch supporter.

    “It’s great to be here today with the assembly workers of this G.M. plant,” he said. “I’m here to send a message to Washington and Wall Street: We are not going to leave the workers here in Michigan hung out to dry while we give billions in taxpayer dollars to Wall Street. It is time to get our auto industry back on its feet. It’s time for a new generation of cars and for loans to build the facilities that will make them.”
  2. poyayan


    Anyone else want to blackmail the government? Now is the time to do so!! especially if you are in a swing state!
  3. mokwit


    Sounds like some private equity players are beginning to realise that they too made some bad investments and now are claiming their Federal bailout entitlement.
  4. clacy



    In credit card debt? BAIL OUT

    Having trouble paying your student loans? BAIL OUT

    Can't run a profitable company? BAIL OUT

    Make horseshit products that nobody will buy? BAIL OUT

    Can't afford as large of a flatscreen as your neighbor? BAIL OUT

  5. Evil. Pure evil.
  6. poyayan


    Future generation if you are lucky. If not, your tax dollar. It is a zero-sum game. SOMEONE need to pay the piper.
  7. mokwit


    No lobbyist left behind.

    Don't forget the Homebuilders also believe they are entitled to a bailout for building too many homes they now can't sell.
  8. I forgot about the homebuilders, they need a hug too.

    Imo, the gov't has micro regulated every aspect of every business, "asking more" and "mandate" corporate America and "make them pay". We have now have a business climate were no one can make any money, I'm not surprised. There aren't thoughtful considerations to the cost benefit or expense in real productivity.

    One extreme example in the news are oil cos with "obscene" profits. Any politicians asking the oil cos to pony up and fund their health care liabilities or pension? No way, it's not sexy.
  9. TGregg


    Free money! Woo hoo! How about a 100 grand check for everybody? Hey, make it a million! We can all be millionaires! Wow, who woulda thunk that we could just vote ourselves rich!

    Isn't big government great?

    Did you lose money on a trade? At Vegas? At the poker table last night? Call up your Congress Critter and ask for a federal bail out!

    #@^% if this keeps up, they'll have to drive semitractors full of cash all over the country.
  10. mokwit


    Step right up, step right up for the free money carnival. You Sir, you look like a man who mad a bad investment, don't you worry, Dr Bernankes Patent Elixir will alleviate your pain.
    #10     Sep 18, 2008