An Insult to the American People

Thumbing its nose at the American people, who have opposed a bailout for automakers by a two-to-one margin in public opinion polls, the Bush Administration is pushing a $17.4 billion bailout for automakers General Motors and Chrysler, even though a similar bailout plan was rejected by the Senate earlier this month, on the ground that it would do nothing to fix what ails the auto industry.

Many of the beneficiaries of the bailout are well-to-do special interest groups who have been exploiting American consumers for years but would lose out if the automakers cut their costs by filing for bankruptcy: the United Auto Workers union, whose members receive $70 an hour in compensation (more than double what most American workers earn), and redundant auto dealers who can’t be terminated to cut automakers’ costs, thanks to state dealer franchise laws.

In an insult to voters’ intelligence, the Administration claims that the bailout is merely a loan, which will have to be paid back if the automakers turn out to be “unviable.”   Of course, if the automakers are unviable, they will, by definition, be unable to pay back the massive loan.  The only reason for the loan in the first place is that the automakers are verging on bankruptcy.  The so-called “conditions” that the Bush Administration placed on the “loan” are “non-binding” and a joke.

Even if the insolvent automakers did manage to pay the “loan” back in the event they were found to be “unviable,” it would only be by failing to pay their other obligations, like moneys owed to the auto suppliers who increasingly do most of the actual auto construction in this country — and whose survival is one of the stated reasons for the bailout!

We earlier argued that the Bush Administration’s plan for an auto bailout was illegal, as are some other federal bailout measures in response to the mortgage meltdown and financial crisis.