Auto Bailout Still Looms over Taxpayers

Government Watchdog Group Warns against Boondoggles and Mandates

Washington, D.C., December 15, 2008—As the White House today offered assurance to Detroit auto makers that U.S. taxpayers would be made to bail them out of their financial woes, a government watchdog group renewed its warning against the looming taxpayer boondoggle.

“No amount of taxpayer money can save Detroit from its own mistakes or years of heavy-handed government mandates,” said John Berlau, a financial policy expert with the Competitive Enterprise Institute.

“Detroit needs to fix its labor costs, agreements with auto dealers, and other flaws in its business model,” said Berlau. “And the government needs to get out of its way by repealing costly and counter-productive mandates, such as fuel economy standards.”

Instead of a bail out or loan funded by taxpayers, Berlau pointed to other viable options for the industry.

“A Chapter 11 bankruptcy gives the car firms a chance of being restructured into lean, profitable companies,” said Berlau. “Auto makers should really ask themselves if bankruptcy would be any worse than the price of becoming an appendage of Washington in the next conceived bailout.”

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