Auto Bailout--Prolonging Death

It's time once again for the people to speak out, to stand up and tell our elected officials that we are sick and tired of them doing the wrong thing at every turn. The auto company bailout is just one more example of money going right down the drain, and will do nothing in the long run to fix what is actually wrong. Let me explain.

The auto industry is hemorrhaging money at an alarming rate. This is due to a great many things. Most people only want to talk about the lavish salaries of upper management, and that is, in fact, part of it, but it's not the largest part. If the companies were flush with capital, I wouldn't care about lavish salaries, but I certainly don't think that I should have to pay them.

A much larger part of the picture is the UAW. The Union contracts are killing the American auto makers. Just a few examples, $57.00 an hour for assembly line workers, talk about unsustainable! Then you have huge benefit packages. And a huge part is those who have retired after 25 to 30 years in the job, and continue to get paid something akin to their full salary for the rest of their lives, which could potentially be longer than their productive careers with the companies. Some Union contracts actually force the auto manufacturers to pay people that they have no work for to sit home and not work. On top of that, Union contracts won't allow them to make multiple models of car in one plant, so many things have to be duplicated which really shouldn't be, and more importantly, that they can't afford for them to be. And they are duplicated many times for all the many many types of cars that they make.

The sheer number of types of cars that they make is part of the problem too, they would be much better off with a more streamlined product lineup.

But let's also be aware of the Governments role. Once again, we are talking about an industry which is very heavily regulated by the Government. With mileage requirements, and other regulations which are constantly changing, forcing the companies to constantly make expensive changes to their assembly lines in order to keep up. Also, the Government regulations force them to make certain cars, rather than others, without regard to what people are looking to buy, which means they have to put a lot of money into something that they are not going to be able to sell at a profit.

Even if we give them the $25 Billion that they are begging for, all of these things will still exist, meaning that the money continues to flow out far faster than any is coming in, and very soon, the bailout money will be gone, and we will be out the money, and the Auto makers will be right back in the same boat that they are in now. So a bailout is clearly not the answer, at all.

So what is the answer? Bankruptcy. This does not mean that they would go out of business, but it would allow them to reorganize, and to shed some of the Union contracts that are killing them, and to cut back on the lavish salaries and benefits of upper management, and to shed some of their unprofitable products. They could come up with a much more workable and sustainable business model. About the only thing they couldn't do anything about is all the Government regulation, but, hey, one problem instead of several, at least that's something they can work around, but they can't work around it all.

Yes, I understand that some people would lose their jobs, but better a few than everyone. I also understand that some benefits will have to be cut, but again, they will still be able to provide good benefits, just without the gold plating. I understand that Auto workers would have to take a pay cut, but again, better that than no job at all. And I understand that some retirees would lose their pensions, but if a 60 year old has to go get a job, I'm not devastated. The contracts were designed in such a way as to make them ultimately untenable in the long run, so they must be gotten rid off. That is what bankruptcy exists for.

Honestly, is there anyone who can say that they think that the Average American taxpayer should be forced to pay the salaries of people who make several times the amount that the Average Taxpayer makes? Does this make any sense at all?

Let them take the hit. They will come back stronger for it. And let's face it, if they didn't, someone would step in to take their place. In any event, a $25 Billion bailout (which even Congressman Barney Frank has admitted would only be the beginning, and not the total) is not the answer.