Friday, December 5, 2008

Corker & The Big Three

I’ve got to say Sen. Bob Corker (R-TN) is right on the money when he sums up the situation for Chrysler and Ford.

He says Chrysler just wants a little spending money to stay afloat until it can sell itself off to the highest bidder:

"The fact is basically what your plan is about is that you want to hang around long enough so that you can date somebody and hopefully get married soon before you run out of money," Corker said.


He told Ford Motor Co. CEO Alan Mulally, whose company is not in immediate danger of collapse, that he was just there because Chrysler and GM were asking for help.

As for GM, Sen. Corker has some good ideas and bad.

He gave GM a laundry list of solutions to it’s problems, including offering its debtors 30 cents on the dollar, which is more than they’re getting in the debt reselling market right now. Plus, Corker wants the UAW to cut GM some slack on retiree healthcare payments and unemployment payments above and beyond what the government gives laid off workers.

Well, GM should try to buy back its own debt for pennies on the dollar if it can, and that’s not a bad use for a government bailout check, if it gets one.

Here’s where Corker goes wrong. In this economy, the last thing you want to do is take money out of the hands of consumers, even (or especially) unemployed ones. For one, they’re buying necessities, not frivolities. And for two, we want to encourage all the spending we can.

The second-to-last thing you want to do is take healthcare away from retirees. Either the government is going to end up paying for it, or they’re going to have to go without. Neither is a good thing. And the ones that go without are likely to get sick and cost the government a whole long more money in the long run away.

So that’s two more good things to do with a government bailout check.

I’ve been on the fence on the whole auto industry rescue thing, but Sen. Corker now has me leaning towards a bailout for GM at least. The other two… not so much. Ford says they’re not going to declare bankruptcy either way, so if they’re not even at risk of bankruptcy why the hell do they need bailout? Chrysler’s a goner anyway. Would a bailout help them find a buyer or only give them longer to put it off?

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