The Big Three’s Plans for Change
Posted December 3rd, 2008 at 5.30pm in Enterprise and Free Markets.
A few weeks ago, CEOs from Detroit’s Big Three flew to Washington in their private planes asking for $25 billion. They were ridiculed for flying private jets and Congress sent them home, demanding they needed a comprehensive plan to even consider loaning this kind of money to the automakers. They came back yesterday, making the 500+ mile road trip in hybrid cars, with a $34 billion plan. Let’s check out what these plans have to say.
Providing Cars and Trucks People Want to Buy. “
Now that’s a plan I can get behind. I don’t see any reason not to give them $7 billion.
Success in the automotive business is based on product. No element of our Plan is more important than accelerating the development of new vehicles our customers want and value.”
Well, now that they understand that to make a business profitable, they need to make cars people actually want, let’s hand over that $9 billion they’re requesting. Businesses have been succeeding and failing for as long as I’ve been on this planet, and forget the fact that Ford has enough liquidity to make it through the year, as long as the light bulb finally came on…
Taxpayers will be provided with a means to participate in growth in the company‘s share price based on successful execution of the Plan.”
I’ll let George Mason economist Don Boudreaux handle this one:
I remind these executives that each American is already perfectly free and able, with no action from government, to “get a stake” in these companies. Of course, few Americans now choose to do so – a fact that reflects the considered judgment of millions of people that these companies are unworthy recipients of investment funds. If millions of investors, spending their own funds, refuse to invest in GM, Ford, and Chrysler, why should Congress force them to make such investments? Why should we trust that Congress will make wiser investment decisions with other people’s money than these people themselves make with their own money?”
And from G.M.’s president, Frederick A. Henderson:
The first $4 billion is crucial. We wouldn’t have asked for the $4 billion if we didn’t need it.”
That will make the taxpayers feel better. And what about the other $14 billion GM’s demanding? Sure, the Big Three’s plans are more comprehensive than what is outlined here, but it still doesn’t warrant Congress loaning $34 billion and holding taxpayers’ responsible. We’ve argued many times at Heritage that this loan is more likely to extend the status quo rather than lead to reform.
The CNN/Opinion Research Corp. survey found that 61 percent are against the loans, while 36 percent support them. The poll also found 53 percent who said they don’t believe that aiding the automakers would help the broader economy.”
The people have spoken. Comments are open. What do you all think?
- Author: Nick Loris
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December 3, 2008 Danny, Ohio writes:
I listened to the press conference today in Maryland with Chrysler and the Auto Dealers Association. I am definately against the loan, however they did bring up some good ideas about tax incentives for car purchases through the end of 2009. Once again allow the tax deduction on a car bought before 2009, and deduct the interest, and eliminate or cut the sales tax.
It sounds to me as if the Big Three are trying to lure in buyers now, with cars and trucks that will be obsolete in 2010. Does that make any sense? Re-tooling for Hybrid’s?
I think the Big Three need to get back to promoting the American Worker, and the Made in America brand. Get labor and management to cut wages and benefits, and lets build trust in our own products again. A major ad campaign to Buy American. I would, I think many of us would.