It doesn’t seem like it would be hard figuring out how to spend $700 billion, but that is exactly what’s happening in Washington. The Big Three automakers (General Motors, Chrysler LLC and Ford) are practically begging for a $25 billion bailout to stabilize their industry, and lawmakers cannot agree on whether they should allow it.
According to the Associated Press, the newest plan was caught up on Capitol Hill Tuesday after Republicans opposed it, stating they didn’t want to take funds from the Treasury Department’s $700 billion financial bailout program.
So far, 20 different companies have received more than $1 billion in bailout relief – each one of them either a bank or financial institution. So why should automakers have to figure out their issues on their own?
The AP report says that millions of layoffs would come should the companies fail. GM CEO Rick Wagoner said the collapse would cause 3 million jobs to be cut during the first year and "economic devastation that would far exceed the government support (that) our industry needs to weather the current crisis."
This is the real problem. Automakers’ issues aside, leaving millions of people without work would be the ultimate catastrophe. Many of the workers also belong to unions that would also struggle to aid 3 million laid-off employees.
This isn’t the first time a major domestic automaker has asked for the government’s help financially. In 1979, Chrysler was given a $1.2 billion loan in order to avoid bankruptcy. The loan was paid ahead of schedule, and the taxpayers actually made money off of the loan.
For this reason, it seems like the smart thing to do for the government – help the ailing companies and receive a profit in the years to come. Should this not happen and the companies file bankruptcy, Congress will end up with the bill anyway.
But, while it’s sure to be written in a final contract should the money get approved, we still don’t know exactly how the money will be spent. The government has already given loans to these companies to help design more fuel-efficient vehicles – something that would likely sell fairly well and give foreign automakers tougher competition – and still they are struggling.
This is a tough decision for Washington and one that could be very costly if not dealt with properly. Let’s hope that the government will take a good hard look at the Big Three and help them come up with the best options. Most of all, let’s hope they find a way to keep the workers employed.
