I doubt anyone’s surprised that half the country’s asking for bailout money. Once we let the genie out of the bottle, there was little hope of getting him back in quickly.
General Motors, among others, wants the federal government to ride in to their rescue. They say they simply do not have enough cash to keep going.
If we don’t stop this train now it will only get harder to stop. Every industry or company we bail out adds to the momentum of this whole situation; every bailout makes it harder to say no to the next guy.
GM is a great place to stop this, and here’s why:
My first car was a Chevrolet. So were my second, third, and fourth. Last year I bought a Toyota, and I’ve never looked back.
GM is a great place to stop because their problems are largely self-inflicted. Their sales are down because their product is not as good. Yes, credit is difficult to get, and yes, people seem to assume GM doesn’t make fuel efficient cars.
But GM’s cars simply aren’t as good as their competitors. They’ve also allowed themselves to get into a situation where their operating costs are much higher than the competition’s. In short, they’ve made their bed.
Now, I don’t want to see them shut down. Besides the fact that I have family that works for GM, I also don’t want to see their many, many employees out of work.
But would refusing to rescue them destroy the American economy? Probably not. I don’t think it would even destroy GM.
Michael Levine makes a good case in today’s WSJ that bankruptcy would actually help GM fix a lot of its problems. And it would tell US corporations that the feed trough is closing.
Now, there are things the government can do to help GM without writing them a check. Currently GM doesn’t get to play under the same CAFE rules as Toyota. The feds should fix that. As a matter of fact, this might be a good time for the feds to put the CAFÉ increases on pause – maybe even roll them back a tad.
If they just have to spend some money, maybe the feds can use tax credits like were offered for buying hybrids to help “domestic” manufacturers move their vehicles. Maybe they can even buy a few for the government fleet.
Helping them like this would send two important messages not only to corporate America but to all Americans – government charity can only go so far, and there are more ways to help someone than writing them a check.