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Representative Thaddeus McCotter one of the few informed voices on the automaker bailout

12.06.08 | technician | In auto, bailout

I realize that this is now my fourth post on the automaker bailout but I believe there is still a lot of misinformation out there. Yesterday Representative Thaddeus McCotter spoke again and I believe he made some very important points. First of all, the money that would be used for loans to the automakers is money that has already been allocated. It’s not new tax money that we have to come up with. The money is there and it’s going to be spent either way. So denying the automakers a loan does not save the American taxpayers a single dime.

Right now lawmakers are arguing over which pool of money the loans should come from, either the Department of Energy or the $700 billion TARP fund. Democrats and Republicans are fighting over this decision and are currently doing nothing in stalemate. Meanwhile, our economy suffers. We lost over half a million jobs last month. Representative Thaddeus McCotter propose that half the money come from the Department of Energy and half the money come from TARP. That’s because both those sources of money were intended to go towards problems such as this meaning that the automakers qualify for money from both.

The treasury is saying that the big problem the economy is facing right now is the number of home foreclosures. If all of a sudden millions of people lose their jobs because even one of the automakers goes bankrupt I haven’t heard anyone willing to argue that the number of foreclosures wouldn’t go up sharply. So such a loan would help the foreclosure rate.

The domestic automakers have huge research departments and for years now they have been doing research on improving energy efficiency and have used grants from the Department of Energy in the process. If any of the automakers were to go bankrupt years of research would be lost as well as America’s current leadership position in many of these research areas. In other words, billions of dollars will have gone to waste.

One last point I want to make is that many Southern Republican Congressman would selfishly want the domestic automakers to collapse because even though the entire nation’s economy would suffer, even though foreign automakers would also feel the pain, those foreign automakers are currently concentrated in the South and those Southern politicians are hoping that this will only help foreign automakers. They are clearly willing to let the nation suffer so that a foreign company within their state might benefit. Meanwhile, those foreign automakers are getting help from their own governments.

Those politicians try to make it seem like bankruptcy isn’t so bad. But more than 50% of people surveyed have said they wouldn’t buy a car from a company that was in bankruptcy. This would instantly cut more than half of a domestic automaker’s potential market leaving them no way to survive. That’s why bankruptcy is not an option.

Here are my three previous posts on the automaker bailout:
There is no plan B, we still need an automaker bailout
We need an auto industry bailout
Representative Thaddeus McCotter on the auto bailout


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« Saturday: Shop Detroit Midtown
» Ice Cube/It Takes A Nation/ video review