Road Test

Alright, $25-billion here, $170-billion there, pretty soon we’re talking about some real money. Everett Dirkson, the late Senator from Illinois with the beautiful hair and even more beautiful voice, assured himself a permanent place in American history with the model for that analysis.

If we are going to socialize the U.S. auto industry, maybe we should just pick one company, let the others sink or swim. They could draw straws, or at least let’s take them for a road test. Here’s my plan. The Big Three from Detroit meet at some NASCAR venue like the Indianapolis Speedway or Daytona. Bring their best cars. Give each car 10 gallons of regular gasoline (up to 10 percent ethanol allowed). Gentlemen, start your engines. Let them drive around the track at Interstate Highway speed until they run out of gas. The last car still moving wins for its manufacturer the honor of becoming the new taxpayer owned auto maker. The others can live or die by old fashioned capitalism. If they can’t survive, let them go the way of the tyrannosaurus rex. Once the tax-payer buys its own auto manufacturer, maybe the government will be able to regulate gas standards and alternative fuel vehicles enough to give the country half a chance of survival beyond the next holiday shopping season.

If the U.S. Congress comes up with an auto industry bailout, Speaker Nancy Pelosi says the plan would require use of existing funds from the $700 billion Troubled Asset Relief Program (TARP) and have many strings attached, including restructuring company finances, meeting new standards for gas mileage and requiring advanced technologies "to compete in the domestic and global market." What about the SUV’s and big macho trucks Detroit has clung to like they could not see it coming? Democrats also said they would include new limits on executive pay at the Big Three auto companies.

Auto executives, corporate clowns and empty suits to the bitter end, are fear mongering and threatening the loss of millions of jobs, added to an economy already crunched by the credit crash. Detroit’s Big Three also provide healthcare benefits to almost 2 million Americans and pension benefits to 775,000. Many politicians and other free marketers believe America cannot afford a collapse in the car industry. Others think, “Taxpayers should not be on the hook for bailing out businesses that have made very bad decisions and deserve to face the consequences.” According to Cato Institute associate director Dan Ikenson, a bailout will just delay the inevitable. “If all three went down and all the parts’ suppliers went down at the same time, yes we are talking about millions of jobs. But that’s not going to happen. What should happen is one of the Big Three should go down and liquidate. Then prospects for the other two would be much brighter. Quite frankly, the US economy could survive without an auto industry. It’s not going to happen, but we could survive. We would not survive without banks or a credit system.”

Congress already set aside $25 billion to help pay for government-imposed fuel-efficiency quotas. This was before the $700 billion TARP. Now Detroit wants a share of the $700 billion intended to bailout the stock markets. Or was it for the failed mortgages? I get confused. The Secretary of the Treasury keeps moving the shell, and I lose track of the pea. I just hope there is still some of the $700 billion left when these lame ducks limp and quack away.

Copyright 2008 by William C. Cotter