Toyota isn't bankrupt. Why do they escape? Japan didn't allow US cars in THEIR clunker program btw. Toyota sold more under the US program than anybody else. (Wonder how many of those Toyota buyers want their clunkers back?) But here is something I got in an email not so far from your point of view:
Was The Bailout Of The Automotive Industry During The Financial Crisis Of 2008–2010 Effective? What Would Have Worked Better?
The object of the government’s bailout of the ailing U.S. automobile industry was to save jobs, keep the big three automakers profitable, and help them become more competitive, increasing sales volume, thus contributing to the increased consumption necessary for GDP growth and a healthy economy. As of early June 2009, the Bush and Obama administrations had invested $80.3 billion in direct bailout payments to GM and Chrysler with expectations of the final cost reaching $130 billion dollars. <1> The bailout was ineffective.
GM announced serious layoffs, reducing the number of autoworkers from 96,000 to 45,000 by 2012. General Motors and Chrysler both ended up filing for bankruptcy even after receiving billions in federal aid. General Motors emerged from bankruptcy having laid off 21,000 union workers and closed 12 factories and forty percent of their 6,000 dealerships.<2> Chrysler received a $ 5 billion dollar bailout and was taken over by Fiat.<3> Overall, 2009 had the lowest new car sales in 27 years, about 21% less than 2008. <4> Ford, which did relatively well, took no government bailout; GM and Chrysler took the bailouts, and had awful sales numbers. Prior to the bailouts, Ford was in a stronger financial position than GM and Chrysler, with the strongest product line of the three domestic auto companies, and has heavily invested in improving quality and reliability. <5>
The bailout did not stop layoffs or facility closings, did not increase sales volume, and Chrysler is now controlled by a foriegn corporation. A better use of our taxpayer dollars would have been to have the government use the bailout money to purchase lots of cars and trucks from the big three automakers now, and commit to the purchase of large numbers of the new, fuel efficient, totally American made, vehicles the Big three would agree to produce, along with subsities and tyins to trade agreements with overseas markets designed to increase export sales of American made vehicles. In addition, a direct grant of bailout cash would be used to create an endowment to help fund current and future pension and health insurance obligations for the American automakers’ employees. This would help close the highly publicised gap between U.S. and foreign car company labor costs. Tarifs on imported cars and higher taxes on foreign owned car companies in the U.S. based on wage rates as an incentive for foreign companies to raise wages and benefits to the same levels as those negotiated by the UAW would remove wages from competition, allowing automobile companies to compete based on quality and service. More of the bailout money could be used as incentives to invest in new, green, U.S. based factories and updated equipment in current U.S. facilities, with further cash incentives for innovative research and development aimed at creating new products and increasing quality, rather than for innovations designed to eliminate jobs.
The combination of increased government vehicle purchases; increased export sales; incentives for capital investment in current and new U.S. manufacturing facilites; subsidizing outlays for current and future pension and welfare contributions for retirees, without reducing benefits; use of taxes and tariffs to reduce labor cost differentials; and cash incentives for research and development that rewards companies for designing new products, increasing the quality of current products, while focusing on increasing employment opportunities would all contribute to increased consuption and the desired increase in GDP.
<1> CNN, February 18, 2009.
<2> Source: Bloomberg, “Chrysler Financial to Get $1.5 Billion to Aid Car Sales”, January 19, 2009
<3> The New York Times February 24, 2010
<4>
http://www.carlustblog.com/2010/01/bailout-blues.html<5> Ibid
Robert R. Daraio
Recording Secretary
New York Broadcast Trades Council
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