For better or worse, or whether it’s throwing good money after bad, momentum is building in Washington for an auto industry bailout, much larger than the $25 billion already promised.
Congressional Democratic leaders Harry Reid and Nancy Pelosi are in favor. President-elect Barack Obama has indicated that he is inclined to support some sort of rescue. And Bush administration opposition seems to be weakening.
The Big Three have upped the pressure on Congress and the administration with GM saying last week it would run out of cash by mid-2009 — and some analysts saying even sooner — and raising the specter of 3 million lost jobs if one or more of them should fail.
The quickest avenue to a rescue would be letting the auto industry tap into the $7 billion bailout fund, but that fund was intended solely to pump liquidity into the banking system. Including the automakers would open it up to all sorts of supplicants.
The Big Three’s problems go beyond a quick credit fix. If Congress truly believes the costs to the economy are too great to allow an automaker to fail, it should use its lame duck session to fashion a specific rescue package with sacrifices shared among labor, management, shareholders, creditors and suppliers. Some analysts have even proposed a government-appointed receiver or oversight board.
However the package is crafted — and it should include protections for the taxpayers — the end goal should be leaner, more efficient automakers making the cars Americans want and not the ones Congress thinks they should buy.