THE BIG QUESTION — Nov. 18
November 18th, 2008
The Big Question is a feature where influential lawmakers and interest group leaders give their answers to a question that’s driving discussion in news circles around the country.
Today’s Big Question is: Is bailing out Detroit good policy or bad policy?
Look below for responses from Rep. Earl Blumenauer (D-Ore.), National Association of Manufacturers Vice President for Tax and Domestic Policy Joan Claybrook: Rep. Ileana Ros-Lehtinen (R-Fla.), Public Citizen President Joan Claybrook, Rep. Michele Bachmann (R-Minn.), Americans United for Change Deputy Executive Director Caren Benjamin, Judicial Watch President Tom Fitton, House Minority Leader John Boehner, Cato Institute Center for Trade Policy Studies Associate Director Daniel Ikenson, Sen. Bernie Sanders (I-Vt.), Rep. Ron Paul (R-Texas), and Americans for Tax Reform President Grover Norquist.
Rep. Earl Blumenauer (D-Ore.): The question of whether an additional bailout of the auto industry is good or bad policy depends entirely on how we provide assistance.
Giving the Big Three auto makers more funds to continue business as usual is probably not good policy nor is it a wise use of resources. I have long advocated investments that accomplish more than one objective. In the aftermath of 9/11, for example, I was disappointed that we gave money to the airlines without insisting that they use it to buy quieter, less-polluting aircraft. Today, we have the opportunity to use federal investments to not only help the auto industry respond to future needs, but to strengthen the economy and the environment in communities across America. Read the full response
National Association of Manufacturers Vice President for Tax and Domestic Policy Dorothy Coleman: Providing $25 billion in loans to the auto companies from the $700 billion Troubled Asset Recovery Program (TARP) is necessary because there is no practical alternative. The nation’s economy is at a vulnerable point. Consumers and investors are skittish. Job losses are mounting. And the unease reaches far beyond our borders, portending a worldwide economic slowdown.
In this environment, we simply cannot stand idly by and let the auto companies suffer a systemic failure. It isn’t just a matter of these auto makers at risk, but rather the highly-integrated nature of the overall auto industry. Read the full response
Rep. Ileana Ros-Lehtinen (R-Fla.): As the country continues to face an uncertain economic future, government must act with the same fiscal-responsibility currently required of millions of small-businesses and middle-class families across the country. In my home district of South Florida, unemployment is on the rise, foreclosures are rampant, and our thriving tourist economy is quickly spiraling downward. We need to address the root causes of our economic situation—most notably volatility in the housing market and access to credit—before we should consider shouldering any additional financial commitments. Read the full response
Public Citizen President Joan Claybrook: The auto industry got itself into this mess by failing to adapt to a changing market and offering consumers safe, fuel-efficient vehicles. It traded short-term profits for long-term viability by continuing to market gas-guzzling, high-priced, unsafe sports utility vehicles. Detroit shouldn’t expect American taxpayers to come to the rescue to the tune of $50 billion without getting something in return.Read the full response
Rep. Michele Bachmann (R-Minn.): Fresh off the $700 billion-plus financial service sector bailouts, including the most recent dole to AIG that upped their bailout total from $85 billion to $150 billion, the Democrat-controlled Congress is trying to rationalize a new $25 billion bailout for the auto industry.
For years, the American auto industry has struggled to keep up with foreign manufacturers like Toyota, Honda, and Nissan. CEOs at Ford, GM and Chrysler have operated using outdated business models, failed to invest wisely in new products and technology, and were not prepared for the massive rise in gas prices that scaled back their truck and SUV sales dramatically. Read the full response
Americans United for Change Deputy Executive Director Caren Benjamin: It’s the wrong question. One in 10 American jobs is linked to the auto industry. If it collapses, an estimated 3 million jobs would be lost in the first year. This can’t happen. But a “bailout” is never good policy on its own, because the term implies a no-strings- attached quick-fix for what is really a long-term problem. Read the full response
Judicial Watch President Tom Fitton: The larger government becomes, the more money and power we grant it, the more opportunities for corruption present themselves. As much as we deplore the mismanagement conducted by Wall Street and the automotive industry, Judicial Watch cannot condone the idea that Washington can or should try to solve all of our nation’s economic woes. Read the full response
House Minority Leader John Boehner (R-Ohio): Spending billions of additional federal tax dollars with no promises to reform the root causes crippling automakers’ competitiveness around the world is neither fair to taxpayers nor sound fiscal policy.
Earlier this fall, the Democrats in charge of Congress approved a $25 billion loan package for America’s ailing automakers. Why are Democratic leaders in Congress discussing an additional taxpayer-funded bailout on top of that $25 billion package instead of ensuring these loans are made available to the automakers as quickly as possible? Read the full response
Cato Institute Center for Trade Policy Studies Associate Director Daniel Ikenson: The U.S. auto industry doesn’t need a bailout. It needs a shakeout.
More than a quarter century of competition between Detroit’s automakers and foreign nameplate producers, operating in communities across the United States, employing American workers, paying U.S. taxes, supporting local businesses, charities, and softball teams has rendered a verdict. Automakers that produce efficiently and make products Americans want to consume are the winners. Politicians trying to change the rules of the game or crying “do over” should be sternly rebuked. Read the full response
Sen. Bernie Sanders (I-Vt.): This is a tough issue. The auto industry is responsible for 3 million jobs in this country and we’re already in the midst of a major economic crisis. On the other hand, the policies that have come out of Detroit in recent years have been disastrous. They’ve been shutting American plants and moving jobs to China. They’ve been lowering wages for their American workers who still have jobs. They have done an extremely poor job in producing the kinds of vehicles that the American people want that lower greenhouse gas emissions and create jobs in this country. Read the full response
Rep. Ron Paul (R-Texas): I have opposed government bailouts of private organizations from the start, and I still consider these types of policies to be foolish and very damaging for the long term economic health of our country. We must remember that governments do not produce anything. The only resources they have are taken from the producers in the economy through such means as tariffs and taxation. As such, the government has an obligation to be good stewards of these resources. In bailing out failing companies, they are confiscating funds from the productive economy and giving to unproductive companies, or companies whose business models were unrealistic and unsustainable. Read the full response
Americans for Tax Reform President Grover Norquist: The federal government should not take money by force from American taxpayers and give it to unionized automobile companies.
True, many of the problems plaguing the auto companies were caused by our federal government. When Bush put the tariffs on the steel industry it was a direct looting of the auto industry and all steel users. And the CAFE standards imposed by the Democrats and Bush forced auto makers to make cars other than those wanted by customers. And yes, the various environmental regulations added billions in costs to the auto industry. And yes, the no growth types have limited energy production in America raising the costs of electricity and gasoline. Read the full response
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