Auto Industry Bailout Discussion

I have been reading lots of material on the requested (and perhaps doomed) auto industry bailout demanded by GM and others. There appear to be people of good will on both sides of the issue, so I thought it might be a good idea to briefly summarize the arguments here for Mod-Bloggers, and let our own esteemed thinktank take a crack at sharing their opinions.

PRO-BAILOUT POSITION

The automobile industry has long been the backbone of American industry and thus the backbone of the American economy. Allowing any of the Big Three to outright go bankrupt - or worse be bought out by foreign powers - would be tantamount to surrendering the future of American jobs to outside controls. The Big Three themselves are direct employers of hundreds of thousands of Americans, but more importantly they are INdirect employers of millions more who provide parts, chemicals, electronics, websites, advertising, etc. to these companies. The failure of the American auto industry would put nearly 1/3 of the American workforce out of a job, and thus plunge us into a true Depression.

But luckily, we have a simple solution. Give the automakers an additional $25 billion guarantee on their debts and/or outright loans, to be paid back to the American government. This is a paltry sum compared to the $700+ billion already secured for the economic system, and can br drawn from the moneys already allocated.

ANTI-BAILOUT POSITION

There are reasons why the Big Three automakers are failing, and in particular why GM is on the chopping block. They have failed to adapt to a changing marketplace, and have been insulated in the past from their own failures by a government eager to protect auto jobs at any cost. American automakers are producing cars that no one wants, at a price no one wants to pay. Furthermore, the largest cost for automakers today are unwieldy commitments to Big Labor negotiated during boom times. These contracts can only be renegotiated, by law, when a company is in bankruptcy. Keeping automakers out of bankruptcy and reorganization simply keeps them shackled to business models and debts that they can never get out from under, which would require on-going government subsidies.

But luckily, we have a simple solution. Do nothing. Allow GM and the other automakers - if needed - to go into bankruptcy and reorganization. Let them renegotiate their debts, reorganize their management and workforce, and emerge a stronger company. This requires little government intervention, and no extra outlay of taxpayer funds to accomplish.

What do Mod-Bloggers think? Did I summarize the arguments adequately? Which side do you find yourself agreeing with? Or is there another P.O.V. that needs to be considered? Let us know in the comments section.