Should We Bail Out the Big 3?

Automakers are on Capital Hill to ask the government for enough funding to keep them out of bankruptcy. I don't have the answers as to just how a bailout should be structured, but the entire country will be affected if it doesn't happen. As the talks progress I have an increasingly difficult time listening to our elected officials (many who've never run a business) attempt to put all of the blame for the crisis on auto industry management. Manufacturers didn't create the problems in the banking industry, and maybe our economy wouldn't be in its current conditon if Congress itself had kept a better watch on lending practices.

Auto dealers have been hit hard, and they're having a difficult time obtaining floorplan funding (the loans they receive to keep vehicles on the showroom floor). Sales are down because people are nervous about the future, but the credit crunch is discouraging to some of people who are potential buyers. For example, GMAC has restricted its loan program to buyers with credit scores of 700 or higher, driving those with lower scores to apply for credit elsewhere, and typically at higher interest rates. When rates drive the payments upwards, many buyers bow out.

A slowdown in the auto industry doesn't just affect automakers and dealers and their employees, it impacts every company that supplies parts or services that enable vehicles to be built, and when sales for those companies slide, a huge number of jobs will go away. So I say to Congress, figure it out -- it's okay to question these guys on how the funds will be used, and make sure accountability is in place, but when you're asking those tough questions, ask yourselves the same things. All of your special interest trips and frivolous spending are billed to the taxpayer -- and are never repaid. If you start managing the government's business using the same guidelines you expect the automakers to follow, we might see significant cuts in federal spending, and maybe we'd have more funds to help at-risk industries.

Poll: Should We Bail Out the Big 3?

1. Yes, absolutely
2. Yes, as long as the money is paid back with interest
3. No, let them go under
4. I'm not sure

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