expense of taxpayers. Bush would prefer that Congress loosen restrictions on the $25 billion already appropriated to build energy-efficient cars and let automakers use the money instead to temper their inclement financial situations.
President-elect Barack Obama has expressed his desire to see a bailout for the Big Three, but has said that if a bailout passed, automakers need to use the opportunity to become more competent manufacturers.
Many Republicans oppose the idea of any type of bailout. They believe that U.S. automakers are in danger of closing because their business tactics have been subpar for several decades and not because of tightened credit markets or poor sales. Sen. Richard Shelby (R-AL), who is the most vocally opposed Republican to an automaker bailout, described a bailout for GM, Ford, and Chrysler as “postponing the inevitable” on Meet the Press.
“I think it’s a mistake. They would be, in a lot of people’s judgment, a lot better off to go through Chapter 11 where they could reorganize, get rid of the management, get rid of the boards, the people who’ve brought them to where they are today,” Shelby said. “This is a dead-end, it’s a road to nowhere, and it’s a big burden on the American taxpayer.”
Last week, Treasury Secretary Henry Paulson agreed with Bush that any assistance for automakers should be separate from the bailout passed in September for financial institutions. Paulson and Federal Reserve Chairman Ben Bernanke, are scheduled to appear tomorrow before the House to update Congress on how the $700 billion bailout is being spent.
To make matters worse, neither automakers nor members of the United Auto Workers (UAW) are open to legislative changes in how they run their businesses. They do not want to make concessions to reduce executive bonuses or wages for union workers or to institute higher mileage standards. All of these actions would encourage lawmakers to push the bailout through.