Do we help GM, Ford, and Chrysler survive with tax payer dollars?
(I made the question into a painting)

Premise:
Excerpts from a Wall Street Journal entitled GM Blitzes Washington in Attempt to Win Aid written by Jeffrey McCracken

"General Motors Corp., hoping to sway the battle in Washington over an auto-industry bailout, has begun telling federal officials that a bankruptcy filing by the car maker would set off a chain reaction hammering hundreds of suppliers and dealers -- and in turn the company's Detroit rivals."

"A bailout would be a boon both to the companies and, by saving jobs, to organized labor, a major supporter of Mr. Obama in the election. Auto-related industries employ 3.1 million people around the country, encompassing everything from car-seat makers to auto dealers to auto-parts stores. GM itself employs 123,000 in North America and does business with thousands of North America suppliers."



"A GM bankruptcy could create a cascading set of bankruptcies among these part suppliers, other auto makers and suppliers. That's because a bankrupt company could take months, if ever, to pay its pre-bankruptcy bills. Such delays would put stress on suppliers that already run on thin working capital and that feed just a few end auto makers, they argue."

Beyond suppliers, a collapse at GM also carries a risk to thousands of auto dealerships and to the government's pension-benefit insurance arm.

On average, auto dealerships employ 7.3% of a typical state's payroll, and 740,000 dealership jobs nationwide come from the Big Three makers. GM's 6,000-plus dealers employ about 325,000 of those people, according to estimates from the National Automotive Dealer Association."

"I do not think putting more money into the failed business strategy there makes sense," said Mr. Altman. "The government should help, but it should use bankruptcy as part of the more-efficient process that also limits exposure to taxpayers." Such an approach, says Mr. Altman, would also avoid risk to the broader industry, because GM could use the process to keep paying its most critical vendors."

View an interactive chart showing GM's decline.

"One of the biggest fears in Washington is how a bankruptcy filing by one or all of the auto makers would affect the federal agency that insures the retirement savings of almost 44 million Americans. The Pension Benefit Guaranty Corp. ended 2007 with a $14 billion deficit, though that shortfall was expected to shrink to about $11 billion. Were GM to place its pension burden on PBGC, it would more than double the agency's current shortfall."

Our Views....

Ryan's: It makes me want to run and take another shower, but I think my answer would be yes as long as it was through some kind of debt financing tied to real assets that we could liquidate if whatever is done fails, to recoup some of the taxpayer dollars. Now, my first reaction was "corporate welfare, absolutely not, what country is this...France?!, they made decades of bad decisions, didn't control costs, created massive legacy problems, not to mention problems with the UAW and the fact that they produce cars nobody wants. How can we pick winners and losers, who would be next?" But....I thought some more about it and came up with this idea train: 3 million people is a lot of people. Its true that they should lose their jobs if they are employed by companies that don't make money. But not all in a very short period of time...if there is something that can be done about it. The impact to the rest of the country may be unnecessarily great.

I am not smart enough to know what can fix it or how, but as an opportunistic and powerful country, if we can provide some ability for 3 million people to restructure into smaller, sustainable, and quite possibly different industries altogether over time, then I think that's worth my vote and a risk of my tax dollars. Smaller companies in trouble should be left alone to experience pain and die, but is it worth it to stand by ideology instead of practicality when the shock factor of this magnitude can be avoided, or spread out over time?

Leslie's: My first gut reaction was the same as Ryan's, basically: no. Why should the car companies get a handout for making bad decisions and cars no one likes -and how can we choose them over other industries? Then I thought about the ripple effects and how bad that would be - which is the meat and bones of Ryan's argument in favor of the plan. I considered that for a very long time and ultimately concluded that it didn't matter; the companies are too far down the slope to fix.

In order to survive and reach the island of sustainability there needs to be a MASSIVE overhaul, much larger than $50,000,000,000 that has to be split between three companies can provide. I feel that this new bailout is only postponing the inevitable and that the money would be better spent helping those affected by the chaos to weather the storm and find new trades. So, I am still against the plan as it currently stands. I do think that something needs to be done to help the employees, because 3 million people out of a job nearly at once is on the scale of a "national disaster" and it would horribly overrun the current unemployment and welfare options. (It's kind of like Katrina victims and free stuff: if a tree fell on my house up here in Rochester, no one would care - but if a tree fell on my house during Katrina then I would get a free house from the government because thousands of other people lost their homes too) I don't think handing the corporations so much money will work or achieve what everyone hopes - at the end of the day there are still tons of cars no one wants and an ever increasing legacy, which regardless of how much money we pour into these companies, will prevent them from being globally competitive.

What's your view?

Comics found at Theo Spark(PG13 site)