Thursday, December 11, 2008

Auto Bailout Leaves Taxpayers on the Hook

U.S. Rep. Lynn Westmoreland on Wednesday voted against the $14 billion bailout package that would provide loans to the Big Three automakers. The bill passed the House 237-170.

“The Detroit automakers maintained an outdated business model, bowing to union demands for bloated salaries and benefits and falling behind their competitors in meeting consumer demands,” Westmoreland said. “I don’t see how my constituents should be asked to pay for those decisions when so many small businesses in my district are facing very tough times and many are going into bankruptcy. There’s no federal bailout for them.

“There’s a Kia plant opening in my district in west Georgia and thousands are applying for the 2,500 jobs that will come there. Why should U.S. taxpayers who work in plants of foreign-based automakers pay to bail out Detroit, their competition? The Big Three’s workers cost their companies, on average, $20 to $30 an hour more than workers of foreign-based automakers.

“It’s good that the bill is designed to prevent huge payouts to executives and golden parachutes, but this still leaves taxpayers on the hook if the Big Three continue to unravel. I also have a problem with the creation of a federal “car czar.” Perhaps the only thing guaranteed to be less responsive to the market than the management of the Big Three is a new federal bureaucracy. Washington politicians and bureaucrats can’t credibly lecture anyone on how to balance the books.

“Congress doesn’t have the best record of late with bailouts. The $700 billion bailout for the financial services industry has not worked. The money has not filtered down to the small businesses and individuals to get loans. The construction industry especially is being hit hard, with banks refusing to restructure loans and allow liquidity. Banks are using the money to buy other banks rather than freeing up the credit market. I’m afraid this auto bailout won’t fulfill its intentions either.”

The bill now goes to the Senate.

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