Duncan Column on the Auto Bailout
Reprinted from the Farragut Press

December 18, 2008

I voted against the loan package for Chrysler and General Motors even though I certainly do not want to see either company go under.

However, neither company can survive, even with these loans, without major and immediate reductions in salaries and health and retirement benefits.

Those reductions were not included in this proposal, so this legislation, if passed by both the House and Senate, simply would have been throwing good money after bad.

Almost every independent analyst said, too, that these “bridge” loans, as they were called, would have just been a start.  In a very short time, probably no more than a few months, they would have needed more.

We cannot even afford all the bailouts we have committed the taxpayers to already, and there are other industries and even state and local governments saying they need many billions in assistance, too.

All of our governments, federal, state, and local, and millions of our people have lived way beyond their means for many years, and now, unfortunately, much of this overspending is catching up with us.

No matter what we did or did not do at the federal level, there was (and is) going to be a great deal of pain.

At the end of July, the Congress passed a housing bill which included a raise in our national debt to $10.6 trillion. (I voted against this, too.)

Then, in the first big bailout, which was passed in October, the debt limit was raised once again to an incomprehensible $11.315 trillion.

Since we did not even have the money to afford what we had already done, we could not afford the automobile package, either.

And there were cheaper and more effective alternatives. The President of BB&T wrote every member of the House and Senate just before the big bailout vote saying that a major tax credit for anyone who bought or built a home (new home, old home, first home, second home, or whatever) would have done more for the economy at far less cost than what we did.

In the same way, we could have done more for the automobile manufacturers and dealers if we had a bill with the salary and benefit reductions mentioned above, coupled with a tax credit and/or more liberal depreciation on all car purchases.

The reductions the Republicans asked for were not draconian, but simply to go to the level foreign manufacturers are paying in the U.S. (roughly $45 an hour). However, the Union would not bend in any significant way, and congressional Democrats would not allow a bill requiring it to do so.

One other thing I would personally like to see is a requirement that no company receiving government money or loans can pay any employee, from the CEO on down, more than the President of the United States ($400,000 a year).

Even in the best economic times, thousands of small businesses fail and we do not bail them out.  I have been concerned all along with the unfairness of what we have been doing, primarily for the financial companies, and for what we attempted to do for the automobile manufacturers.

No company should be considered by our government as being “too big to fail.” And I realize that if everyone had voted the way I have, some very big companies would have gone under.

However, socialism has not worked anyplace in the world. In my opinion, the pain, as great as it would be, would be a lot less and our economy would recover a lot sooner if we would simply let the free market work.