Click here to check the ultimate guide to learn how to leverage your PC and internet to make money online.
The Washington Independent
The Washington Independent

$25 Billion for Automakers Only Tip of the Iceberg

House Financial Services Committee Chairman Barney Frank (D-Mass.) said in no uncertain terms Wednesday that the $25 billion bailout being sought by America’s

Tyreece Bauer
News
Last updated: Jul 31, 2020 | Nov 19, 2008

House Financial Services Committee Chairman Barney Frank (D-Mass.) said in no uncertain terms Wednesday that the $25 billion bailout being sought by America’s Big Three automakers would constitute just the first federal offering in what would be a much more expensive rescue plan. Asked by National Public Radio why Democrats think $25 billion for Detroit will be enough, Frank responded, “We don’t think it would be enough.”

The Massachusetts Democrat framed the debate as a something akin to class warfare. Why, Frank wondered, would the White House rush to help Wall Street with $700 billion but so adamantly resist diverting a fraction of that amount to the country’s largest manufacturers?

Well, AIG, which I don’t think anyone would think was as important to the American economy as the auto industry … got $40 billion just now to make it up over $100 billion. To some extent, let’s not have a white-collar/blue-collar bias in our public policy…I don’t want to set a precedent that bankruptcy now is a way in which you undo what gains unions have been able to hold on to.

Frank went on to describe the conditions of his version of the Detroit bailout bill (which differs from the Senate plan), including restrictions on executive pay and a dividend moratorium for the Big Three. The companies would also have to present the government with a new business model for creating more fuel-efficient vehicles. More money, Frank said, could follow.

If, on Mar. 31, the president does not believe that this is going to get them the viability with energy efficiency cars, they have to repay the loan; they get no more money. If they can show by Mar. 31 a plausible way to go forward, then we would consider giving more money, again, under equally stringent conditions.

We heard inklings of this message yesterday in the Senate Banking Committee, where Chairman Chris Dodd (D-Conn.), another supporter of an automaker bailout, told the Big Three executives that he’s under no illusions about the eventual size of the bailout they’ll need. “I suspect,” Dodd said, “that this $25 billion is not going to be the end of it.” (These three executives are testifying before Frank’s House panel as we speak.)

The issue has been at the forefront of GOP opposition to the plan. Republicans, already wary of the degree to which Washington has intervened in the private marketplace this year, think the Detroit bailout plan represents nothing more than throwing good money after bad. They think the Big Three are destined to fail due to poor management decisions, and wonder why lawmakers would waste taxpayer money to delay the inevitable.

During yesterday’s Senate hearing, one testy exchange between GOP Sen. Bob Corker (Tenn.) and General Motors CEO Rick Wagoner summarized the Republicans’ mood:

Corker: “Would you all make the pledge that if you get the $25 billion, you’ll never be back to see us again?”

Wagoner: “Sir, if you could make the pledge to us that the U.S. economy will turn around on a certain point in time, then — and the financial markets will rejuvenate, then we would be glad, based on that data, to come back to you and give you … our exact best estimate of how much financing we think we need, sir. We’d be very glad to do that.”

Corker: “You’re going to be back, aren’t you?”

But, in the middle of this financial mess, many economists are warning that the economic ripples of a Detroit failure would decimate businesses and communities far beyond Michigan.

Soon we’ll be running a longer piece detailing the reasons that the bailout option might prove far less costly for taxpayers than allowing the companies to go under.

Tyreece Bauer | Analyst and photographer in the field of technology. When I'm not working on my laptop, I like to go surfing, hiking with friends, and go karting or play soccer with my nephew. I enjoy traveling and am excited to visit Tokyo this summer. What are your plans for your next trip?

Related

$1.89 billion given to states to fight HIV

The federal government Monday announced more than $1.89 billion in funding to states to fight the HIV epidemic with access to care and with more cash for the failing AIDS Drug Assistance Program. According to an HHS press release , $813 million of that money will go directly to the ADAP programming. An additional $8,386,340 will be issued as a supplement to 36 states and territories currently facing a litany of unmet needs and access issues.

Army Data Shows Constraints on Troop Increase Potential

If President Obama orders an additional 30,000 to 40,000 troops to Afghanistan, he will be deploying practically every available U.S. Army brigade to war, leaving few units in reserve in case of an unforeseen emergency and further stressing a force that has seen repeated combat deployments since 2002.

1. Brian Schweitzer

As governor of Montana, Schweitzer doesn’t represent one of the most highly populated, high-profile electoral states in the country. But this

$1.3 Million for Brown

The GOP’s candidate in the Massachusetts special election raised more than one million dollars -- double the goal -- in a 24-hour moneybomb on the Ron Paul

$1.3 trillion in federal spending unaccounted for, report finds

Despite calls for independent bodies to keep government accountable, the Sunlight Foundation’s most recent Clearspending report has found the federal

#1 in Conspiracy Theories

Andrew Young’s tell-all biography of John Edwards, hitting shelves next week, is surging in one Amazon.com category in particular. #1 in Conspiracy

1 Brigade and 1 Battalion

ISTANBUL – It’s 10 p.m. in the lowest level of the Istanbul airport. In 20 minutes I’ll be allowed to board my plane to Kabul, bringing me to the

$1 Million for Toomey

Pat Toomey, the former Club for Growth president and leading Republican candidate in Pennsylvania’s 2010 Senate race, has announced a $1 million haul in the

1. Lindsey Graham

Sen. Graham (R-S.C.) is typically regarded as a reliable vote for his party, but he took the bold step of breaking with his fellow Republicans to join Kerry

Bachmann uncomfortable over earmarks ban

Republicans appear to have boxed themselves into a corner with their portrayal of earmarks as wasteful spending, as many of them have backed a moratorium on

Troubled mine holds hope for U.S. rare earth industry

China currently controls 97 percent of the world’s rare earth production. The Mountain Pass Mine could change that -- if it can overcome serious environmental concerns.

© Copyright 2021 The Washington Independent All Rights Reserved

Terms & Privacy | twi.news@washingtonindependent.com

Click here to check the ultimate guide to learn how to leverage your PC and internet to make money online.