Can we save Detroit?
Promoted for discussion by Brendan
Nancy Pelosi has asked the Big Three automakers to present a plan by December 2 .
Pelosi, D-Calif., laid out her expectations for an auto bailout plan, emphasizing that "it must be innovative, accountable and viable."
The decision to call the House back into session next month does not depend on the quality of the plans offered, she said, but rather on the automakers meeting the deadline.
The Big Three can provide a plan jointly or separately, and they have three options to pursue, she said. They can use the $25 billion for advanced technology assistance; for credit assistance to their finance arms to allow them to sell more cars; or as a cash infusion to free up liquidity.
I like the sound of that. All we need is $25 billion and a plan, and Detroit will be healthy again. Because that is what she is assuming with this statement. As if the Big Three have been waiting for Washington to tell them this simple solution to their troubles.
Democratic leaders demand the companies demonstrate financial viability and accountability, but appear to be giving Detroit wide latitude on explaining how they would use bailout money to reverse their disastrous financial slide.
"It's another opportunity for them to say to the American people 'give us your money because we'll put it to good use,'" Pelosi said.
"This isn't to be life support for three months, it's about viability for a long time to come," she said.
I would venture to guess that these companies have been striving to demonstrate financial viability for some time now. Their success in doing so is reflected in their current stock prices.
So what, exactly, happens when that $25 billion is used up? I don't see much hard analysis of that very likely outcome. Instead, we get just a lot of wishful thinking and naive statements, and a huge price tag.
I am not unsympathetic to what failure of these industries mean. But I think this congressman put it pretty well
"What we're doing is asking the Speaker of the House and Sen. Reid to decide whether or not these auto companies are viable. That's not the way this ought to work," Rep. Tom Price, R-Georgia, told FOX News on Friday.
He and other lawmakers are advocating for the auto industry to fall into Chapter 11 bankruptcy, which allows companies to restructure.
"That's the tried and true way to do it, as opposed to having Congress do willy nilly and throw more money at this problem," Price said. "That's not the solution."
Like it or not, bankruptcy IS the way something like this should be handled. Pehaps even with some sort of Federal assistance on specific items once the restructuring plans are worked out, with the specific goal of smoothing the transition for the affected workers. But anything we do now, to prolong this, is simply delaying the inevitable, not preventing it.
If you disagree, and think Washington can indeed "save" the auto industry, I'd be interested in hearing your arguments for that.