$17.4 Billion Auto Bailout Approved by Bush

If you have not seen it all over the news today, President Bush, in an effort to preserve some sort of a legacy, approved a $17.4 billion auto bailout for GM and Chrysler, whose executives during congressional hearings over the past few months have voiced that their companies did not have enough cash to sustain operations into the new year. But the bailout is just a temporary fix to a big time problem, one that staves off an orderly bankruptcy, according to Bush, and allows the major auto makers to regroup and restructure into viable and profitable entities by an end of March deadline in 2009. Of course, what hopes are there of this being successfully, and when coupled with the fact that the bailout is actually a loan from the treasury, and not a handout, the auto makers are responsible for paying it back in payments, to begin in April of 2009, or face bankruptcy. Why Did Bush Approve the Money? Bush approved the loans because he thought that around a million jobs would be lost and the auto industry and the American economy would be so affected by a failure of these companies that it was worth taking the risk. But what if they do not become viable and profitable, and then what happens to the billions of dollars we ‘loaned’ them? And, how can they ever manage to pay it back when they are struggling to just stay in business. A big argument against the auto makers filing for bankruptcy is that nobody would buy a car if they knew that the company was in bankruptcy protection. Rubbish! A recent AP poll showed that seven out of ten American consumers would still purchase a car from an American car maker in bankruptcy protection, so why the bailout, and what happens to Ford? How Come Ford is Being Left in the Dust? Ford has repeatedly stated that they do not require the funds right now and have enough operation capitol to sustain operations well into the fiscal year of 2009. However, they have requested a line of credit to fall back on just in case, and they have also warned congress that a failure of competitors GM or Chrysler would mean inherent doom for Ford as well. So the bailout fund, which was originally a few billion, has suddenly gone soaring up to nearly twenty billion, and that’s for two auto makers, not the original three—how in the heck does that happen? And where is Ford if a major player does go belly up? Is this certain doom for the auto industry? You and Me and Society Foots the Bill If the auto makers do fail, who pays back the billions that they borrowed but are unable to repay? Well first their assets are liquidated, and the government will recoup as much as it can. But at the end of the day there will still be billions of dollars to roll over, dollars that come out of your paychecks. You would think with that kind of money in check that the American people would deserve to hold a national vote on the issue to decide the fate of the big three auto makers. But then again, that’s in a perfect world!