Since the invention of the Model T Ford in 1908, the U.S. automobile industry has been the backbone of America's industrial economy. Today, the Big Three — General Motors, Ford and Chrysler — are in danger of collapsing under the weight of a bad economy and self-inflicted policy blunders. In its lame duck session, Congress will vote on whether to use part of the Wall Street bailout funds to dig the auto industry out of its financial quagmire. We reluctantly support this rescue initiative.
The auto bailout is a controversial measure. Many Americans believe that it will only postpone the industry's inevitable collapse and that the failure of one or more of the auto companies is needed to stimulate the economy.
Opponents of such a bailout include Sen. Richard Shelby (R-Ala.), the ranking member on the Senate Banking Committee.
"The Big Three's financial straits are not the product of our current economic downturn, but instead are the legacy of the uncompetitive structure of their manufacturing and labor force," he told CNN on Nov. 11. To his credit, Shelby's stance is born of principle — he rejected the Wall Street bailout on similar grounds — although he quickly re-earned our scorn by resurrecting the bogeyman of the Freedom Fries era, saying, "I think we're going down the road of France now."
Shelby is quite right with regard to the auto industry: It has been recklessly and foolishly mismanaged, resulting in high prices and shoddy merchandise. While buying Detroit's products may invite a certain patriotic pride, it has gotten to the point where Sen. John McCain's (R-Ariz.) ownership of three foreign cars reeks less of snooty elitism than of a rather laudable pragmatism.
The bailout's proponents contend that a failure to act could result in millions of jobs being lost and more than $100 billion in wages being hacked out of a fragile American economy. They also insist that the industry is a victim of the global financial crisis and deserves a rescue like that of Wall Street.
"It would be a travesty for the irresponsible, reckless behavior of Wall Street to result in the sweeping away of the American automobile industry," Mike Jackson, CEO of AutoNation, the nation's largest auto dealership group, told CNN.
If Jackson actually blames his industry's malaise on the excesses of Wall Street, he is either shameless or a fool — or a shameless fool. Anyone who can whine about Wall Street's mismanagement while lobbying relentlessly against increases in fuel efficiency standards or the development of cleaner cars deserves public scorn and private shame.
Nevertheless, we grudgingly support using part of the $700-billion bailout package to assist the auto industry. To some extent, this is out of fear; we worry that the collapse of GM (which will file for bankruptcy if left unfunded) will set off a chain reaction that will leave millions of workers out in the cold.
We urge Congress, however, to include some of the preconditions that the White House has proposed. The auto industry needs to make measurable progress on fuel efficiency and reliability that will serve its customers now and its business in the long run. Detroit must be made to understand that just as the economy is too weak to stomach the auto industry's collapse, so too is it unable to serve as an ATM for America's junkyard.
