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GM Bailout

Posted by David A. Peterson on 12. November 2008 in Economics, Message |

Yesterday I was watching Republican Senator Jeff Sessions from the great state of Alabama on CNBC. The topic was the GM Bailout and his own thoughts on the additional money. Also if this happens the commentator was asking where all of the bailouts would stop – “what about airlines, and retail,” etc.

 

Last month the Congress rammed through a $25,000,000,000 bailout for the automakers that most Americans are not aware of. This money was earmarked for the retooling of the automakers. The retooling is meant to create the new energy efficient cars of tomorrow.

 

So here we are in the middle of November with 1st $25 billion program meant for retooling and a 2nd $25 billion being requested for cash flow purposes. This new request is being called a “bridge loan,” because among other things the automakers owe the union’s money for transfer of medical contracts from the automakers to the union’s expense.

 

Jeff Sessions left me with the impression that he is against this new bailout money. He expects that the automakers, primarily GM, ought to go into bankruptcy. In bankruptcy with a judge presiding over the case GM, its creditors, shareholders, and the public will get a full disclosure of the economic perils of the company. Maybe they will survive, maybe they won’t.

 

Congressman Ron Paul from the 14th district of Texas, another prominent Republican and a past Presidential hopeful, is no stranger to this type of argument. In a nut shell his view is GM should fail if it can’t perform in the free market.

 

This type of message from these two Republican leaders makes all conservatives look bad. This message smells like politics. Both leaders are busy trying to look tough and different than the Democrats. However, the American public is only seeing, hearing, and reading – “Republicans say let GM, Ford, and Chrysler fail – the 3 million people affected will find other jobs.”

 

Come on boys – think! Do you really want 3 million job losses? How about this do you really think the extra $25 billion is not going to pass very, very soon regardless of what you think?

 

How about governing instead of politicking.  How about Sessions and Paul find a way to temporarily save the current jobs working with the Democrats, the companies, and the unions instead of just stonewalling.

 

Here’s a thought – how about you approve the extra $25 billion with these strings: If you borrow it (i.e. you need it) you will immediately begin bankruptcy proceeding. If you make it out of bankruptcy you will repay us (as in me and you – the taxpayers) with non-voting shares of preferred stock with a strike price of date you borrowed the money. 

 

I’m not trying to change conservative views, I’m trying to get conservative leaders to realize the message they are spewing is anti-jobs, anti-middle America. Is that the message our conservative leaders meant to communicate?

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