"Bailout to Nowhere."

Tom Friedman writes a biweekly column for the New York Times. On Wednesday Night he was on the Rachel Maddow Show to discuss that day’s column in the paper that was highly critical of the Detroit carmakers for coming again hat in hand to the government asking for additional money so they don’t go under before the first of the year. After having received $25 billion already the Big Three want $150 billion more to be taken out of the $700 billion package designed largely by Henry Paulson. Incidentally, the money in that package, we learned yesterday was detoured to the banks rather than used to buy up the toxic assets that we were told it was originally designed for. Paulson decided to do it that way because those assets were difficult to handle and decipher and would take too long to unscramble. One wonders does anybody know what is going on? Nothing seems to work and the hole we are in keeps getting deeper.

Friedman’s critique of the Big Three is merciless and persuasive, for everyone knows they have been in denial since the oil crisis in the early 1970s. They have failed to convert their factories to smaller more fuel-efficient cars and are now caught in a vise of their own making. They have continued to produce gas-guzzling vehicles that the Industry has taught the American public to want, that they believe they must have to be strong and protected. Well, the chickens have come home to roost, as the carmakers are now paying their dues for their tardiness and delinquency in regard the cars now called for by circumstances that even a fool could see were coming. The trouble is they are paying their dues with OUR money, making the American taxpayer foot the bill for their lack of vision and imagination, and their inept management of their business. Moreover, the Bush Administration is not insisting on transparency or real oversight on these deals with the car companies--or the banks. No one is really sure what the Big Three did with that original money they were given to presumably retool the plants. To the layman it is an outrageous rip-off without dictating terms and having close scrutiny over what was going on. Like AIG they probably handed out bonuses to the company’s hierarchy, in short, it ended up corporate welfare. To hell with saving the industry and the three to five million people who depend on it for a living. Social responsibility seems a foreign concept to these people. Selfishness is the only credo they live by.

Near of his comments Friedman quotes Paul Ingrassia of the Wall Street Journal who used to be bureau chief in Detroit and knows the car business very well. He’s as fed up and disgusted with the carmakers as Friedman. He thinks for them to get direct government aid the shareholders should lose what equity they have left and a government-appointed receiver should call the shots in regard the retooling of the plants, and he or she should be hard-nosed and nonpolitical. It also means tearing up existing contracts with the unions, dealers, and suppliers; some operations will have to be closed and others sold off, and the companies will have to be downsized. And for heaven’s sake, don’t give them a blank check. Make them demonstrate proof of retooling; we don’t want a lot of smoke and mirrors and then end up with more of the same kind of vehicles and business as usual. Look for the renegades and eccentrics with ideas and the will to be inventive and innovative, like conventional designers won’t be.

Getting down to brass tacks in regard a bailout, Senator Chris Dodd of Connecticut, the chairman of the Senate Banking Committee, said on Thursday that there aren’t enough votes in the upcoming lame-duck session next week to pass the legislation, and its problematical that it can be achieved after Obama is sworn in as President, as it appears there just isn’t the Republican votes to do it, plus there are a number of Democrats who are skeptical, as they see it as throwing good money after bad. The Democrats would have to able to reach 60 votes and that doesn’t seem likely at this juncture, although it might change when all races are resolved.

Senator Richard Shelby, a Republican from Alabama, the ranking party member on the Banking Committee, has said he will not support bailout legislation and was quite prepared to let the Auto Industry collapse. “The financial situation facing the Big Three is not a national problem, but their problem.” The Republican Leader in the House, John Boehner of Ohio, was even more explicit. “Spending billions of additional federal dollars with no promises to reform the root causes crippling automaker’s competitiveness around the world is neither fair to taxpayers nor sound fiscal policy.” The Republican leader in the Senate, Mitch McConnell of Kentucky was in favor of the first loan but he has not indicated he would support additional monies for Detroit.

Then today, Friday, David Brooks met the problem head on. His column was called “Bailout to Nowhere.” I recommend it to everyone, as he calls a spade a spade. He is against helping the automakers because it’s contrary to the principles of Capitalism, what he calls “creative destruction,” what deserves to fail should fail, to be replaced by something better. Cars will still get made in this country. To give Detroit more billions of dollars when they have shown no will to change over three decades is to support the notion that some corporations deserve a kind of immortality and become, not healthy and profitable, but part of a system of corporate welfare, which is based on political power not sound economics. Do you remember when it used to be said, “What’s good for General Motors is good for the country.”? Does anyone still believe that? I doubt it. And isn’t it true that if you help the automakers aren’t you opening doors to every other business in trouble, say, Circuit City. If you help one aren’t you inviting everyone to come with a hand out asking for money? To help the carmakers is to encourage corporate stagnation, exactly what we don’t need. “ There is no one who believes the companies are viable without radical change. A federal cash infusion will not infuse wisdom into management. It will not reduce labor costs. It will not attract talented new employees…. In short, the bailout will not solve anything—just postpone things.” He suggests, and I would certainly go along with this idea, that some of that proposed bailout money be used to help the workers who would be displaced by the transition away from the old way of doing things. No one is saying this can be easy, but we all can get through it, if the government does the right thing and puts money where it needs to be.

Just remember Obama’s slogan, YES WE CAN.