Pondering the Big Three bailout

The Big Three automakers go to Washington. Will it provide results?
By Susanne Retka Schill | November 24, 2008
Now that the 2008 election is behind us, the 24-hour news cycle chiefly revolves around the lagging economy. The depressing nature of the situation sure takes the momentum out of the Christmas creep that started in mid-May…

Leading several recent newscasts was the meetings between the leaders of the Big Three automakers and Congressional leaders. The meetings were part of efforts by the automakers to land needed financial assistance. As my international economics professor from college would likely tell you, I wasn't an ace on economic issues. However, that doesn't prohibit me from throwing ideas at the wall and seeing what sticks. For instance, why should the government (or taxpayers) give $25 billion to the Big Three automakers? If Congress is going to directly support those companies, would it make sense to give $25 billion to U.S. citizens for the sole purpose of purchasing Big Three automobiles?

It could be sort of a play on the economic stimulus checks most of us received this year. However, this time the money would be required to be spent on purchasing a new Big Three vehicle. That way auto companies get money, people help the economy by getting their own money back, and an entire fleet of older, less efficient vehicles gets taken off the road, resulting in less emissions.

Would this impact the ethanol industry? Perhaps, since the Big Three are offering quite a few flexible-fuel vehicle options. However, what fuels the Big Three's vehicles isn't as important right now as what goes into making the vehicles—people and the jobs associated with them.

I'm guessing I've already found the fatal flaw to my theory, and it's a problem that I think even a $25 billion bailout wouldn't solve. It wouldn't be enough to help the automakers become more flexible and efficient in production. That's also likely one of the reasons members of Congress weren't ready to cut a check after the first round of meetings. After all, it wasn't overly clear how the $25 billion figure was reached, or how it would specifically help the companies.

Do you have any suggestions? Feel free to poke holes in my theory, or add solutions of your own. After all, that $25 billion is your money, right?