The bailout discussion with the Big Three automakers is kind of like being stuck between a rock and a hard place; you don’t want to be there, but you can’t seem to find a way out.
When the initial debate began, I was one of those people who felt that it wasn’t the government or taxpayers’ responsibility to “save” three automobile conglomerates from going under. My stance on the position was solidified even more as I examined the actions (or lack thereof) and salaries of each of the companies’ top executives.
Here are some of the reasons I was initially against the Big Three Bailout:
• General Motors Chairman and CEO Rick Wagoner, Ford CEO Ala Mulally, and Chrysler Robert Nardelli all traveled to Washington, D.C., last month to request $34 billion in their own private jets. Seems like they would have saved the company thousands of dollars by simply flying commercial or driving.
• Once the executives arrived to D.C. during their initial meeting, they asked for billions of dollars, but none of them thought to present a plan for what they planed to accomplish with the borrowed money. Talk about being ill prepared.
• Mulally was paid $50 million over the last two years while Ford lost more than $15 billion within the same time period. In addition, the CEO spent more than $900,000 on the company jet over two years, most often flying from his Seattle home to Ford’s headquarters in Detroit.
• At $6 million Wagoner was paid significantly less than Mulally, but his company lost $40 billion. Wagoner spent an excess of $45,000 last year on his personal jet.
• Chrysler is a private company so Nardelli doesn’t have to disclose his salary. Since the company is requesting money from the federal government, I think it’s only fair that payroll and other pertinent documentation relating to finances be disclosed. When Nardelli failed to do this, his actions didn’t set well with me.
• In recent years, laid-off workers of the three companies were eligible to receive 95 percent of their pay.
While the aforementioned are some pretty good reasons not to support the automakers, the truth of the matter is if we don’t the United States would go into a severe slump. To prove this point one can look solely at GM. If GM folds, there will be more than 98,000 workers unemployed in North America alone. That means there will be 98,000 families’ spending directly impacted. In addition, if GM and the others become bankrupt and close their doors, money that they receive from their service centers (which are often contracted out by other countries) will be obsolete. So eventually, not only will the slumping economy negatively impact the U.S., but it also will inadvertently have a negative impact on other countries.
If Americans aren’t spending money (or paying bills), the economy plummets. When the economy plummets, the cost of basic needs and services skyrocket, making affordability even more of a distant reality. In essence, people need to work in order to buy things and pay bills. When people are purchasing goods and services, the economy is being stimulated and things become manageable from all perspectives.
Here’s a breakdown of what each company is requesting:
General Motors: $12 billion with a $6 billion line of credit
Ford: $9 billion
Chrysler: $7 billion.
At Recorder press time the trio had yet to meet with Congress to present their plans, though most experts are confident that some sort of intervention will happen, either through Congress or the Tarp Law, which has a right to overrule Congressional decisions.
While I was initially against the bailout, I now realize how significant an effective plan is to the stability of this economy. Hopefully with the various bailouts that are taking place, America’s recession won’t last as long as others in the past.
