American Agora

There has been much talk recently about a potential bailout of the Detriot auto industry. According to the NY Times, the auto industry has been pushing Washington more cash. While they are expected to try to push through something during the last Congressional session in late November, such massive legislature will most likely be held off until after Inauguration Day. At a recent press conference, Obama telegraphed his likely support of a government hand out.

Here is a strong case (if extremely brief) for Obama NOT to support such a bailout:

Throwing another $25 billion of taxpayer money down the rat hole won't do anything other than postpone the crisis. Just let the companies go bankrupt, Obama. That's what bankruptcy is for. Let the shareholders and debt holders take the hit. Not the American taxpayers.

Ford, GM, and Chrysler will continue to make cars. They will continue to employ Americans. (When airlines go bankrupt, they keep flying). Most importantly, they will finally be able to do the major restructuring that they have been postponing for decades.

A common argument is that Detroit cannot pay the outrageous health care costs and pensions of their employees that other automakers (particularly those based in the non-union South) are not subject to. Is this not a signal to reform those larger issues that affect more than the employees and shareholders of three companies?

-Andrew