In the third and final presidential debate that occurred this past Monday, the main topic was supposed to be foreign policy. However, when given the chance, both candidates switched to talking domestic economic policy. This is to be expected as that is the hot button issue of this presidential race. One topic that stood out to me was the issue of the auto industry and the bailout they received from the gov't that Obama supported. Romney stated emphatically that he believed the best way to solve that problem was to have the companies (GM and Chrysler) go through managed bankruptcy with gov't guarantees. He stated that he did not approve of gov't support in the form of bailouts or stock purchases. Obama seemed to focus on the 'no gov't help' part to attempt to paint Romney as a 'flip flopper' on the issue because Romney has stated he was in favour of gov't guarantees. This is a strawman argument of course, because it misstates Romney's position. Guarantees are not bailouts, nor are they stock purchases, however this demarcation was lost on the leader of our nation.
The more important issue to me was the seemingly untouched assertion that somehow the auto industry is doing well and that the bailout assisted to that end in any way. It has been hinted at in several speeches given by the president himself and the vice president as well that somehow they 'Saved Detroit'. To me this is a straight up lie. I offer that the bailout only served to preserve the labour practices of the UAW despite these practices and Legacy costs contributing to the collapse of their employers, and that the bailout achieved nothing in the way of saving the companies from bankruptcy, as Chrysler did file for bankruptcy and GM is still not out from under the monetary aid of the federal Gov't.
The labour practices of the UAW are in place to serve the interests of the union members. The sad fact of this is that the interests of the employee are not always the interests of the employer. However there is one common interest: the existence of the employer. If an employer goes under, there are no employees. This to me seems lost on members of the UAW. The chief concern of the members should be preservation of their employer to ensure holistic job security for their industry. It doesn't take long to realize that the japanese auto makers are far and away out competing the american auto makers. The common thing they share: No union contracts. This should give pause to any member of the UAW. If other auto companies are out competing you without labour contracts, doesn't that tell you something about how your 'rights' or 'interests' affect your company? Oh wait, thats right, if your company goes under the gov't will just bail them out! Nothing to see here!
The more interesting thing is the state of both companies today. The 'bailout' supposedly saved both companies, but at what cost? Chrysler was on the road to bankruptcy, so we gave them billions of dollars and allowed the UAW to own some of their stock. What happened? They file bankruptcy anyways! On top of that Italian automaker Fiat buys them out. Result of the bailout: Bankruptcy and foreign ownership; that definitely sounds like its worth billions!!
Now consider GM. The gov't gave them a loan and purchased some of their stock. Purchasing the stock was a way for the gov't to give money to GM without it being a 'loan'. The common thing for supporters of this form of a bailout is to say "well they payed back the loan!!". Well yes, however the Gov't still spent $25 billion on stock, valuing it at around $53 per share. The current share price is around $23. So we haven't even come close to getting our money back on that one. That 'loan' is hardly repaid. They also filed Chapter 11 bankruptcy on top of that! Result of bailout: Bankruptcy, a repaid loan, and billions not recovered in stock purchases. That's definitely worth billions as well!! Obama has managed our money with masterful adeptation!
So as you can see, the auto industry was far from 'saved' but we did give some money to the UAW, who support Obama. So if you like buying votes with the taxpayers money. I guess we succeded!!
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