Op-Ed: A Wasteful Bailout For Detroit; Canada, Be Careful

A plan has been agreed to by Congress and the White House that will get an initial $15 billion in emergency loans to the automakers with no substantial elements or conditions enabling the successful rebuilding of Detroit, just vague political strings.

Bush will be required to name a Car Czar, if one can be found vain enough not to be embarrassed by such a title. His position will have absolute power over the U.S. version of the auto industry. The bill requires the auto manufacturers to submit plans for restructuring by March 31, which would then enable the release additional funds. Supposedly Bush asked that only financially viable companies or those taking specific steps to become viable should receive such additional funds. No kidding? Well if that isn’t tough, harsh and demanding negotiating for you, what is? This is about as powerful and effective as other languid but politically careful conditions such as requiring the companies not to argue in court against tougher tailpipe-emission standards. Under the plan GM, Chrysler and Ford are eligible to apply for available emergency loans. Reading through the bill, it appears that interest will be 5% for the first 5 year period and 9% interest after that. Other than doing the politically right thing of barring bonuses until the loans are paid back, there is nothing in the bailout bill that solves the problems that have brought the Big 3 to their knees. Lack of money is not their enemy, and even wholesale changes in the executive offices are implemented, the root causes of creative stifling are not removed. Congress, the White House and even the new incoming Obama administration supporting this legislation are failing the taxpayers. This is a time when a wholesale restructuring of the companies could be decreed by Congress. Removing decaying obstacles would give light to the talent that still resides within the auto companies, and enable it to design, manufacture and sell vehicles in harmony with demands and expectations of this new century. That same talent that has been smothered by self-serving mismanagement and the UAW, could actually turn these companies around and into prosperity. Congress is doing nothing to provide impetus for the revision of all the agreements and deals that have been cemented into these corporate behemoths over the past 50 years. By this I mean such things as arcane agreements to provide unions with board representation. Boards of Directors should be independent, and in all three cases, the seats should be cleared and restructured completely including all CEOs. With this impossible and likely fruitless lead from the U.S. Congress and Administration, Canada is now placed in an untenable position of being embarrassed into following suit. This should be a non-starter, and Harper, if he decides that Canadian taxpayers should do anything at all, should follow a plan more akin to this one: A Solution For Detroit. Adding billions to the already heavy burden of the national debt should be exercised with extreme caution. James Raider writes the The Pacific Gate Post