Ronald Reagan loved to invoke the image of a welfare queen in a Cadillac. Today, we have the CEO of Cadillac in the welfare line.
Picture this cartoon: An impeccably-groomed CEO emerges from his chauffeured limo to join the line outside the welfare office. In front of him stand others of his ilk, waiting impatiently to pick up a check.
With very little exaggeration, that was the scene in Washington this week as the chiefs of the Big Three U.S. automakers “arrived before Congress in corporate jets with tin cups in hand.” Is anyone surprised?
The federal government has already ponied up $700 billion to bail out Wall Street—with promises of more cash on the way. If Washington is ready to reward the securities industry for their greed and incompetence, why shouldn’t the feds do the same for Detroit? After all, what’s $25 billion among friends?
In contrast, I read a Wall Street Journal article earlier this week criticizing president-elect Obama’s health care plan. The WSJ editors claimed Obama's plan would incur $150 billion in debt over two years. A mere $150 billion to help provide medical care for the entire population of the United States? That seems like chump change after the $700 billion Uncle Sam is doling out to the securities industry.
Here's the irony: To the Wall Street Journal, when the government spends 150 billion to help ordinary Americans, it’s "socialist income redistribution.” But of course that label does not apply when the government shells out $700 billion to prop up failing companies led by the uber-rich. Apparently, socialism is any government program that does not benefit the Lear jet set.
With all this corporate largesse from Washington, it’s no surprise Detroit now wants taxpayers to dole out $25 billion to keep their companies afloat. (Excuse me. It's not a handout. They insist it’s a loan.) And $25 billion is only a down payment. The auto CEOs mentioned $25 billion may only get them through the early part of next year. Hmmm. Maybe the smart money guys on Wall Street can figure out a way to package the loan to the Big Three as a type of security they can sell. Oh, wait. They already tried that with other bad credit risks.
Look, I know the auto industry touches one in ten jobs in the U.S. economy. There will be some painful side effects in letting some of Detroit’s dinosaurs go under. But if they could not succeed before, what will we solve by throwing more money at these disastrously managed companies? When will we admit that free enterprise means the freedom to fail if corporate leaders make monumentally poor decisions?
And let’s not forget that the Big Three are not the only auto makers with assembly plants in the United States. If we bailout Detroit, that will create layoffs at the Honda and Toyota plants that employ U.S. workers. So in giving preferential treatment to the Big Three, we are really robbing Peter to pay Paul.
We have crossed a dangerous threshold when hundreds of billions are tossed around like pocket change and the government is handing out welfare to the richest of the rich. Meanwhile, we have trouble mustering the political will to invest a fraction of that largesse to provide medical insurance for the nation’s ordinary citizens.
Back in the 1980s,Ronald Reagan loved to invoke the image of a welfare queen in a Cadillac. Today, we have the CEO of Cadillac in the welfare line.
Raul Ramos y Sanchez