Auto Industry Bailout: Just Say No

Well, it's not even the new year and Senator Reid and Speaker Pelosi are at it again, telling everyone who will listen that the auto industry needs a bailout. Why does the auto industry need a bailout? Why can't they just be allowed to merge or file for Chapter 11 bankruptcy reorganization? Several airlines have gone in and out of bankruptcy since 9/11/01 and have reorganized themselves.

Could the Democrats motives be political? If the car companies file bankruptcy, bankruptcy judges have the power to rewrite onerous union contracts. Unions donate heavily to the Democratic party. I believe this is why the Democrats in Congress want to bail out the auto industry.

I also believe that the auto industry doesn't want to declare bankruptcy because they like their cushy management structure.

However, in my opinion, the American auto industry has failed to change with the times and should be forced to go bankrupt and reorganize themselves. If Honda and Toyota can make cars in America and be profitable, why can't American car companies do the same? Are Honda and Toyota that much smarter than Ford and GM?

Bloated union contracts are a part of the problem. The workers at Honda and Toyota are not organized. But unions are not solely to blame for the current state of the American auto industry. Onerous fuel standards imposed by Congress is another reason. And a lack of forward thinking seems to permeate the managerial ranks as well e.g. Honda and Toyota beat them to the market by years when it came to making a hybrid car.

Overall, I recognize that the American auto industry employes a lot of people and I do not wish to see those jobs go away. However, I think they have greater chance of saving them if they were forced to go bankrupt and reorganize into a more competitive company. As it stands now, a bailout will just continue to subsidize their current losing strategy.