American people angered by bailouts, says Bachmann
Washington, D.C.,
Dec 17 -
Sixth District Congresswoman Michele Bachmann, R-MN, says the massive bailouts only accomplish an angering of American people.
Bachmann voted against the $700 billion bailout and she has expressed opposition at providing a bailout for the Big Three automakers.
She offered the following analysis of the proposed auto bailout:
As families across Minnesota save up for modest holiday celebrations, Washington continues its bailout spending spree. Bear Stearns. AIG. Citigroup. Fannie Mae. Freddie Mac. AIG, again. In the last ten months, American companies have received nearly $1.5 trillion in taxpayer bailouts.
The latest in line are the Big Three automakers, whose executives soared to Washington in private jets, hat-in-hand to ask for their chunk of taxpayer dough.
But the bailout strategy has thus far failed. The marketplace is just as unstable. The Dow continues to plummet or yo-yo, at best. One in ten mortgages is in arrears. All indications are that the economy will continue to lag well into 2009 – and perhaps well beyond.
The only goals the bailouts have actually accomplished are to anger the American people and leave them — and their children — to foot a massive bill.
Despite this evidence, last week, the Democrat Leadership in the House of Representatives sought to continue the failed bailout strategy; this time pushing through $14 billion for Detroit’s Big Three. What’s more, Speaker Nancy Pelosi has made it very clear that she expects any bailout funds allocated this month to be little more than the first installment on the Big Three’s bailout.
Republicans in opposition to this latest bailout – including myself – focused on the alternatives available to the automakers. No one wants to see them fail. No one doubts that the ripple effect would be significant, particularly in this recession. But, that doesn’t mean that a $14 billion taxpayer-backed infusion is the right answer.
Decades of mismanagement and adherence to failed business models must be undone – whether through a pre-packaged bankruptcy or a through a loan with real benchmarks for reorganization – so that they could be actually be competitive in the future and shed taxpayer support. But Democrat leadership and the auto union balked. And, in the end the package passed by the House was so weak and unstructured that the Senate didn’t even bring it up for a vote.
Though the Senate wouldn’t pass the bailout last week, the White House has indicated that it will step up to dole out funds out of the TARP (Troubled Asset Relief Program) – the $700 billion bailout package passed in October – to the automakers. Never mind that that’s not the purpose for which the funds were allocated.
Members of the United Auto Workers net an average of $75 dollars per hour in wages and benefits – far more than the average blue collar worker. High costs like these translate into an extra $2,000 for the production cost of each vehicle – meaning the automakers either have to price their vehicles higher, cut their profit margins, or put less into each car.
And as long as this is the case, the auto companies will not be able to compete in a crowded market and Americans will continue to seek out cars made by foreign manufacturers. So, while other companies tighten their belts to ride out our current economic woes, the auto companies are asking for taxpayers to subsidize them so they can continue with business-as-usual. Rather then being part of a shared sacrifice, they’d prefer everyday Americans sacrifice on their behalf.
A wholesale reorganization of management practices is essential to keeping Detroit automakers alive. Take General Motors for example, GM is drowning under the high costs of employee benefits. Due to the negotiation of long-term retirement and health packages, GM currently supports more retired employees than present employees. Taking care of your retirees is good, but not to the point where you’re going belly-up. The former head of the UAW, Walter Reuther, once said it best: “Getting more and more pay for less and less work is a dead-end street.”
As Commerce Secretary Carlos Gutierrez recently said on CNN, “There’s a line of companies of industries waiting at Treasury just to see if they can get their hands on those $700 billion.” And Congressional Democrats are reported to already be working on a plan to send another $500-600 billion stimulus plan to the Obama White House on Inauguration Day.
Thanks to this string of bailouts, government now controls a larger share of the national economy than since WWII – nearly 25%. But increasing the federal share of economic activity won’t create more jobs or increase prosperity. When the government bails out a company, it’s like taking a glass of water, dipping it into one end of a swimming pool, and then pouring it somewhere else in the same pool. We need to add more water, not redistribute it.
In part, that means a tax policy that makes it easier for our companies to succeed in a competitive global marketplace and that attracts new investors. The US currently has the second highest business tax in the industrialized world – that needs to change.
That also means the government has to stop treating you like an ATM. Our economy grew to be the strongest in the world on the backs of Main Street; from the ideas and sheer sweat of innovators and entrepreneurs flush with the American spirit. Risk-taking is part of that adventure. But when government guarantees against failure, risk and reward becomes meaningless. Productivity declines, opportunities shrink. Eventually, that will crush our economy – and that eventuality may not be that far down the road.
President-Elect Barack Obama recently noted in an interview on 60 Minutes that “we shouldn’t worry about the deficit next year or even the year after,” but I am concerned that it is precisely that type of lax attitude that will pull the taxpayers and the economy into far deeper economic problems.
More bailouts will not make the economy sounder – it will only chip away at its foundation and break the backs of taxpayers in the process.
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