U.S. Auto Industry Alternative Solutions

Governor Jennifer Granholm (by the way, we’re still waiting to be “blown away”) appeared on the CBS “Early Show” this morning, begging for taxpayers across this country to bail her out from failing policies and leadership here in Michigan. Of course the governor conveniently camouflaged this plea under the guise of the current crisis in the U.S. automotive industry.

Granholm stated that the auto industry supports one in 10 U.S. jobs. “If the industry fails, there would be a ripple effect across the entire country.” She added: "This government decided that it was going to step in and throw $700 billion at the financial sector. We're just asking for a fraction of that."

Sure, why not! She’s getting a fraction of every penny we earn and spend here in Michigan … there’ no place else to go.

House Speaker Nancy Pelosi wants Congress to support a financial bailout for the troubled U.S. auto industry, which is suffering under the weight of poor sales, tight credit and a sputtering economy. Pelosi, D-Calif., said Tuesday she was confident that lawmakers would consider "emergency and limited financial assistance" for the auto industry under the $700 billion bailout measure that passed Congress in October. She urged the outgoing Bush administration to support a compromise.

So you’ve got Granholm and Pelosi out there trying to get the money, when there are viable alternative solutions that won’t cost the taxpayers an arm and an axle.

Recently, there was a great column about this in the Wall Street Journal by Holman W. Jenkins, Jr., and it's entitled: 'How to Save Detroit and $50 Billion.' (Please review at the following link):

http://online.wsj.com/article/SB122100316976917063.html

Granholm, along with the Detroit Auto Makers and their lobbyists are now out there on high alert with their plea for $50 billion in federal loans. “Congress practically owes us this money”, Ford, GM and Chrysler argue … because Congress slammed us with new fuel mileage mandates that will cost us $100 billion to meet. John McCain caved. The White House is in the process of caving. Barack Obama didn't need to cave.

But before rushing to pass the legislation, there's an easy way to save $50 billion or whatever part of these loans wouldn't be paid back … just repeal the fuel economy rules. It must infuriate the auto makers how readily their critics attribute their problems to their own incompetence.

Then how do you explain that GM is thriving in Europe, selling small cars which get very high miles per gallon? There was a story recently that Ford has a car that gets 65 miles to the gallon but they can't sell it in North America, they're not allowed, can't sell it in North America because it runs on diesel. It seats five, it gets 65 mile per gallon. Buick is among the biggest selling brands in China. GM is running away with Latin America.

The Big Three's problem, to be blunt, is North America. They should have pulled out long ago. And his idea is rather than give them $50 billion, just get rid of these stupid CAFE standards, get rid of the government running the auto business.

Keep the damn environmentalist out of the auto business and let them make the cars that they know the customer wants. These silly restrictions are causing all kinds of retooling, all kinds of investment. They don't face these restrictions in different parts of the world, and they're doing well.

The only reason GM and Ford is thinking about going bankrupt is because they're all kicking butt around the world. They're just not kicking it here. Now, why is that? They also got saddled with a monopolistic union, UAW and big, huge contracts and paying people who are no longer working for them. Toyota doesn't have that. Other foreign makers that make their cars here do not have the same restrictions that the big three do ... so it's real simple.

The auto business is overregulated and it's costing a lot of people a lot of money per car. The union contracts are estimated at over $3,000 per car, with the health insurance portion taking up the bulk of that figure. That's nearly $2,500, per car, that Toyota doesn't face. So it's real simple. Mr. Jenkins is exactly right. If you get the government out of these businesses, they'll be fine, because the government cannot tell 'em what CAFE standards to build in Latin America, in China, in Europe, and American cars are definately kicking butt over there.