Steven Pearlstein asks some questions on the auto-industry bailout that neither Congress nor the President Elect is inclined to answer:
[I]f the government provides money to automakers, should it require that the companies forswear any further layoffs, as some have suggested? Or should the government require that shareholders, creditors, pensioners and active workers make whatever sacrifices are necessary to ensure that the money is repaid and these companies emerge as profitable, competitive and environmentally born-again?
And GM announcing that bankruptcy is “not an option” should come as no surprise. (Sure it is. Just not one they would like.) The UAW then chirps up that there will be no concessions from them, because it is “management that got the companies into this situation.” Yes, the exorbitant wage, health, and pension demands, and the arcane work rules the UAW insisted upon for decades, are entirely beside the point.
And who is to tell all of them “No, the taxpayers aren’t going to shoulder this one”? There’s the rub. Pearlstein observes:
There is little in Obama’s campaign platform, and his oft-stated promise to “restore the middle class,” to suggest how he will answer these questions or where he will draw the lines. But it won’t be long before he is forced to acknowledge that even the federal government, with its unmatched capacity to borrow and spend huge sums, cannot rescue every important industry, save or replace every job, prevent every foreclosure and restore every budget cut. The sooner he levels with us about those limits and the extent of shared sacrifice that will be necessary, the sooner the new president will be able to establish confidence in his leadership and restore faith in our economic future.
And this, more than the money, is what is at stake. If Obama continues to pursue the unsustainable fiction that taxpayers will pay for everyone’s errors with no cost to anyone, there will be no “bottom” to the recession. The slide will continue, with the continued expectation that all bets, good or bad, will be covered. The President Elect has the opportunity to put a halt to it by making clear he does not support a car bailout, at least not without substantial concessions by all parties (including labor).
In short, it is time for tough love. If not now, when?