Good Money After Bad
The United States taxpayer will be giving Chrysler $50 million a day in hopes that it will be absorbed by an Italian firm and ten times that to GM for, well, no apparent reason.
The Obama administration will make about $500 million available to Chrysler LLC through the end of this month as it seeks to reach an alliance with Fiat, and up to $5 billion through May to help General Motors Corp restructure outside of bankruptcy, an independent oversight report on the Treasury Department’s corporate rescue fund said on Tuesday.
To say that this makes no sense whatsoever is an understatement. The talks with Fiat are not going well and the deadline imposed by this same administration — and Canada’s government, too — is nine days away (although I counted today in calculating the average daily amount we’re wasting). In the unlikely event the deal goes through, all that will be left of Chrysler is the brand name and Jeep. (Jeep, as those with long enough memories will recall, is in turn all that’s left of American Motors.) And, um, we’re paying GM $5 billion more to help them go bankrupt in a more orderly fashion? Whiskey Tango Foxtrot, over?
Separately, the United Auto Workers (UAW) union urged its members to lobby the White House by phone or email to ensure that workers and retirees are treated fairly in negotiations at both companies on new concessions, which are considered vital for the automakers’ to survive.
While I’m no fan of unions and believe autoworkers were grossly overpaid for decades, the only rationale for saving GM and to keep some small piece of Chrysler around is to prevent devastation for their workforce and others who make their living as a result of the industry. How far would $5.5 billion in direct payments go toward meeting that goal?
UPDATE: As is often the case, Dave Schuler was way ahead of me on this. Writing in mid-December:
If we’re bound and determined to spend $5 billion a month for the sake of people who work in the auto industry, here’s my suggestion: pay the money to them directly. We don’t need GM or Chrysler for that. Let’s start a roster of people who’ve been laid off or fired from the auto industry. They’ll need a W-2 and documentation of the termination.
The estimate I’ve seen is that may be as many as 2 million people. If it’s that many and if you pay them directly, that would come to $2,500 per person per month. Not princely but enough to get by on.
Let that payment expire in 2011 (when the UAW contracts expire). That should be enough time for them to make other arrangements.
I’m not sure what “other arrangements” a 50-year-old assembly line worker will be able to make by then but a stipend through then — perhaps with some additional funding for training and/or job hunting and/or relocation expenses — would be a reasonable use for taxpayer money under the present extraordinary circumstances. Even Ronald Reagan supported a “safety net” and fulfilling “obligations that spring from our national conscience,” after all.