Too Big to Fail
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Dec 10, 2008 Posted by Adam Swope
Bear Stearns, Freddie Mac, Fannie Mae, AIG, Citigroup; the list goes on. Many institutions, described as "too big to fail", are receiving the governments' largesse to the tune of $8.4 trillion taxpayer dollars. Wall Street is being taken care of with taxpayer money, but no one else. The latest plan to spend $800 billion to finance loans for consumers and to push down home mortgage rates is pushing the envelope. Are we merely a consumer nation? Are we being told to go shop again? Isn't that what caused the problems we have today? And what about the people who could lose the roof over their heads?
Especially disturbing is how little consideration has been given to our American automobile industry in this economic dilemma. When Lee Iaccoca sought help for Chrysler in 1979, he pointed out that the government had bailed out the airline and railroad industries, arguing that more jobs were at stake at Chrysler should it fail. Iacocca received loan guarantees from the government that put Chrysler on the road to recovery, making it possible for the company to repay the loans seven years earlier than expected.
A collapse of the U.S.-based auto industry will not just impact the nearly 355,000 Americans directly employed by the Big Three automakers. One out of every 10 people in America is employed in a service that is related to the U.S. auto industry. If it should fail, the industry predicts that 3 million jobs would be lost in the first year alone, with another 2.5 million jobs in the next two years. That's more than the 3.5 million manufacturing jobs we have already lost over the past decade. Our fragile economy would not be able to absorb these loses.
In 2007, the UAW agreed to eliminate the compensation gap between domestic and foreign automakers in the U.S. It was agreed to set up Voluntary Employee's Beneficiary Assoc. (VEBA) funds to provide for retiree health care in the future. The infamous health care component in the price of a car would be diminished. Two-tier wage scales were established for new hires. These were difficult concessions by the UAW to help ensure the long-term viability of the industry.
Every American has a stake in the survival of the American auto industry, so ask your representatives in Washington to pass legislation that provides an emergency bridge loan for the domestic auto companies to continue their operations that also protects the taxpayers.
Our country and the U.S. auto industry are too big to fail.
Jean Friday
President
Pennsylvania Alliance for Retired Americans