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Bailout bandwagon

Are automakers next? Then who?

November 11, 2008

U.S. auto companies on the brink of bankruptcy have been reduced to begging Washington for help, and beleaguered taxpayers may have little choice but to oblige. But after bailing out financial firms and banks and a global insurance company, where does it end?

When companies came cup-in-hand to Washington of late, taxpayers were often told they were too big to fail, that their demise would grievously wound the national economy. So now General Motors Corp. and Ford Motor Co. have stepped to the front of the line. Congress has already approved $25 billion in loan guarantees to help them retool to build fuel-efficient cars. Now they're seeking $25 billion more for bridge loans. And Congress is considering cutting them in for a piece of the $700-billion Wall Street bailout.

The auto industry has been savaged by high gas prices, tight credit and looming recession - all things beyond its control. But the companies aren't blameless. They've been terribly managed. While foreign automakers brought hybrids and other high-mileage cars to market, the U.S. companies fought higher mileage standards and churned out legions of gas-gulping SUVs.

Should taxpayers shield companies that make shortsighted business decisions from the consequences of their folly? Do we really need three U.S. automakers? What would happen if one or more were allowed to fail? And if taxpayers do pony up money for a rescue, will it ever be enough?

A bankrupt auto industry would take millions of blue collar jobs with it. That may be a hit we can't afford to let the economy take. But among the many tough decisions awaiting President-elect Barack Obama is deciding when to just say no.