The auto bailout is a massive failure. It did not save jobs. It is a fallacy to claim that more jobs exist in an economy because particular firms have been saved from going out of business. Automobile jobs exist in the United State because of consumer demand for automobiles. Bailing out car companies does not increase demand, nor will it increase the number of cars built and sold.
All the auto bailout did was shift jobs from one set of firms to others. Because GM and Chrysler are poorly managed, and are joined at the hip with the United Auto Workers, they will not produce cars as efficiently as competitors. In the long run, the bailout will cost American jobs.
All car companies, but especially the bailed-out ones, are burdened by government regulations and mandates, like the recently tightened fuel efficiency standards. Obama said today that the standards are “good for consumers.” Millions of consumers voting with their dollars are more competent than government officials to decide what kinds of cars are built.
Obama also claimed the standards are “good for the environment.” In the past, increased fuel efficiency has resulted in people just driving more. If fuel economy can be mandated without negative economic consequences, why not require cars to get 200 or 300 MPG?
Obama is dramatically lowballing the cost of the bailout. He cited a figure today of $60 billion. The total is over $100 billion if you include two GMAC bailouts, the parts supplier bailout, cash for clunkers, GM and Chrysler warranty guarantees, and TALF subsidies for auto loan securities. It is likely taxpayers will never be paid back for bailing out GM but Goldman Sachs and other Wall Street firms will profit royally from the GM initial public offering.
Ford is the recipient of a $6 billion Energy Department loan, which will enable it to produce “energy efficient” cars, in which it otherwise would not invest. The taxpayer is subsidizing electric automobiles, the widespread use of which would create problems. The power grid in many parts of the country is already overburdened. For the most part, electricity is produced by burning fossil fuels. Electric cars are not zero emission.
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