To Bail Or Not To Bail...

After years of downward spiraling, the American Automobile Industry is on life support in the intensive care unit. Its lobbyists, those for Big Oil and Congressmen and Senators whose pockets they filled and lifestyles they improved have constantly prevented retooling for fuel efficient cars and have kept indulging the American public's hunger for excessively big automobiles with excessive horse power. Their powerful unions demanded and obtained prohibitively large and comprehensive compensation packages that cannot be sustained under present economic conditions. The most logical scenario would be to let the Big Three go into bankrupcy. The piper must be paid and it is unfair to ask the taxpayer to foot the bill. Let the greedy management and the greedy unions take their well-deserved punishment and we can go on driving Japanese and Korean cars. But it's not so simple. A wise man told me once that one should always owe the banks a lot of money since it would be unecomonical to put in Chapter 11 a large debtor. In order to do the right thing we would have to let millions of jobs go down the drain and this would, in all likelyhood, send us streight into a 1929-type deflationary depression. We have no choice but to bail out the Automobile Industry; however, we should do this with lots of strings - nay, cables - attached. Managment should be forced to cash-in their options at their strike price by year end or lose them; they shouldn't profit, thanks to the injection of taxpayers money, from the rebirth of the firms they have killed and their ongoing compensation packages should be brought in line with the new reality. Labor contracts should be renegotiated to a sustainable level and, should the unions not be prepared to do so, let their members remain jobless while their employers go bankrupt. Furthermore, the new government should appoint an 'Automobile Tsar' who will have wide supervisory powers over the industry and will oversee labor negotiations and wholesale retooling to produce fuel efficient, hybrid cars. There should be a national car registration fee - a few tens of dollars for cars that can do over 40 miles on a gallon; say $1,000 for cars doing between 30 and 40 miles to the gallon; $5,000 for cars doing between 20 and 30 miles to the gallon and, say, $10,000 for cars doing less than 20 miles to the gallon - and a variable tax should be levied that would fix the price of gasoline to $5 per gallon. The proceeds from the gas tax and the registration fees should go towards research for alternative sources of fuel to power automobiles. All this would be hell to implement but we are already on the brink of hell and, unless we want to land right in the middle of it, there is no choice.