Failure of auto industry could set off catastrophe - Yahoo! Finance
DETROIT (AP) — Advocates for the nation’s automakers are warning that the collapse of the Big Three — or even just General Motors — could set off a catastrophic chain reaction in the economy, eliminating up to 3 million jobs and depriving governments of more than $150 billion in tax revenue.
Industry supporters are offering such grim predictions as Congress weighs whether to bail out the nation’s largest automakers, which are struggling to survive the steepest economic slide in decades.
And, of course, these “advocates” are entirely unbiased in their pleading for the taxpayers to save their jobs for them after decades of mismanagement.
For a more realistic view, check out (of all places!) the New York Times:
Some experts note that while bankruptcy would be painful, it may be preferable to a government bailout that may only delay, at considerable cost, the wrenching but necessary steps G.M. needs to take to become a stronger, leaner company.
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What I’ve heard suggests that Detroit is resisting Chapter 11 because they fear sales will slide even farther into the toilet. I’ve got my doubts about that: bankrupt airlines seemed to do a fair amount of business after their filings.
> depriving governments of more than $150 billion in tax revenue
Aye, there’s the problem.
The Big Three are ham-strung by union contracts. A bailout leaves those contracts as is, so big labor and the Dems will move that way. Chapter 11 puts pressure on the union contracts as well. It is time for American auto makers to become competitive. To do that, a lot of work needs to be done on the labor contracts.