Friday, October 31, 2008

A Sorry Opinion... Indeed

First, I want to say that I was much gratified to find another person who reads the New York Times each day for its entertainment value. Bernard Goldberg wrote a book titled, "Crazies To the Left of Me, Wimps To the Right," which I read this week. I don't agree with everything Mr. Goldberg says, but I can say that I'm on the same page with him in most things. I really recommend the read...

But on with today's subject!

The New York Times has an editorial piece titled, "More Money for Detroit." This particular opinion piece should highlight quite beautifully why I find so much entertainment from these people. They're clearly... nuts. The article begins by saying, 

Here is a measure of just how grim the economic outlook is: It seems to make sense to pump billions more taxpayer dollars into Detroit's automakers even though down the road they could quite possibly go bust anyway.

Really??? That makes sense to you? Pray tell, WHY?!?

They then go on to say that the request by GM and Chrysler is preposterous because both companies are losing money hand over fist and now they're requesting a load of cash to go along with a merger. The NYT says, "Gluing them together would not change this dynamic." But the editorial goes on to argue that the money should be tossed over to them anyway. 

Why? Get this: because "they are expected to offload responsibility for their retirees' health care onto a new fund... they have negotiated new contracts with the auto workers' union that eliminate retiree health care and allow for lower wages for new hires... Some analysts believe they finally have a promising lineup of fuel-efficient cars..." And last but not least, "Even if Detroit's car companies do not manage to survive in the longer term, it may still be worthwhile to keep them from going bankrupt next year. The economy and the job market will have their hands full dealing with the fallout from the near-collapse of the financial system." 

So... taxpayers are supposed to be fine with pumping billions of dollars into failing companies -- partly because these companies are no longer going to be providing their employees with health care upon retirement, which will lead the taxpayers having to pay for those benefits as well... Also, because the companies are now going to be paying less money to their workers, which means fewer tax payers (because people making less money really don't pay taxes). And because even though the bailout may not (and probably won't) work, we shouldn't let the companies go bankrupt next year -- we need to save that treat for another time. 

According to the NYT, allowing these companies to fail next year would be extremely costly to the government because the government's pension guarantee corporation would have to "pick up some of the tab for hundreds of thousands of retirees." Is the NYT actually trying to say that the government won't need to pick up this tab in a later year? Methinks not... 

They also state that, "Detroit's three automakers employ hundreds of thousands of workers and support several million jobs in related industries like auto-part manufacturing and car sales." Yes. This is true. But somebody needs to explain to me how pumping billions of taxpayer dollars into the companies is going to change their sales data? If they're not selling cars, they're not selling cars. So if we pump more money into their companies so that they can continue to make cars that aren't selling, we're just forestalling the inevitable -- and wasting billions of dollars in the process. 

The NYT ends its editorial with this paragraph:

We realize that helping Detroit involves big risks. After bailing out the financial system, it will encourage other companies to seek sustenance at Washington's trough. Washington will have to learn to say no. But at this juncture, Detroit is too big to allow it to fail. And who knows? It may learn to survive.

Oy. At least they have things right when they call it "Washington's trough." Ever notice that much of what comes out of Washington is in reference to pigs? The "public trough" and "pork" are the most prominent. And very fitting, if you ask me. 

Too big to fail... sheesh. Keep in mind, there's no such thing as a government that is "too big to fail." 

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