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Auto Industry Wants Another $21 Billion   February 17th, 2009
All these bailouts just aren't working       


More observations...

The auto industry is now seeking $21 billion in federal bailout funds in addition to the $17 billion they got from Bush last December .


General Motors and Chrysler LLC presented their updated turnaround plans to the federal government Tuesday and said they could need an additional $21.6 billion in federal loans between them because of worsening demands for their cars and trucks.

The two firms also detailed plans to cut 50,000 jobs worldwide by the end of the year. In addition, GM plans to close five more plants in the next few years and confirmed it will drop some of its weaker brands.

A quick review...

First we had TARP, the $700 billion boondoggle that hasn't really helped the financial system.

Then we found that the real costs of government bailouts (counting money being managed by the Federal Reserve) was actually closer to $7 trillion.

Then we had the $25 billion auto bailout that was rejected by the Senate but which resulted in President Bush giving the auto industry $17 billion anyway.

Then, last week, we had Treasury Secretary Geithner's revamped "plan" for the financial sector which nobody was very impressed with and concluded it was mostly just a continuation of the previous ineffective plan and which would most likely cost more than the remaining $350 billion available . We later found out that the real cost of the bailout could be $2 trillion and the reason why Geithner's plan didn't provide any real plan was because he didn't want to spook Congress right before they voted on the "stimulus" package.

Then today we had the $789 billion "stimulus" package which is more about Democratic social programs than it is stimulative.

And now, the same day, we have Detroit coming back and saying that even when they promise to cut about 25% of their workforce, they still need another $21.6 billion from the government. So will Obama accept the idea of giving an industry $21.6 billion so that they can lay off 25% of their workforce? Or will Obama counter with, say, $30 billion as long as they don't lay anyone off? Won't it be ironic if the auto industry actually gets more than what they're asking for in return for "no layoffs?"

I can't be the only one thinking the whole concept of government spending our money to save us from ourselves isn't working out so well. Does anyone really think we can keep borrowing ourselves into prosperity to avoid the pain? That if we just resign ourselves to borrowing a little more money under the guise of "investment" that, in the long run, it's all going to work out? Doesn't that just fundamentally seem like a bad plan? Especially without any evidence that it's working? Aren't liberals usually against faith-based initiatives?

Adding up the above, our government has left us on the hook for potentially about $10.5 trillion in new spending and obligations since September. Keep in mind, the ENTIRE NATIONAL DEBT in September was "only" about $9.5 trillion. It took us about 225 years to reach approximately $5 trillion, about 8 years to double it to $10 trillion, and potentially about 5 months to double that to $20 trillion.

Granted, that's the worst case. Our real national debt today is still "only" $10.8 trillion, not $20 trillion. But all the potential spending and obligations that our government has committed to potentially do leave us on the hook for up to $20 trillion. And that number did double in less than half a year. And that figure doesn't count the "normal" deficits we can expect for the foreseeable future.

Perhaps it'd be one thing if there were some indication that it was working. But everything suggests the opposite. The financial sector that was bailed out in September still is broken and potentially needs $2 trillion more. The auto industry that was bailed out in December is now back asking for an amount that more than doubles their total bailout to $38 billion. We're spending money on Obama's stimulus but there is no real evidence that it will work, much less quickly.

This isn't rational, folks. We're throwing money away by the trillions now. Based on nothing more than "hope." Today's "hope" is being borrowed from the next generation in exchange for despair. This simply isn't fair to the next generation.

Update 2/20/2009: A similar analysis appeared three days later: "It's easy to spend somebody else's money... It's easier to spend someone else's money who's too young to vote and hasn't been born yet, and that's exactly what's going on. It's not only irresponsible. It's unethical."

Some politicians are asking us to take the bitter pill, hold our noses, and do the tough thing for the sake of our country: Borrow and spend more money. But the borrowing party is over. It's time to take the REAL bitter pill, hold our noses, and do the really tough thing for the sake of our country: STOP borrowing and spending money. Let this generation, not the next, shoulder the pain for our reckless borrowing.

Thomas Paine, the "father" of the American Revolution, said: "A generous parent would have said, 'if there must be trouble, let it be in my day, that my child may have peace'." He was so right, and this stimulus package is precisely the opposite.

As for the auto industry? If they want to be bailed out, they should ask someone with money. The U.S. Government doesn't have any and, notwithstanding that, it already spent $787 billion today.

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