This is a no brainer. The $24 billion in loans sought by the US auto industry needs to happen. Our government simply cannot afford the industry to fail.
According to Pete Davis’ blog at Capital Gains and Games… “The Big Three financed Center for Automotive Research has estimated that the demise of the auto industry would cost 239,341 direct jobs, 973,969 supplier jobs, and 1,738,034 other jobs from $150.7 b. less personal income. Federal, state, and local governments would be hit with $14.3 b. of increased transfer payments, $21.1 b. of less Social Security payroll taxes, and $24.7 b. less personal income taxes.”
Okay, it’s not a no brainer as it takes a little math. Using Davis’ figures, the total direct cost to government to let the almost 3 million jobs disappear would be $60 billion for one year. That doesn’t include trickle down/trickle on. Taxes lost from Wall Street losses. Cost to pony up for the pension plans. And admittedly, while it doesn’t take into account increased revenues by bankruptcy attorneys, it also doesn’t include the cost of increased foreclosures and credit defaults. Pick any number to lend the industry and the math still works. But aren’t we missing something?
Didn’t our President-Elect convince us that energy independence was the next economic bubble – the bubble that will raise the standard of living for all? Let’s use this moment to start it. Let’s add a string to the bailout. Say, new CAFE standards to reach a 50 mpg target for 2010 and 80 mpg for 2012? They’ll reach, because they must.
Wait a minute, the economy stinks so no one is buying cars. Let’s sweeten the deal. Say, a 10% tax credit to anyone who buys a new American-made car. Sure it is unfair trade, but screw the rules, this is an emergency and we need to create jobs.
But there’s another aspect of competitiveness we need to address and it just happens to be another promise of our President-Elect. I do love it when a plan can come together so neatly. The cost of providing employee healthcare is killing the industry – while the lack of it, is killing people. This is the moment to pass healthcare reform.