01 Dec 2008 Make Detroit and Wall Street Work Together, by Ak’Bar A. Shabazz
In bailing out American automakers, Congress is essentially using taxpayer money to cover for bad business decisions.
After years of mediocrity in the industry that seemed to come to a head in a recent series of angry congressional hearings, executives say they have seen the light and will mend their ways.
Initial bailout money is slated to come from the Department of Energy. Congressional Democrats want the money to come from the $700 billion previously allocated to save American financial institutions. The White House wants separate bailouts.
Why not merge the bailouts? As is common in mergers, aspects of both plans would be brought together. It would bring together the money automakers need and the oversight necessary for the banks.
Right now, the auto bailout is more about keeping the industry treading water than about innovation and salvation. The bailout definitely is unfortunate, but our nation’s manufacturing capabilities must be preserved.
It’s also unsettling when lawmakers are seeking to trade bailout cash for a degree of control over the industry, but the sad fact is that American manufacturing is at its lowest level in decades. If we do nothing, we risk becoming a consumer nation that produces nothing and buys everything abroad.
American manufacturing used to be the backbone of our country, but we’ve sent too many jobs to China or south of the border. Labor costs may have been reduced, but it seems American consumers still pay the same or more for the same products.
A whole new bailout mechanism should not be required to protect American manufacturing capabilities. In lumping industrial and financial rescue efforts together, it might actually improve the existing one.
Despite an alleged emergency leaving no time for thoughtful debate with the original $700 billion bailout of Wall Street, a lot of the money authorized to save institutions supporting mortgage and business loans and other pillars of our nation’s financial house remains unspent. Why not, if they must, let the automakers dip into these funds?
It’s not like banks are always using the money as intended. CitiGroup, for example, received $45 billion from the bailout altar. Instead of investing American taxpayer funds in America, Citigroup executives proceeded to spend $10 billion to purchase a Spanish company that operates toll roads.
As in the industrial sector, the banks are allowing jobs and wealth to move abroad. But only the automakers seem to be called on it under the current framework.
It’s obvious there’s not been a lot of scrutiny on how Wall Street’s $700 billion is being spent. Not so with the automakers. Perhaps, in merging the bailouts, a mechanism to bring oversight to all this bailout spending can be created.
All this presents a great opportunity for American manufacturers, unions, taxpayers and the financial companies to begin working together to turn our economy around. Taxpayers have already done their part by acquiescing to the bailout. The financial companies can do their share by using the money as it was intended. Manufacturers can do their part by keeping jobs in America. Unions can help by releasing automakers from burdensome contracts that are no longer financially feasible.
Congress can keep an eye on how our money is spent.
I grew up in the Midwest. Towns that once had thriving economies are now ghost towns as industries move overseas. The peripheral companies that relied on them then went out of business. Some analysts have estimated further business closures could put 12 million jobs at stake.
Congress needs to make Wall Street and Main Street work together to improve the state of our economy. American taxpayers have already done more than their fair share.
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Ak’Bar A. Shabazz is a member of the national advisory council for the Project 21 black leadership network and president of Shabazz Enterprises. Comments may be sent to [email protected].
Published by The National Center for Public Policy Research. Reprints permitted provided source is credited. New Visions Commentaries reflect the views of their author, and not necessarily those of Project 21 or the National Center for Public Policy Research.