Capitalism In Question: Why Is GOP For 'Forced Restructuring' Of Big Three?
Congress will spend the remainder of this week arguing over the Detroit Big Three automaker bailout -- $14 billion in emergency bridge loans aimed at keeping at least two of them, GM and Chrysler, in business.
The House approved the bailout tonight. Now it moves to the Senate, where it's heavily opposed by Republicans.
Okay, that makes sense, you say. Free-market Republicans ought to oppose a government bailout of a failing company.
But what might surprise you is the alternative they prefer: a "forced restructuring" of at least GM and Chrysler, according to Sen. John Ensign (R-Nev.).
In other words, a Republican is in favor of the federal government forcing a corporation to change the way it does business, the way it's run, the products it makes. They don't like the way private-sector corporations are running themselves and want to make them change.
Now, that's surprising. At least it used to be.
The current financial crisis is doing more than just draining 401(k)s, throwing markets into turmoil, determining presidential elections and putting people out of jobs. It is causing Americans to question the very nature of U.S.-style capitalism.
Greed and short-sightedness have flipped our system upside down and Americans rich and poor are turning to the government for help. Each federal response, it seems, takes the economy one more step away from capitalism and toward nationalization.
In this feature -- Capitalism In Question -- we will take a hard look at these steps as a way to help us better understand what kind of economy we are becoming.
In the case of the automakers, Republicans are not advocating a true free-market -- a place where profitable ideas succeed and poor ones fail. If they were, they would oppose any sort of government action -- bailout, forced restructuring, whatever -- directed to the Big Three or any company, for that matter. If they were laissez-faire capitalists, they would tell the automakers: You're on your own. Sink or swim.
Instead, they favor a highly invasive form of government intervention -- one that is much more invasive than the Democratic plan of simply lending automakers money at a good rate.
At a press conference yesterday afternoon, Ensign was joined by Sen. Richard Shelby (R-Ala.) and a handful of other Republican senators. They said they were working on an alternative to the $14 billion bailout bill passed by the House last night that would require the "forced restructuring" of the struggling Big Three, presumably through Chapter 11 bankruptcy.
"Unless Chrysler, Ford and GM become lean and innovative and competitive in the marketplace, this is only delaying the funeral," Shelby said, referring to the bailout.
And when did it become the job of a U.S. senator to ensure that any private-sector company become lean, competitive and innovative?
The government "has to make sure they come out healthy on the other side," Ensign said. Oh? It does?
But wait, there's more: Ensign called for new-car warranties on vehicles made by GM, Ford and Chrysler to be backed by "the full faith and credit" of the U.S. government.
Now the government is in the business of guaranteeing products? What's next, toasters?
Not all Republicans are on board with this idea.
Rep. Ron Paul (R-Texas), a former presidential candidate and a deficit hawk, was outraged on the House floor tonight and railed against the growing government intervention into the private sector.
"We're in the middle of heading into nationalization without a whimper," Paul said. "It's such an embarrassment and such an insult to those of us who believe in freedom. This is what it's come to? Bailout after bailout after bailout? It's the nationalization of our industry."
December 10, 2008; 9:12 PM ET
Categories: The Ticker | Tags: Chrysler, Ford, GM, capitalism, nationalization
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