Regardless of who wins Tuesday’s election, the next great argument in Washington is whether there will be a second ‘stimulus bill’ (ie, bailout). Constituencies are already lining up. House leaders have heard from mayors, governors and state transportation officials, looking to Washington to save them from the balanced budget requirements imposed on them. Environmentalists are hoping to add billions to fight global warming, and other interest groups are expected to jump into the fray after election day. Where will the money come from? Charlie Rangel is clear: it will be tacked on to the federal deficit.
There will also be tremendous political pressure applied to bail out the U.S. automakers. It will come from Michigan’s Senators and Congressmen, as well as Governor Stabenow. But the most powerful constituency for a bail our of the automakers will be the unions. That’s because — as Steven Pearlstein points out — they would be the prime beneficiary:
The real flaw in the government-financed merger proposal is that it spares the companies from bankruptcy reorganization, the very process they need to get their costs and structure in line with market realities.
Only a bankruptcy court can reduce the burden of pension and health benefits to 600,000 retirees that are slated to cost the companies $90 billion over the next decade…
And only a bankruptcy court can impose on members of the United Auto Workers pay and benefit packages comparable to those paid at the nonunionized plants of foreign manufacturers that have been stealing market share from the Big Three for decades.
If the Treasury were to commit government funds without getting this kind of long-overdue restructuring, it would simply be throwing good money after bad.
Do the American taxpayers want to see billions more of their hard-earned tax dollars spent propping up companies and unions that have spent years using Washington to protect themselves from the realities of the market?