Thursday, Democratic leaders denied General Motors Corp., Ford Motor Co., and Chrysler LLC a $25 billion bailout to provide aid to the ailing American auto industry.  The Big Three U.S. automakers are struggling to stay afloat heading into 2009 amongst an economic meltdown.  It was recorded that the companies had burned through almost $18 billion in cash reserves fighting off collapse in the last quarter of the year.  Now GM and Chrysler have stated they could be filing for bankruptcy within weeks. 

Despite the pending implosion of Detroit’s Big Three, the Democratic Congress has refused to act, stating that they require a business plan of how the automakers plan to use the bailout and reassurances that another future bailout won’t be necessary.  Senate Majority Leader Harry Reid said Thursday:

The executives of the auto companies have not been able to convince Congress or the American people that this government bailout will be its last.

The three automakers promptly issued statements promising the business plan the Democrats desired.  During and after the meeting, CEOs of all three corporations were scrutinzed for their lavish lifestyles, and for traveling to the meeting via their luxury corporate jets.  Despite their ailing companies, the CEOs extravagance suggested that they didn’t support widespread reform to the auto industry.  This didn’t send the right message to the American voters, in Senator Reid’s opinion. 

Friday the Democratic Congress began laying out the conditions for the Detroit auto makers to meet before considering an emergency bailout, with an intent to reconvene on December 2nd.  If approved, voting on the emergency bailout could commence as early as the following week.  Though he wouldn’t comment on whether he approved of the Democrat’s move to return to the auto industry’s dilemma in December, Senate Republican Leader Mitch McConnel said of the Big Three automakers:

I think we all accept that they’re in serious trouble.  No one is happy about that.  But what to do about it remains to be seen.

The Bush administration had criticized the Democrats for letting the auto bailout issue delay while a congressional recess was taken.  In initial talks between Congress and automakers, the idea of government investment in the auto industry to justify a bailout was discussed, but later discarded.  Recently Congressional Republicans and President Bush had supported a bi-partisan plan to divert government funds reserved for improving fuel-efficiency to the ailing automakers.  However, most democrats were unwilling to support the plan, resolute that the automakers get their act together.  The Big Three insisted that they were not manufacturing unappealing cars, but rather that it was the economic meltdown which had caused their current predicament. 

Despite rapidly declining gasoline prices, fuel efficiency has become the chief concern of the American consumer.  With several of the Detroit automakers continuing rapid production of undesirable trucks and sport utility vehicles, sales have been low.  In addition, the fuel efficient sedan and compact vehicles produced by American automakers fail to match the sales of Japanese and Korean automakers Toyota Motor Corporation, Honda Motor Company, and Hyundai Motor Company. 

The idea of bailouts has become quite unpopular with the public after the backlash from the latest $700 billion financial rescue.  After the decision to deny automakers financial aid was made Thursday, Democratic Representative Barney Frank said of the last bailout:

There is a sense that we did not do a good enough job of safeguarding the use of those funds, or providing prevention against abuse.  And you could not get, I believe, through either house of Congress today what some people might think was a repeat.  That’s why we need to take time. 

The public as a whole has voiced against the idea of more taxation, especially if it means sacrificing savings for homes, investments, or college for their children.  With several companies receiving bailout consideration, individual Americans want to know when their financial support is coming.  Unemployment rates in certain states are at all time highs, and thousands more homes are foreclosed on each day.  Banks then attempt to unload foreclosed homes at cutthroat prices without much success.  The entire situation could become as dismal as the great depression, according to some economist’s speculations. 

Regardless of whether or not the bailout goes through, it is clear that haste is necessary to address this issue.  With the Big Three automakers on the verge of implosion, if no decision is made the decision will be made for the government. 

The situation for the Detroit automakers is dire.  Even if one of the automakers declares bankruptcy, estimates indicate U.S. job losses in 2009 as high as two and a half million.  Combined, the three companies employ almost a quarter million workers, and three quarters of a million more produce materials and parts that go into their cars.  Another million people work in dealerships across the nation.  This, combined with lower than average market sales across the board, could spell calamity for the marketplace.

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