Sad Day For Taxpayers: Ford, General Motors And Chrysler Get A Bailout

Yesterday, I talked about how one of unintended consequences of the proposed bailout was that a major appropriations bill is being considered without much publicity. Last night, we saw another piece of legislation fly under radar - a bailout for U.S. automakers.

The House passed a bill providing Ford (F), General Motors (GM), privately-held Chrysler and various parts suppliers with a $25 billion loan package. Payments are not due for five years and the interest rates are as low as 4%.

The intention of the loan package is to develop advanced fuel-efficient technology, but the reality is that few strings are attached. Rather, the Big 3 can simply adjust their budgets and use the loans to replace money already allocated to such programs.

Detroit’s automakers failed to learn from history and now the House is giving them our money to fail again. In the 1970s, the Big 3 got caught with their pants down when oil prices jumped. Last year, the Big 3 again was caught with a line of gas guzzlers, while Toyota (TM) took market share with hybrid vechicles.

Given this record, does anybody really think America’s automakers won’t screw up in the future?

The House had a great opportunity to demand next generation vehicles that are significantly more fuel efficient and absolutely blew it. Venture capitalists and private financiers would have had no problems demanding a complete business plan with a timeline for developing next-generation products. Our Congressmen, however, chose to cater to the industry and its unions.

It’s a sad day for taxpayers.

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