Recently, as in within the last week, the government officially alerted the American public to the fact that we are experiencing a recession. How astute.
Contributing to the recession, now officially acknowledged, is the decline of the car companies generally referred to as the "Big Three." Ford, General Motors and Chrysler make up this manufacturing behemoth that has been the backbone of American auto-manufacture since the invention of the car. In fact, in recent years, the members of the Big Three have come to dominate the industrial sector of American business, becoming the three largest and most influential industrial manufacturers of any product. And now, they are in decline.
In order to stay in business, the three companies have approached the federal government in the wake of the recently approved bailout package and asked for $34 billion dollars, which they believe would bolster their capabilities to compete with more popular, better-seated foreign auto companies.
The government has balked at this request, citing the past irresponsibility of the automakers in managing their money, as well as the current relative unpopularity of domestic cars as opposed to foreign automobiles. Furthermore, the government said the auto companies have grown too large and cumbersome to continue on their current paths. For these reasons, opposition to the auto bailout is strong.
I don't propose to defend the auto companies. I believe they need to adjust their business models, conform to the times and update union benefits. The concept of a line-worker shooting lug nuts into a car's wheel for upward of $60 an hour doesn't jive, but that's beside the point. More importantly, the government will prove itself foolish and hypocritical should it deny the automakers the aid they so desperately require.
It would be the height of hypocrisy not to lend to the car companies when, just last month, the Fed paid out $20 billion in a second bailout package for financial giant Citigroup. Deemed "too big to fail," Citigroup has been allotted approximately $40 billion; the second $20 billion given after the first 20 had been frivolously squandered. There have been substantiated reports of foolish asset-buying, raises and vacations paid for with money used in the first bailout, prompting the company to beg for more, which was promptly paid.
The logic doesn't follow. Three companies, which make up an integral part of the American economy, need $34 billion, collectively, to stay afloat. One company, which essentially fills the role of "company that moves money around," has been given about $40 billion to continue to do nothing. U.S. policymakers need to wake up and realize that whatever faults one might find in the Big Three won't be fixed if the companies close, and that they, like Citigroup, might just be "too big to fail."
Aaron Davis is a sophomore English major who would like to point out to his lady readers that he also is too big to fail.