Michigan Mayor Says No Auto Bailout Will Mean Depression

     Give the auto companies billions of dollars or Americans will all be lining up for soup.

     At least that was the warning from the mayor of Lansing, Mich. “You know this is a sure prescription to go from recession to depression if you allow this auto industry, our manufacturing prowess, to fall by the wayside,” Mayor Virg Bernero warned on CBS’s “The Early Show” Dec. 2.

     “It’s unfathomable. It’s unthinkable. Failure is not an option,” Bernero continued. “This industry is too important, not just to Lansing, Mich., but to the whole country. This is our manufacturing base. You know we were the arsenal of democracy. We’ve talked a lot about economic security, and that’s number one, but what about national security? You know, we were the arsenal of democracy in World War II; it was the auto industry that helped turn us around. Can you imagine a country, I would ask, can you imagine America losing our manufacturing edge, not having that manufacturing prowess? That hurts our national security.”

     Bernero compared the possible auto bailout to the previous Chrysler bailout.

     “Look at the Chrysler aid package 30 years ago. That was a good investment for taxpayers. It was paid off early and in full and I believe this will be a prudent investment,” said Bernero.

     But one Bloomberg editor disagreed with that assessment. “Well, it’s different this time because this landscape is different,” Bloomberg Editor-at-Large Doran Levin said of the Chrysler comparison on Bloomberg’s “On the Economy” podcast Nov. 7.

     “First of all Chrysler was the weakest of a Detroit auto-making trio that basically controlled the market and had 90 percent. What you have now is three weak automakers and together they control less than half the market.”

     Smith noted during “The Early Show” that the city Bernero represents is home to some 6,000 auto industry workers.

     Bernero has pushed hard for a bailout of the auto industry, according to WEYI, the NBC affiliate in Michigan. On Nov. 19, Bernero put together a number of local officials to lobby for the rescue.

     Bernero even sparred with Fox Business Network’s Neil Cavuto over the issue Nov. 16, arguing that not bailing out the auto industry was a “prescription for going from a recession to a depression.”

     “Here is where your rigid capitalist ideology tumbles, because you are forcing our American auto companies to compete in non-capitalist, in a non-free market economy … Our companies are competing against countries, they’re not competing against other auto companies because they would be winning,” Bernero said. “The fact of the matter is Hyundai, and Toyota and Honda and those companies; they have immense support from their governments. But you and others like you in America, you want that line of demarcation between government and companies and that would be great if it were true in all the other countries.”

     Bernero continued, “I’m not here to tell you that the American auto companies didn’t make mistakes. But those other auto companies made mistakes too. The difference is their governments are there subsidizing them, supporting them, providing healthcare, manipulating their currencies, and what we have here is pundits like you pulling the rug out from underneath them and kicking them in the shins.”

     Cavuto prompted Bernero by saying his support of the bailout was all about politics.

     Cavuto asked, “So mayor, if you were mayor of Savannah, Ga., you would say the textile industry is too important to fail. If you were down in West Palm Beach, Fla., you would say the housing industry is too important to fail. If you were down – no, wait a minute – if you were down in southwest Texas, you’d say the petrochemical industry is too important to fail. They are all failing right now, mayor.”

     “You can’t pick and choose what you consider to be your nearest and dearest cause. Mayor, you are a great mayor, you are looking out for your people – I admire you for that. But to then say that this is somehow an important national issue if we let these guys go … Mayor, I remember the same argument espoused to keep the television industry in America: Because there would be hell to pay; jobs lost if we didn’t,” Cavuto said.

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