Time and again we’ve heard about the lost jobs and economic impact of failing to bail out the beleaguered American auto manufacturers. But little mention has been made of the consequences of going through with the bailout, and how such an action would be viewed by other Americans.
Time and again we’ve heard about the lost jobs and economic impact of failing to bail out the beleaguered American auto manufacturers. But little mention has been made of the consequences of going through with the bailout, and how such an action would be viewed by other Americans.
In an interview following [1]a Dec. 10 press conference where he and four other senators aired their opposition to the proposed bailout deal struck by congressional leaders and the White House (and approved [2]by the U.S. House of Representatives 237-170 that evening), Sen. Jim DeMint, R-S.C., warned that the perception that some industries are being bailed out and some aren’t could lead to violence.
“We’re going to have riots. There are already people rioting because they’re losing their jobs when everybody else is being bailed out. The fairness of it becomes more and more evident as we go along. The auto companies may be hurting,” he said, but “there are very few companies that aren’t hurting and they’re going to hurt. We don’t have enough money to bail everyone out.”
DeMint blamed the unions for pushing this issue as far as it has gotten. The senator said the notion that reorganization under bankruptcy would not work was generated by the unions for fear of losing their power.
“The primary driver behind this is the unions, because bankruptcy allows the auto companies to basically restructure all their contracts in a way that a bankruptcy judge says will make them sustainable,” DeMint said. “And if they do that, then essentially the unions lose all their leverage. It’s the unions that have brought them to the brink. So definitely, I think the reason they want a political solution and a car czar is because a car czar can protect the unions through this whole process at the expense of the taxpayer.”
The result of the bailout culture that now exists on Capitol Hill will be incredibly high rates of inflation down the road as the economy picks back up and prices reflect the amount of new money circulating through the economy.
“There is no question this will result in inflation,” DeMint said. “The amount of money we’ve borrowed, the amount of money we’ve printed has put us in a more dangerous situation than we’ve ever been in as a country. We may not see the inflation as long as the economy is slow. But, I’ve talked to some economic experts and once the economy starts picking up with so much money in the money supply and so much debt, we’re likely to see very high interest rates and very high inflation rates.”
DeMint went as far as to say that General Motors (NYSE: [3]GM), one of the big three auto manufacturers lobbying for bailout money, was better off than the nation that’s debating whether to rescue it..
“If you look at where we’re going, we’re not on a sustainable course as a country,” DeMint said. “Frankly, GM is in a better financial situation than we are as a country. The only difference is we can print money. But as other countries around the world lose confidence in the value of a dollar – that’s going to come home very shortly.”
Video courtesy of [4]ALG News Bureau. For the entire video, check out their [5]YouTube posting.
Related Links:
[6]The Gohmert Proposal: Weighing the Pros and Cons of Tax Holiday as Bailout Alternative
[7]CNBC's Burnett Downplays Senator's Opposition to Auto Bailout
[8]NBC Discovers Union Role in Auto Industry Turmoil