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Saturday, November 22, 2008

Bailing out the Detroit Three

Yesterday, Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid sent a letter to the Detroit Three automakers. In the letter, they lay out some the conditions to be imposed if a taxpayer funded bailout is to go ahead.

That Congress should be demanding a business plan - and some assurances that any loans can be repaid - is good. However, in spite of UAW President Ron Gettelfinger's earlier assertions that there will be no concessions, nothing in the letter supports the urgent need to rewrite the existing contracts between the companies and the union.

Will the Detroit Three CEOs dare to include contract revisions in their response to Congress? Or, given that the Democratic Party is entirely beholden to the unions, will they surrender to political correctness?

Unless the union contract issues are addressed, taxpayers are likely to lose all of their hard earned investment money while the long overdue reorganization of the domestic automobile industry will merely be deferred for a few months. Liquidation, rather than reorganization, may become the only option if the Detroit Three, Congress, and the UAW decline to face reality now.

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