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Why the Bailout Is Bad Medicine



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Detroit, Mich. – Despite the rational advice of the Wall Street Journal’s insightful former business editor, Paul Ingrassia, a bailout for America’s automakers looks increasingly likely under a union-beholden Democratic president and Congress.

President-Elect Obama put the auto industry’s plight on the front burner in his first press conference Friday. Yet an auto bailout — as opposed to government-appointed receivership, as Ingrassia suggests — would open the companies to the special-interest priorities of Washington’s hyper-green politicians.

Consider this line from Obama’s press conference: “I have made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis, and succeed in producing fuel-efficient cars here in the United States.”

Has The One noticed that gas prices have plunged to a national average of $2.15 a gallon this week? ($2.05 here in Michigan)

With last summer’s $4 price shock, consumers are still wary of big vehicles. But if low prices continue, will fuel efficiency be a priority 12 months from now? Of course, Obama could set a market price signal (as writers like Tom Friedman suggest) and goose gas taxes to a permanent $4 a gallon, but no incoming pol is going to go there.

Smelling bailout, green interests are already lining up behind Obama for their pound of flesh.

Activists with TheClean.org and 40MPG.org on Tuesday demanded that the bailout come with long green strings attached. “If Washington is going to give yet another loan-guarantee bailout to Detroit automakers,” their press release read, “the price tag for doing so should include requiring the car manufacturers to end their four-year-long legal assault against global warming laws in California and three other states.”

“Further,” said Pam Solo of 40MPG.org, “Congress should insist that every penny of the $25 billion in new loan guarantees that Detroit is seeking be targeted to building the cars of tomorrow (hybrids, clean diesels and other highly fuel-efficient vehicles), not the gas-guzzling dinosaurs of yesterday.

But if politicians demand that cars be built for a market that doesn’t exist, taxpayers’ bailout investment will be for naught.



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