GOP Balking at Auto Bailout

Good. It won't be popular with the unions, but the unions don't support the GOP anyway so there's not that much of a political downside to opposing a bailout for an industry that can't be fixed by just throwing more money at it:

WASHINGTON — Top Republican senators said Sunday they will oppose a Democratic plan to bail out Detroit automakers, calling the U.S. industry a "dinosaur" whose "day of reckoning" is coming. Their opposition raises serious doubts about whether the plan will pass in this week's postelection session.

Democratic leaders want to use $25 billion of the $700 billion financial industry bailout to help General Motors Corp., Ford Motor Co. and Chrysler LLC.

Sens. Richard Shelby of Alabama and Jon Kyl of Arizona said it would be a mistake to use any of the Wall Street rescue money to prop up the automakers. They said an auto bailout would only postpone the industry's demise.

"Companies fail every day and others take their place. I think this is a road we should not go down," said Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee.

"They're not building the right products," he said. "They've got good workers but I don't believe they've got good management. They don't innovate. They're a dinosaur in a sense."

Added Kyl, the Senate's second-ranking Republican: "Just giving them $25 billion doesn't change anything. It just puts off for six months or so the day of reckoning."

House Speaker Nancy Pelosi, D-Calif., said over the weekend that the House would provide aid to the ailing industry, though she did not put a price on her plan.

"The House is ready to do it," said Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee. "There's no downside to trying."

There clearly is a downside to trying, if trying means giving a poorly run industry taxpayer money without requiring them to change the fundamentals of the way they operate. There is an advantage to allowing a car company to go through bankruptcy - it will allow them to renegotiate the union contracts that are killing their business.

The other issue that won't be fixed with a bailout is the constant meddling by Congress into the automaker's business. Congress requires ever higher average fuel mileage standards which requires companies to build cars nobody wants in order to build the SUV's and trucks that consumers to want.

A bailout is a band-aid that won't put off the inevitible failure of the car companies, a failure they've largely brought on themselves with their union partners. How about asking the unions for a bailout instead of the taxpayers?