CA's Jerry Brown: American auto industry is in trouble, may require subsidies
The US federal government has for too long enabled the domestic automakers to keep up their inefficient and gas-guzzling ways and may now need to spend billions to bail them out. That's what California Attorney General Jerry Brown said yesterday as the Ninth Circuit Court of Appeals heard arguments on a lawsuit against supposedly weak federal fuel efficiency standards.Brown's exact quote, as reported by Reuters: "The American auto industry is in deep trouble and they may require subsidies. They may have to be bailed out by the federal government that has just enabled their inefficiency and their gas guzzling. ... It may be to protect jobs, to protect our own domestic industry, they (US automakers) are going to require billions of tax support."
12 states have filed the lawsuit, which claims that the US National Highway Traffic Safety Administration "failed to meet federal laws requiring the government to determine the impact of regulation on fuel conservation and the environment," according to Reuters. NHTSA says it doesn't need to do that because the standards worry about energy conservation, not environmental protection.
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[Source: Brisbane Times]
Reader Comments (Page 1 of 1)
Howard Lee Harkness 12:34PM (5/15/2007)
The Liberal's (capital L) answer to everything.
Better idea would be to allow the US auto manufacturers to die. Cruel as that might be, it's less so than what would result from Brown-style subsides using my tax dollars.
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Steve 1:32PM (5/15/2007)
as opposed to the us auto industry going under as you suggest, and all the former employees going on welfare and using your tax dollars that way? Not saying the Brown suggestion is a good one either, but it seems your proposed solution would achieve no better effects but put people out of work, AND reduce the amount of tax dollars going into the system from both the companies and their former employees. Given the number of people employed by the U.S. auto industry, it may actually actually increase the number of dollars you and I would have to feed into the system. I'm not too much fond of that scenario either.
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Howard Lee Harkness 2:34PM (5/15/2007)
So, Steve, you assume that the economy in the US can't possibly survive without government help?
The government did not offer to prop up my computer store business when I was having a hard time making a go of it -- but I managed to find other things to do that were more profitable. Without a government handout, even. Oh, it's a matter of scale? Well, tens of thousands of computer stores went under about the same time mine did. We just weren't all in the same politically-connected organization, which is the important difference.
The answer to the problems largely caused by government will not be solved by "more of the same". Government subsidies only make the inevitable that much worse.
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Doug 2:57PM (5/15/2007)
I'm with you, Howard. Why should my tax dollars be wasted even more on inefficient business practice? Let these companies go belly-up if they can't survive with their "quality" products.
If you can't stand the heat, get the hell out of the kitchen (or Detroit).
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iamsancho99 4:53PM (5/15/2007)
Ford and GM have pretty well used up their do-overs. They're about out of credit. When Chrysler got bailed out labor management and vendors had to sacrifice to make it work and in the end the government made a bunch of money on the stock it took. If they do get help, they've got to dramatically restructure their labor agreements. The UAW are amoung the best paid and "bennied" workers in America. It is not fair to expect people making half their income to subsidize this. We already cant afford to buy their labor. Any help that is given needs to be aimed at the capital investment side, new technology etc. Sensible staffing rules and compensation that reflects the market they serve. Likewise with management. We already heard about Ford giving huge bonuses to managers while simultaneously laying off thousands of workers.
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Steve 3:52PM (5/15/2007)
Howard, I wasn't saying to just give them a blank check and a pat on the back. I'm just noting that the reach of the auto industry goes beyond the manufacturers and their dealer networks. More or less, I was arguing whether or not the loss of the extra taxpayers would result in more of a loss than propping up the manufacturers. I have no doubt that the economy could support the hit if they were to go under. But seeing as the government already meddles in the purity of the free market economy, I can unequivocally say that whether or not it could support it ... it simply doesn't have the opportunity. Ask anybody who has gotten a tax credit (subsidy?)on a hybrid (of any make). And I didn't mean for you to take offense at my comment, just posing the question of whether or not, in this case, maybe a little investment on the part of the taxpayers, would yeild greater returns.
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TvLover 4:34PM (5/15/2007)
Guys, forget this twit. Jerry Brown used to be the Mayor of Irvine, CA. He was a big proponent of two really stupid ideas (both of which came to fruition (only one in the idea intended)). The first was to build a bridge accross University Dr. for frogs to cross (yes, you read that right). It was eventually modified and turned into a footbridge for people. The second was to change Michelson Dr from a 4 lane to a 2 lane road in one of the busiest sections of town. This happened. It is still a two lane road today thanks to this genius. 2 lane roads in high traffic areas cause more waste of fuel. Decidedly lacking in the "green" factor. Oh, and he has run for President of the US in the last two elections receiving less than 1% of the votes...
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Der Alte 2:48AM (5/16/2007)
Let the old wood die and leave room for others to take their place. One of the Big 3 needs to go. Whatever is left should leave enough business for the other two if they smarten up. Yes, people will be laid off and put out on the street. Honda and Toyota have opened many plants in the US with great sucess. Hyundai is starting as well and I'm sure will only expand.
The US domestic auto industry needs to reinvent itself. The Big 3 have shown themselves incapable of doing so. In business you either change with the times or die. Perhaps companies like Tesla will lead the US automotive renaissance with new ideas and a new attitude. By propping up a sick and ailing business that is unable or unwilling to change, you are merely putting off the inevitable and wasting lots of money in the process.
If the government just can't wait to spend hundreds of millions, they're far better spending it on battery and solar cell research than on propping up the Big 3. Spending the money on research will at least benefit future generations....using it to prop up the Big 3 is about as beneifical as going down to McDonalds and buying a Big Mac.
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iamsancho99 12:08PM (5/17/2007)
I think the Feds should consider helping big auto, but only in bringing new technology in to play or in coming up with new mfg techniques etc. This will help everyone and strengthen our mfg sector. Help should be limited to loan gurantees and not cash. Anf they should be backed by stock warrants. Admittedly the stock isnt worth much now. If the govt starts subsidizing operations or with their benefit entitlements there will be no end to that. I'm 100% in favor of workers getting good wages and benefits but ultimately they have to work withinb the real business environment too. How about those thousands of people in the job bank, getting middle class wages for doing nothing? GM can do anything it wants as top pay etc. as long as they use their own money to do it. And I doubt that protectionist tariffs are very likely either. tens of thousands of Americans make a living now from so called imports. I dont beleieve the domestic vs import definition means what it did years ago anyway.
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Perry Kravec 9:48PM (5/17/2007)
The only thing the US Auto industry needs is a level playing field.
Right now foreign companies like Toyota can build plants in the US and pay NO US TAXES.
The Japanese have somehow duped the world and is allowed to have a CLOSED MARKET while selling and setting up shop in our FREE MARKET or should I say MORE THAN FREE market .. the good ol dumb USA.
How many Camrys would sell in the US for $45,000.. but that's what a Ford or GM car of the same size costs in Japan after the tariffs.
Just think how much money the US could make if they put a $15,000 tariff on all Japanese cars sold here!
JD Powers states..." GM earns more long-term quality and dependability awards than any other manufacturer."
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