Tuesday, May 21, 2024

Welfare Mentality…

November 25, 2008 by  
Filed under Money/Business, News

(Akiit.com) There’s an old saying that goes “Fool me once, shame on you. Fool me twice, shame on me.” What members of Congress failed to do in the recent Wall Street bailout – get a detailed plan of action from company CEOs, require them to scale back lavish spending habits and overall demand that company executives be good stewards of tax payers’ money – they don’t plan to make the same mistake when it comes to the auto industry.

So when the three CEO’s of Chrysler, Ford and General Motors flew into Washington, DC in three separate private jets last week to plead their case on Capitol Hill, their claims of destitution were met with skepticism. The least they could have done was jet-pool. That’s probably one of the reasons Congress fell way short of approving a potential $25 billion handout last week.

That’s not to say Congress won’t eventually give in to the billion dollar grant to prevent Chrysler, Ford and General Motors from drowning in their own man-made cesspool of debt, especially when the glare from their bling blinds their physical eye while the strings of their emotional extortion pull at their sentimental eye to take them down with a one-two punch. Like a Thanksgiving Day meal, if the pork doesn’t get you the sugar will.

When asked by members of Congress if they plan to sell their jets to cut down on expenses the same as someone might sell their car if they can’t afford the note and insurance, the CEO’s declined. Company talking heads claimed the need for private jets was for safety reasons. But their fat rat status didn’t speak favorably to their argument of need.

According to some people who would know, the cost of a private roundtrip jet ride from Detroit to Washington, D.C. is around $20,000, times three jets equals $60,000. A first class roundtrip flight on a commercial jet costs around $500. Cheaper air travel won’t solve the problem, but it’s a step in the right direction.

It’s just like the person who drives up in a Bentley wearing designer clothes to apply for welfare. He doesn’t need more money. He needs to manage his money better.

As for the emotional extortion part of my opinion, automakers say if they don’t get the money they need to pay mostly retiree benefits and other operating expenses, manufacturing plants will be forced to cut jobs and shut the doors causing other companies connected to the auto industry to do the same. They claim it will compound an already grave situation for the American middle class. And on cue there are news stories featuring middle-class Americans as poster children for the auto industry.

Growing up as the child of a single mother and currently a member of the middle class, I understand the struggle. Also, my uncle’s pension comes from a company that made car seat belts. But it seems most company executives want to borrow our story to gain access to public funds then get amnesia about who the beneficiaries should be once the deal is done.

Before there can be an effective solution, first one must admit to the problem. It’s the same process for corporate American CEOs as it is for recovering substance abusers. In the words of Sen. Chris Dodd (D-Conn), “Their board rooms…have been devoid of vision. The Big Three turned a blind eye to opportunities. They have promoted and often driven the demand of inefficient, gas guzzling vehicles, and dismissed the threat of global warming.”

Also after-the-sell customer service and resale value of most American vehicles is a concern.

Although I prefer to purchase American-made products as a show of support for our economy (I drive a 1998 Ford Mustang), the reason U.S. automakers are in their current predicament is that oversees auto makers are taking a majority share of the American car market leaving less money to divide among the big three. Polls as late as 2007 reveal most Americans prefer to own foreign cars because of their better quality and better gas mileage.

So before Congress forks over a quarter of a trillion dollars into what could be a bottomless hole with an accelerator attached, they should realize that more money is not the solution to the auto industry problem.

Written By Steffanie Rivers

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