December 8th, 2008, Fairfax, VA—Americans for Limited Government President Bill Wilson, along with top conservative leaders today called upon members of Congress in a letter to vote against a $34 billion bailout package for the Big Three automakers: GM, Chrysler, and Ford.
The letter, with 18 signatories from the heads of movement conservative, limited government, and free market organizations to every member of Congress, called upon members to reject the automakers’ request for new government loans to stay afloat. It, instead, urged members to encourage the automakers’ to file for Chapter 11 bankruptcy protection if they cannot remain solvent.
“The $34 billion taxpayer bailout for which the Big Three are now asking is an unfair imposition upon the American people who are in no way responsible for, and should not face the consequences of, the profligate behavior of Big Three corporate and UAW union management,” read the letter.
Wilson believes that bankruptcy is the only option for the Big Three. “The nation’s bankruptcy laws were written with companies like GM, Ford, and Chrysler in mind,” said Wilson in a statement. “These companies have built-in, so-called legacy costs—pensions, health and other benefits—whose out-of-control growth have rendered the companies’ unprofitable.”
“The companies blame the current economic downturn, and not their own incompetence, for the current malaise they face,” Wilson added. “The fact is, any company that cannot withstand an economic downturn through the normal scaling back of operations that one would expect to occur may not be properly structured.”
“Things are so bad for these companies that Chapter 11 is the only way they can with confidence work out new contracts with labor, slow down production, close operations at their multiple dealerships, and otherwise readjust their business models to be able to adapt to economic conditions,” said Wilson. “Without going through bankruptcy, the Big Three will probably be hopelessly tied down by the contracts they have with Big Labor.”
According to the letter, the average unionized worker working for the Big Three makes on average $75 per hour in wages and benefits, nearly triple what other workers on average make in the private sector, has a JOBS Bank Program that entitles them to nearly a full salary not to work, and offers a generous 30-and-out pension program.
Wilson believes these costs have become “unsustainable.” In his statement, he said, “The current problems faced by the Big Three are the same crisis many holders of pensions will be facing in the coming years. Clearly, the taxpayer cannot afford to bail out every pension in the country, and for that reason, Congress must not create a new entitlement of guaranteeing every retirement plan in the country.”
“If Congress cannot draw a line in the sand here, there is no telling when and where the bailouts might ever stop,” added Wilson.
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