Congress is en route to discussions in regards to whether the Big Three: General Motors, Ford Motor, and Chrysler LLC, are next in line to receive a federal bailout in the range of $25 billion. While there are many who fiercely oppose another federal bailout for Big Three, many economists argue that the auto industry is far too important for Congress to let collapse and that the loss of jobs could prove as a calamity for the already ailing U.S. economy.
Automakers are asking the Government for about $25 billion in loans to help them stay afloat until 2010 and are able to return to profitability. Without the bailout, the Big Three are fearing the all too realistic truth: that they are in serious risk of running out of money in 2009.
President-elect Obama and other Democratic leadership in Congress support helping the auto industry, but oppose the use of the $700 billion approved for use by Congress. They claim that it would be unfair to American taxpayers who are stuck with the bill, since the $700 billion was intended to combat the cascading collapses of American financial institutions. Democratic leaders have propo
sed instead to use funds which were approved for use to develop more fuel-efficient cars to help the auto makers as an alternative.
Many Republicans in Congress have offered what they believe to be a better solution: bankruptcy. It's believed that allowing the massive companies to declare bankruptcy will allow them to relieve themselves of labor commitments they are now unable to honor in addition to allowing the automakers to restructure themselves and potentially return to profitability. Advocates against the bailout argue that there have been industries in the past that have used bankruptcy as a means to make a comeback and return to making a profit.
The Big Three consist of a total of approximately 1.6 million jobs directly related to the auto industry. As of October 2008, the U.S. Bureau Of Labor Statistics had the National Unemployment Rate at 6.5%. Many believe that the resulting job loss if the Big Three were to collapse would prove to be crippling to the freefalling U.S. economy. Many argue that the auto industry, which has been considered by many to be far too imperative to let fail, must be saved to avoid an economic catastrophe and that the Government is the only institution able to help.
