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Argument: Failure of US autos would devastate US economy

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Bob Herbert. "‘Drop Dead’ Is Not an Option". New York Times. 17 Nov. 2008 - But in the current environment, allowing one or more of the Big Three to go bankrupt would be like offering up your nose to Sweeney Todd to spite your face.

It’s not just General Motors or Chrysler or Ford. The U.S. auto industry is the cornerstone of American manufacturing. It supports millions of jobs, directly or indirectly, in a vast array of businesses.

Start with the thousands of parts in each vehicle. They are produced by suppliers across the country, from one coast to the other. Those supplies have to be manufactured, packaged and transported. Truck drivers, railway systems and shipping companies are involved.

And, of course, there are dealers everywhere. And the auto repair industry. And the insurance industry. And vast systems of advertising supporting every kind of job you can imagine, from messengers to accountants to filmmakers and beyond. All of that advertising funnels absolutely crucial revenues to television, magazines, newspapers — you name it.

If G.M., which is on life support, or Ford or Chrysler were to go bankrupt, the reverberations would kill the jobs of entire armies of American workers. It would undermine the standard of living of hundreds of thousands of families and shutter the entrances of untold numbers of small and intermediate businesses.


Matthew F. Pawa. "Saving Detroit - from itself". The Boston Globe. 16 Nov. 2008 - "Letting these companies die also should be off the table. They employ more than 200,000 people. These workers, their company towns, the dealerships nationwide, and millions of other workers reliant on the automobile industry would face economic catastrophe if the companies fail. Taxpayers would likely pick up the costs of pensions and other liabilities. The social costs would be enormous."


Daniel Gross. "In Defense of Detroit". Newsweek. 13 Nov. 2008 - Another difference between this and other large bankruptcy cases is the potential collateral damage. New York will survive the failure of Lehman Brothers and Bear Stearns, although it will feel the pain of lower tax revenues and retail sales. When a national retailer goes down, it hurts landlords all over the place, but rarely causes an entire mall to become vacant. But already-depressed Michigan, and several adjacent states, will have a much more difficult time dealing with the collapse of an automaker. This doomsday economic scenario, released by the Center for Automotive Research, says that up to 3 million jobs nationwide could be lost if the Big Three stop all production next year. That might not be in the offing. But the impact on Michigan's cities, towns, state government, housing values, and public institutions (including resources that the state has built that are national resources, such as its public university system) would suffer grievous harm.


"US carmakers deserve another chance". The Business Times Singapore. 18 Nov. 2008 - But for all their faults, letting the US carmakers go bust at this time would likely have devastating consequences. It could set off a chain of bankruptcies - of dealers, suppliers and ancillary companies across the United States. The effect on consumer and business confidence - already at a low - would also be shattering. No doubt, there are legitimate fears that a bailout would set off demands for rescue from other industries. But few are as pervasive across America as the carmakers. Moreover, Americans are no strangers to rescuing the car industry, having bailed out Chrysler three decades ago, and seen it rise again.


"Congress must bail out our auto industry". The Register Citizen. 16 Nov. 2008 - Three weeks ago, President-elect Barack Obama asked President George W. Bush to prop up the American auto industry on the ground that letting it collapse would devastate the American economy, conceivably beyond the point of repair.

He is right! The death of the industry that was the “arsenal of democracy” during World War II would plunge the United States into a prolonged recession and send an economic tsunami around the globe — likely decimating the economies of Canada, western Europe and Japan as well.


Ken Murer, Co-founder, APC Direct, a Chesterfield, Mo.-based advertising firm that creates direct-mail campaigns for car dealerships: "The auto industry is crucial to the economy because of all the independent mom and pop suppliers and dealerships that depend on it." (Inc Magazine, November 2008)[1]


"Help Detroit Big 3, but add strings". Toledo Blade. 2 Dec. 2008 - As Big Three executives take their do-over this week in Washington, talk nationwide will be about whether and how to save the American auto industry.

Here in Toledo, "saving the auto industry" is just another way of saying saving the carry-outs and restaurants down the street, saving our neighborhoods from an even greater onslaught of "bank owned!" for-sale signs, saving emergency rooms from being used as primary care sites, saving … everything.

We'll all get dinged hard in the chain-reaction crash that would happen if we slam on the auto industry's brakes. Last month, the Ann Arbor-based Center for Automotive Research looked at what would happen to the national landscape without this sector of the economy, and the immediate impact would be devastating. Counting direct, supplier, and spinoff employees, almost 3 million people would lose their paychecks.

In economic terms, the end of Detroit in 2009 would stunt personal income nationwide by nearly $151 billion, according to CAR, which projected that government losses that year would total more than $60 billion.

The auto industry is clearly and inextricably entangled with the overall economy. The social costs of letting even one U.S. automaker meet a free-market fate and collapse might constitute too high a price tag.


"Barney Frank: Failure to help Detroit ’would be a disaster’". Associated Press. 5 Dec. 2008 - House Financial Services Committee Chairman Barney Frank, a Democrat, said failure of Congress to act now to help Detroit’s Big Three automakers "would be a disaster."

Senate Majority Leader Harry Reid, a Democrat, said the Labor Department’s report of 533,000 job losses in November — the biggest job loss in 34 years — makes the auto bailout even more urgent.

"We must ... prevent the auto companies from collapsing, or we risk adding millions of more Americans to the unemployment line," Reid said, noting that "more than 10 million workers (are) already unemployed."

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