I am encouraged that a compromise between Congress and the White House on providing a smaller bridge loan to the domestic Big 3 automakers appears to be near completion. This proposal allows automakers to tap into previously approved funds to get the cash they need to survive right now. This bridge loan should be coupled with the restructuring plans each of the auto executives and the autoworkers union brought to Washington last week to cut excessive costs, restructure their companies, improve overall efficiencies, and make the fuel-efficient vehicles of the future.
This proposal appears very similar to the bipartisan Senate compromise that could have been signed into law the week prior to Thanksgiving. I hope that this three week delay will not unduly affect the long-term viability of the domestic automotive manufacturing sector.
Congress is in the difficult position of predicting the future of the U.S. manufacturing sector with or without this bridge loan. We have to balance “bailout fatigue” with the tens of thousands who work at auto assembly plants like the Chrysler facility in Belvidere, Illinois, and at auto dealerships and auto parts manufacturers in northern Illinois.
But if you just give the automakers the money to pay their normal operating expenses but do nothing to increase the demand for their vehicles, we haven’t solved any of the long-term problems. We need to encourage Americans to start buying cars again by providing them with tax incentives to encourage the purchase of vehicles. We need to pass H.R. 7273 that provides an income tax deduction on the sales tax and interest they pay on a new car. We also should consider a temporary tax credit on the purchase of a new or used vehicle. Finally, auto dealers need to push other car loan sources besides their captive financing arms.
In other words, all options should be on the table. Repeated taxpayer-financed cash infusions cannot and should not be the only strategy that we pursue here.