It’s Unforgivably Reckless For Congress To Not Rescue Big Three

It would be unforgivably reckless for Congress to refuse to rescue the Detroit automakers.  Whatever the odds of the Big 3’s ultimate success with a loan of $34 billion, the utter certainty of a national economic catastrophe if the loans are denied makes this decision a no-brainer.

Unemployment increased by 3 million over the last twelve months, and the under-employment rate is now 12.8%.  Even in the rosiest scenario, including an auto rescue, unemployment will continue rising throughout 2009, and could reach 9 percent or higher.

Failure to save the Big 3 would make matters unimaginably worse.  A new report by EPI economist Robert Scott estimates the Big 3’s failure could destroy another 3.3 million jobs, shut down thousands of small and medium businesses, and wreak chaos in communities all across America.  Suppliers of steel, tires, electronics, airbags, carpeting, advertising, trucking and rail service would be slammed, and those already on the margin would be bankrupted.

Budgets in states like Michigan and Ohio – already suffering from the recession — would be decimated, causing layoffs of government employees, enormous safety net costs, and service cutbacks.  The cost to the federal government would be at least $150 billion in the first three years in lost tax revenue, unemployment compensation and pension and health benefits.

So yes, the Big 3 must be saved.  They already make fuel-efficient cars but could be compelled to do more.  Their dealers can be trimmed by government fiat.  The UAW already cut Big 3 retiree health costs 50% and starting wages to $14 an hour but is willing to make further concessions.

America needs the Big 3’s investments in R&D and their manufacturing prowess and productivity.  But above all, in the midst of the worst recession in three decades, we need to save the jobs of three million hard-working citizens and taxpayers.