If There Isn’t a Bailout of the Big Three Auto Firms, What is the Overall Effect on the Government and on Our Economy?
Question/Comment: If there isn’t a bailout of the Big Three auto firms, what is the overall effect on the government and on our economy?
Paul Solman: Well, in a time of fearsome recession or worse, the loss of another quarter-million direct jobs, and hundreds of thousands more at suppliers and other affected businesses – that would be a turn of the screw. I spent yesterday in Lansing, Mich., for a story slated to run hopefully this week.
Here’s one relevant answer from Steve Bramos, head of the United Autoworkers union branch at the General Motors plant we visited:
“We’re currently in a recession. I think that will further deepen the recession, possibly put us into a depression. We’re asking for $25 billion. And it’s not a bailout, it’s a bridge loan. And if we go the other route, bankruptcy, it’s going to cost the government $75 – 110 billion — quite a dramatic difference — because of all the social programs, and the people that will have to be taken care of who will now be on the unemployment rolls. The cost incurred that the government would have to assume on pensions alone would be astronomical. It would far exceed the $25 billion that’s being asked for.”