December 10, 2013 Due December 16, 2013
In 2008, both General Motors and Chrysler were facing bankruptcy. President Obama initiated a bailout procedure where these companies borrowed billions of dollars from the government in order to stay afloat. Read the following articles, cite, and take a stand on the question “Is the government justified in helping private businesses? If so, when are they and when not? If not, then what happens to the unemployed and collapsed business investments?”
Background
Oppose:
http://reason.com/archives/2008/09/25/the-case-against-the-bailout
Favor:
http://www.hybridcars.com/did-the-gm-and-chrysler-bailouts-do-america-a-huge-favor/
- 33 comments
- Posted under Uncategorized
hussibhoa 
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austinmp88
said
“taxpayers were net winners.”(1st article)
According to the background article the bailouts did help the country economically. This does not necessarily mean they were justified but it is a big chip in the stack of those that supported the bailouts.
“It would give unprecedented power to a couple of officials who have proved highly fallible in trying to avert this alleged crisis.” (2nd)
The point raised here is one that I am also concerned about. The people running the private businesses that went bankrupt to begin with were obviously not doing a great job but spending on a business and putting it in the hands of someone that is inexperienced is not the best option either.
“for every $1 spent rescuing General Motors and Chrysler in 2008/09, $8 were saved to the U.S. economy,”(3rd article)
If this was definitely true then I don’t understand how it can be argued that these particular bailouts were bad. My point of contention would be spending money on businesses that politicians have a connection with(funding, lobbying, investment etc.). I believe the governments are justified in the case of the auto bailouts but I’m not a huge fan of bailing out every failed business. My hope is that once the government buys a business and gets it back on track that they would not then return the control to the same people who bankrupted the business to begin with. I’m not sure on the details of that so I will not criticize it.
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sydneymcd
said
I feel like this is going to be a really non-cohesive blog post from me so I apologize in advance.
I definitely think government is justified in helping private businesses. I never really agreed with this until I went to Governor’s School. I think what really helped me come to this view is a movie called Inside Job, which is now one of my favorite movie/documentaries of all time. It was about the housing bubble, subprimes, AAA ratings, blah blah blah. Anyways, it helped me see how important government was in regulating business.Of course our government played a pretty bad guy in that whole situation too, but that’s another story. I feel that government regulation goes hand in hand with bailouts & other help.
As the first link states, “Additionally, the center said the bailouts and financial restructurings saved about 2.6 million jobs in the U.S. economy in 2009 and $284.4 billion in personal income over 2009 and 2010.” Simply from this quote, you can see how many people were effected by this bailout plan. 2.6 MILLION jobs were saved! If these jobs were not saved, just think of the situation our economy would be in today. From the second link I saw this quote that made me want to bang my head against the wall, “Saving companies from their bad gambles turns business into a game of “profits for me, losses for you,” corroding the incentives that make capitalism so innovative and efficient.” Well lets see here, I feel like “profits for me, losses for you” is the whole goal of current American capitalism anyways so I don’t see where that point is headed. Also what makes our capitalist system “so innovative and efficient” is not really all that “innovative and efficient” for the bottom 90%. (…and no, I am definitely not a communist) The first quote of the last link says it all, “According to a new study by the Center For Automotive Research (CAR), for every $1 spent rescuing General Motors and Chrysler in 2008/09, $8 were saved to the U.S. economy, including by those who would have been adversely affected if they’d been allowed to fail.” Eight times the amount of money was saved by this bailout than if we were to just let them go bankrupt. I believe it only makes sense for these bailouts to happen if results like this are the outcome.
Our government is responsible for what happens in this country. By allowing huge companies like GM and Chrysler to flop, we are just setting ourselves up for failure. If we didn’t have these plans, think of the millions unemployed, suffering people there would be in our country. It just does not make sense to allow them to go under.
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joel
said
No the government should not be justified in helping private businesses. But i also think they should because being unemployed isn’t good for the economy and collapsed business investments are going to make the government and the economy even worse than it is. The government shouldn’t help private businesses because they have nothing to do with the government, so the government should have nothing to do with the private business.
Background: “As the auto industry went into crisis in 2008, the federal government stepped in, lending billions of dollars to GM and Chrysler to keep them afloat. The federal help allowed both companies to restructure their businesses through bankruptcies. Today, both companies are profitable.”
http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#ixzz2nBpweQo6. I want to know if the companies are paying the government back and not just by taxes.
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philipeh842
said
I feel like I should preface all my posts about economic issues with, “As long as complete reform is not an option, here is my opinion.”
The specific government bailouts in question were obviously successful. They “saved about 2.6 million jobs in the U.S. economy in 2009 and $284.4 billion in personal income” (first link) and “for every $1 spent rescuing General Motors and Chrysler in 2008/09, $8 were saved to the U.S. economy.” (third link)
The main issue people have with it is that it helps businesses who have failed. “This plan would nationalize the money-losing part of the financial sector, to the benefit of capitalists who have made spectacularly bad decisions—fostering more bad decisions in the future.” (second link) These businesses are part of the backbone of the economy, which is very important to the American people. If these businesses failed, the economy would worsen and the people would be hurt. I believe the government has a responsibility to protect its people, including economically. So yes, government should be involved in business. I’m okay with giving a failed business a second chance in order to save the economy, or at least postpone its collapse.
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candersonbaseball
said
Hello, and my name is Connor Anderson. I just want to tell my fellow Americans (Bill Clinton impression) that the Gov’t should be justified in helping private businesses such as GM. I am in Favor of this.
The background of this story is that from the first article http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#axzz2n5jgDXrd Jerry Hirsch says that taxpayers were net winners. And from this, The Center said the bailouts and financial restructurings saved about 2.6 million jobs in the U.S economy in 2009. This is just a great example why the Gov’t should be able to help private businesses. it seems like everybody wins in the long term.
I favor this because, its only right to get some help from the Gov’t specialty if its a major company (GM). According to the Favor article http://www.hybridcars.com/did-the-gm-and-chrysler-bailouts-do-america-a-huge-favor/ for every 1 dollar spent rescuing General Motors and Chrysler in 2009, 8 dollars were saved to the U.S economy. Even though Taxpayers will lose 13.7 billion dollars. The damage control prevented more bankruptcies that would have sapped 284 billion dollars in household income.
My conclusion is that i think its only right for the Gov’t to help your private business only if its helping the general public of the United States Of America. In this case, The Gov’t helped saved 2.6 millions of jobs and prevented even more possible bankruptcies because of the actions taken be the Gov’t. The Gov’t needs to help more private businesses this way in the future.
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chelsea1collier
said
Okay so short and simple yes the government is justified to help private businesses expecially if the government will get their money back plus profit theres no reason not to“for every $1 spent rescuing General Motors and Chrysler in 2008/09, $8 were saved to the U.S. economy,”(3rd article) now it is messed up that the government wont help every baby business thats about to collapse but they aren’t stupif enough to investment soo much money in saving a business if there were doubts of failure I just dont see the government makong those close gambles in conclusion it sucks if your business is falling apart but if the government helps throw a party and if not your s.o.l
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hkwoodie95
said
Background:
1)“As the auto industry went into crisis in 2008, the federal government stepped in, lending billions of dollars to GM and Chrysler to keep them afloat. The federal help allowed both companies to restructure their businesses through bankruptcies. Today, both companies are profitable.” (http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#axzz2n5jgDXrd)
Points Against:
2) “Nor is there any guarantee the plan would work. The cover of the latest issue of Fortune magazine hails the “steely-eyed Treasury chief” under the headline “Paulson to the Rescue.” The story appears brilliantly timed—until you realize it is about the earlier rescue of mortgage giants Fannie Mae and Freddie Mac. That was just one of several steps taken by the feds that were supposed to halt the downward spiral. None of them has.” (http://reason.com/archives/2008/09/25/the-case-against-the-bailout)
Points For:
3) “It remains true that taxpayers will lose $13.7 billion from the bailouts of both Chrysler ($1.9 billion lost) and GM ($11.8 billion lost), but says the study, the damage control prevented more bankruptcies that would have sapped $284 billion in household income for 2009 and 2010. Beyond that, it’s estimated this would have cost the government $105 billion in reduced tax revenues and increased expenditures for services such as unemployment compensation.” (http://www.hybridcars.com/did-the-gm-and-chrysler-bailouts-do-america-a-huge-favor/)
1)In 2008, GM and Chrysler auto industries went into crisis status. In order for them to recover, they asked for the federal government’s help. The Government complied and allowed the companies to go into bankruptcy and then climb their way back to the top. However, this assistance came with both positive and negative criticism.
2) Some people believe that it was a grave mistake to bail GM and Chrysler out of crisis status. This step was supposed to help the economy, but it did not seem to.
3)Then there is another part of the population that believes that bailing GM and Chrysler out was the best thing to do.
So, is the government justified in helping private business? I believe they are. I think they would be justified in helping if the downfall a major company would have crippling effects to our economy, such as GM and Chrysler. However, the government must make wise choices as to who they bail out.
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alexandrashines
said
No, I don’t think the goverment should help private businesses. They have a certain amount of money to begin with & if they can’t handle it then they shouldn’t have a business to begin with. It’s not the goverment job to make sure they stay afloat. We are wasting billions of dollars on Chrysler & General Motors for what reason? I don’t think anyone wen likes their cars. http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#axzz2n5jgDXrd That money could go towards actually getting the U.S together..
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dreamcatcher62
said
obviously the government is justified in helping private businesses. Do I think the should? Absoultely not. We are a trillion dollers in debt and they assume that its ok to waste money on car compaines? Your kidding me right? And then American citizens are over here seeking government help because they can’t find jobs which then leades them to not be able to pay rent, which then leads them to be no where! Oh, and the funny thing about it is that the government waste the money on the car companies and then people can’t afford to buy the cars! haha! that’s just great! Just awesome! But obviously the government thinks that everythings going great and that it will all get better. “All our debts will be gone” they say,”it will be ok” they say. You know what forget what you say, we’re still in debt, you only care about the stinking companies cause only you get the money and caring for the nation is not on your mind. Enough said.
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annagumpi
said
It is always not bad to help a comany to not bankrutcy. There is always a second Chance to help them. Because if not there are so many employers who then lost their Jobs and thats not good for their families. But you have to look too, if ist the Money, if ist richt or if ist cost to muchto help then. maybe is a new start better than to reconstuct the old one.You have to compare and you have to look at the future. The technick gets better and some companies are not that famous and important anymore, the economy and the future gets more and more a Problem, you can do everything you just want to do it.
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@therealaaronrohlman
said
I believe that the government does have a right to bail out private businesses. Although I don’t really agree with it, by bailing these two major automobiles out of bankruptcy the government saved tons of jobs. “…saved about 2.6 million jobs in the U.S. economy in 2009…” (first link).
Although in doing this it severely hurt the American tax payer. “taxpayers will lose $13.7 billion from the bailouts of both Chrysler ($1.9 billion lost) and GM ($11.8 billion lost)” (the third article). And the economy was already in a tight spot, the government had no money to cover these companies with because they were already in debt. At the time that president chose to bailout these companies I would have been very skeptical about his actions because there was no guarantee that it would work and it could have been a huge waste of money. It’s easy to look back on it now and say “hey it worked so well” but what if it didn’t, then It would be viewed as a huge failure and a waste of tax payer money.
If he would have not taken the risk to bailout these two companies then there would have been a bunch of people with out jobs. That is the risk of not doing anything. But it disrupts the free marked economy that the United States is supposed to have. Regardless of the risks, in hindsight I see what he did as a good thing because of all the jobs he saved. It could have been a whole lot worse in America, and Obama made a good decision in this situation.
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♕Princess Maddie✨ (@GingerMaddie722)
said
I believe that the government should help out private businesses when it is absolutely necessary. I don’t think they should give them money annually, or anything of that nature, but only when their situations affect America as a whole. “A shutdown of the two automakers would have spilled into the rest of the auto industry….and caused catastrophic economic damage” (http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#ixzz2nbbTAikE) In this situation, I think it was okay that GM and Chrysler got help from the government.
In the case against the bailout, I can understand where they are coming from, but you have to look at the big picture. “And one good thing about recessions is that they end, usually in a matter of months” (http://reason.com/archives/2008/09/25/the-case-against-the-bailout) While recessions usually end fairly quickly, they take a toll on the citizens. As we’ve discussed in class, once a family enters into the poverty cycle, it is very hard for them to get out of it. While visible affects of a recession might only last for one generation, the social repercussions would probably last much longer.
Government intervention was very helpful for the economy in this case. “It remains true that taxpayers will lose $13.7 billion from the bailouts…the damage control prevented more bankruptcies that would have sapped $284 billion in household income for 2009 and 2010. Beyond that, it’s estimated this would have cost the government $105 billion” (http://www.hybridcars.com/did-the-gm-and-chrysler-bailouts-do-america-a-huge-favor/) I think of a person who plays the lottery when I read this. Their mentality is that they’ll fork out $1,000 to buy tickets, as long as they have a chance at winning the big Powerball. No pain, no gain. I guess it’s okay to lose a little money, as long as you end up having a greater amount than you lost. I don’t know how much sense that made with regards to this post, it’s just what I thought of. The point is, without this intervention, the government would’ve lost A LOT more money than what they did. In this situation, I feel like they made a wise decision. However, as I said before, it should only be made when there are no better options & it benefits the American people the most.
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erinthebabe
said
The government should be able to help private businesses in the way that they did with General Motors. In the article it said “According to a new study by the Center For Automotive Research (CAR), for every $1 spent rescuing General Motors and Chrysler in 2008/09, $8 were saved to the U.S. economy, including by those who would have been adversely affected if they’d been allowed to fail.” That may not seem like it helps the economy out a lot, but those few dollars would have cost our economy to plummet. “It remains true that taxpayers will lose $13.7 billion from the bailouts of both Chrysler ($1.9 billion lost) and GM ($11.8 billion lost), but says the study, the damage control prevented more bankruptcies that would have sapped $284 billion in household income for 2009 and 2010.” Even though the government is taking out tax dollars and using them to support a business it is still helping our economy substantially if the government would not have helped. People think that all of the money that went towards GM will not be paid back, but in time if the company does very well it will have a greater outcome on our economy. The government stepped in this situation to help America for the greater, but this doesn’t mean that the government is going to help out every business that starts to go into bankruptcy. The United States is already in a lot of debt and if the government tries to help out every company America will be worth nothing.
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jaybyrd40
said
I feel that the government should be able to help private businesses only when it is the best for the economy and necessary. I agree with a quote from the first article that says, “In other words, the U.S. government is not a simple investor in companies but an active participant, when needed, in the overall U.S. economy on the behalf of all of the U.S. citizenry.” I feel that that is what happened when the government funded GM and Chrysler recently because it did prevent many layoffs and possibly a second Great Depression. I also feel that the government should be limited to how much they are involved with private businesses.
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Aislinn Nantz
said
i think if the company is a private owned company then the government should mine their own business and stay out of it
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kiapressley17
said
Is the government justified in helping private businesses? I do believe that i some shape and form yes but at the same time were billions in dept also so how can we help when were helped yes i understand that” bailouts and financial restructurings saved about 2.6 million jobs in the U.S. economy in 2009 and $284.4 billion in personal income” over time ,but i feel like were not stable enough to help any one and this will kill the economy as it is so i feel like there`s know winning to this game and this is what would happen “What they prescribe is for the federal government to buy $700 billion worth of lousy assets from banks and other lenders, exposing taxpayers to a potentially crushing liability. This plan would nationalize the money-losing part of the financial sector, to the benefit of capitalists who have made spectacularly bad decisions—fostering more bad decisions in the future.” and it set us up to fall into a bad spot. I agree with “Thoreau thought of their 19th-century counterparts. “If I knew for a certainty that a man was coming to my house with the conscious design of doing me good,” he wrote, “I should run for my life.” and it also falls into now terms.
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marykiser
said
Is the government justified in helping private businesses? Like most topics on these blogs, I’m not 100% sure. When I read the background article I read, ” As the auto industry went into crisis in 2008, the federal government stepped in, lending billions of dollars to GM and Chrysler to keep them afloat. The federal help allowed both companies to restructure their businesses through bankruptcies. Today, both companies are profitable.” Which, sounds very promising and hopeful. As in the second article that was against this idea, “Nor is there any guarantee the plan would work. The cover of the latest issue of Fortune magazine hails the “steely-eyed Treasury chief” under the headline “Paulson to the Rescue.” The story appears brilliantly timed—until you realize it is about the earlier rescue of mortgage giants Fannie Mae and Freddie Mac. That was just one of several steps taken by the feds that were supposed to halt the downward spiral. None of them has.” And the third stated, “It remains true that taxpayers will lose $13.7 billion from the bailouts of both Chrysler ($1.9 billion lost) and GM ($11.8 billion lost), but says the study, the damage control prevented more bankruptcies that would have sapped $284 billion in household income for 2009 and 2010. Beyond that, it’s estimated this would have cost the government $105 billion in reduced tax revenues and increased expenditures for services such as unemployment compensation.”
With all of these certain points from each article, I wouldn’t say that the government is required and justified to help businesses.
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animallover5544
said
At times, yes, but at other times no. When thousands of jobs are at stake then yes the government should step in and help, but no in a way that cost the US tax payers more then they have to give. This is a tricky question because on the one hand thousands would lose their jobs and their financial business investments would collapse but on the other hand spending that must money when the debt is ever growing is a concern. ” What they prescribe is for the federal government to buy $700 billion worth of lousy assets from banks and other lenders, exposing taxpayers to a potentially crushing liability. This plan would nationalize the money-losing part of the financial sector, to the benefit of capitalists who have made spectacularly bad decisions—fostering more bad decisions in the future. It would add to the liabilities of a government that is already living way beyond its means. It would give unprecedented power to a couple of officials who have proved highly fallible in trying to avert this alleged crisis.” (http://reason.com/archives/2008/09/25/the-case-against-the-bailout) This raises a good point in saying that spending that money, in a government that is past it’s spending limits, would only prove to be disastrous in the long run. “It remains true that taxpayers will lose $13.7 billion from the bailouts of both Chrysler ($1.9 billion lost) and GM ($11.8 billion lost), but says the study, the damage control prevented more bankruptcies that would have sapped $284 billion in household income for 2009 and 2010. Beyond that, it’s estimated this would have cost the government $105 billion in reduced tax revenues and increased expenditures for services such as unemployment compensation.” (http://www.hybridcars.com/did-the-gm-and-chrysler-bailouts-do-america-a-huge-favor/) But if this quote is true, then the bailout was called for in saving money in the long run. It is a tricky situation in which the bailout might have been necessary but it only proves the point that America is struggling even harder now against the debt and that America should watch its spending in the future and consider all precautions and options before making a decision an spending money.
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suarez05j
said
“Additionally, the center said the bailouts and financial restructurings saved about 2.6 million jobs in the U.S. economy in 2009 and $284.4 billion in personal income over 2009 and 2010”
http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#axzz2n5jgDXrd
I think US government is justified in helping private businesses when it comes to saving about 2.6 million jobs like the article said. Those are 2.6 million people with families to support and feed. Although, if they were facing bankruptcy, means that they weren’t selling enough to keep their business prosperous.
Economy is bad right now, i doubt These businesses will help our economy enough, to have US government help them to get out of bankruptcy. The last thing in millions of Americans plans are to get a brand new car, and get in debt. US government should spend their money on things that will help this economy get back together.
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elidethvillalobos
said
In my opinion I think that the government is justified in helping private businesses. If the government didn’t bailout these private businesses in the first place, many people would have been laid off causing yet another major problem in our economy. If helping private businesses from going bankrupt helps keep millions of jobs I think the government helping businesses in general is justifiable enough. Not only were Chrysler and General Motors saved by the government so was the rest of the auto industry. “A shutdown of the two automakers would have spilled into the rest of the auto industry because of the structure of the auto parts supplier base in the U.S., and caused catastrophic economic damage, the report said.” “The failure of one or more key suppliers — no matter how large or small — can shut down entire supply chains, resulting in multiple vehicle and truck assembly plant closings and resonating throughout the entire vehicle aftermarket,” the researchers wrote. http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#ixzz2ngc6NlQv
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seth
said
I believe that the government should share money to private businesses because they already spend billions of dollars on nothing so why not help small and large businesses when they really need it. I think when the government gives companies money so they could stay in business that it helps the economy and it helps the American people get jobs. If the government didn’t help any of these small or large businesses then people would get laid off and that means people couldn’t work and many bad things are caused because of no work. If businesses can’t handle it then that is kind of there fault, but the government should just give them money, that’s already what we do.
http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#axzz2n5jgDXrd
http://reason.com/archives/2008/09/25/the-case-against-the-bailout
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Morgan Fender
said
“Is the government justified in helping private businesses? If so, when are they and when not? If not, then what happens to the unemployed and collapsed business investments?”
I have mixed feelings about these questions. My first reaction when I read the question for this blog post was absolutely not, because if the government can help a few businesses out of bankruptcy, then it’s not fair to all the other businesses who’s names just aren’t as big as Chrysler or General Motors.
But then when I read the background article and I saw that when the government saved the companies from bankruptcy, it saved about 2.6 million jobs and $284.4 billion in personal income in the U.S. economy. I can understand why they bailed out those businesses because if they wouldn’t have, all those jobs would have gone and people would have probably been loosing their homes and getting on welfare or food stamps, which, in my opinion, is ruining our country. http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#axzz2n5jgDXrd
I agree with the opposition article on some things because if the government started making habits of bailing out big companies, the taxpayers would probably start getting very mad that our government officials are using their money to help companies out of a situation that they most likely put themselves in. Steve Chapman said: “If this bailout goes through, the term “limited government” will have to be permanently retired.” I agree with this statement because if the government keeps bailing out businesses, the government can probably make up a new way to help out whoever the want, however they want. In this case, they used taxpayers money to bailout a private company. http://reason.com/archives/2008/09/25/the-case-against-the-bailout
However, it might have been a good political decision to bailout Chrysler and General Motors because it saved so many jobs. Jeff Cobb said: “for every $1 spent rescuing General Motors and Chrysler in 2008/09, $8 were saved to the U.S. economy,” This statement explains kind of why I agree with Obama’s decision in the bailout, because it saved our country a lot of money. But it could have very easily been the other way around. http://www.hybridcars.com/did-the-gm-and-chrysler-bailouts-do-america-a-huge-favor/
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zacht27
said
According to Los Angeles Times, The Center for Automotive Research has stated that taxpayers were “net winners” in the auto industry bailout of 2009, stating that the bailout caused the U.S. government to lose about $13.7 billion while it “saved or avoided the loss of $105.3 billion in transfer payments and the loss of personal and social insurance tax collections — or 768% of the net investment.” The center also said that the bailout saved 2.6 million jobs in the U.S. economy as well as $284.4 billion in personal income over 2009 and 2010. (http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#axzz2n5jgDXrd) Sean McAlinden and Debra Menk, the senior researchers bylined on the report, stated that the center “is confident that in the years ahead this peacetime intervention in the private sector by the U.S. government will be viewed as one of the most successful interventions in U.S. economic history,” according to hybridCARS. (http://www.hybridcars.com/DID-THE-GM-AND-CHRYSLER-BAILOUTS-DO-AMERICA-A-HUGE-FAVOR/)
However, CAR also said that “much of U.S. auto manufacturing employment would have recovered without U.S. government intervention by 2011 or sometime thereafter, but there would have been a decided shift in the location of this employment to the southern portion of the United States.” Dan Mitchell, senior fellow at the libertarian-leaning Cato Institute, states that the analysis doesn’t acknowledge the adjustments Chrysler and GM would have been forced to make without the bailout, stating that “Those adjustments, more meaningful concessions in labor costs and work rules, would have put the auto industry on a sounder footing.” “If you only count the things that make you look good and don’t count the things that make you look bad, any investment will look good and any investment will be profitable,” he points out. (http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#axzz2n5jgDXrd)
Personally, I am on the side of opposers such as Dan Mitchell, and disagree with the auto industry bailout. When businesses go bankrupt, they don’t just die on the spot, they go through a process, and the two companies would have had the option to reconstruct themselves and continue operating. I find it unlikely that GM and Chrysler, both billion dollar corporations, would have simply filed for Chapter 7 bankruptcy, closed their doors, and quit, and I find it much more likely that they would have filed for Chapter 11, reorganized themselves, and continued operating. One likely reason for the bailout was stopping GM and Chrysler from re-setting themselves, which would have removed their legal obligation to continue paying the pensions to members of unions. Helping out the unions would have gained support for the Democrat Party in the election of 2012. Even if the bailout wasn’t to gain the vote of unions, America isn’t Fascist, and, as reason.com points out, there was no guarantee that the government investing in stock was actually going to work, and the gamble could have easily lost taxpayers billions of dollars. (http://reason.com/archives/2008/09/25/the-case-against-the-bailout)
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sayrehopper
said
Through reading these three articles, I saw many points for and against the bailout. However, it does sound like a plan that I kind of agree with. From the results that came from this bailout, I’d say it was a risk well taken. “the center said the bailouts and financial restructurings saved about 2.6 million jobs in the U.S. economy in 2009 and $284.4 billion in personal income.” (http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#axzz2n5jgDXrd) The fact that 2.6 millions jobs and $284.4 billion in personal income were saved is pretty incredible. Anything that can help the economy this much is worth a try. The third article reiterates this point: “for every $1 spent rescuing General Motors and Chrysler in 2008/09, $8 were saved to the U.S. economy.” (http://www.hybridcars.com/did-the-gm-and-chrysler-bailouts-do-america-a-huge-favor/) this sounds pretty great, so why not view the bailout and government involvement as a positive thing? However, as the second article states, “the more effective the plan, the more expensive it will be.” (http://reason.com/archives/2008/09/25/the-case-against-the-bailout) The downside to the bailout is the cost put into it. The way that I see it is that we get out what we put in, meaning that despite the cost, the results are worth it. Ultimately, if the outcomes are as good as it was in this case, then I think the government should be able to help private businesses in trouble.
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Jonathan Griffin
said
I feel as if every week I state that my argument is going to be indecisive and almost every week I apologize for it being a faltering opinion. This week seems no different. I do not know how I feel about this idea of the government bailing out private businesses.
On one hand, the plan will be very expensive and contradictory to the U.S.’s free market (http://REASON.COM/ARCHIVES/2008/09/25/THE-CASE-AGAINST-THE-BAILOUT). I’m mainly against government bailing out businesses because of the latter, not the former. I thoroughly dislike it when anyone – including myself – goes against one’s beliefs or principles; in this case, the principle is the free market and going against it is bailing out the businesses. Like I state in most of my blogs, I am no expert, so I have no idea if this is good reasoning behind not believing in bailing out businesses; I’m merely basing my judgement on keeping with morals and principles.
On the other hand, bailing out businesses seem to have the best output when it comes to situations like these. I would like to point out the very first sentence of the third hyperlink, “According to a new study by the Center For Automotive Research (CAR), for every $1 spent rescuing General Motors and Chrysler in 2008/09, $8 were saved to the U.S. economy, including by those who would have been adversely affected if they’d been allowed to fail.” (http://www.hybridcars.com/did-the-gm-and-chrysler-bailouts-do-america-a-huge-favor/). If this is the output of bailing out businesses, then I am pro-bailing. To me, it doesn’t seem logical to go against something with such positive results… But positive results do not correlate with morally right results.
This is where my struggle lies: between what is morally right and what is the best for others. Part of me wants to say that because the bailing out of businesses can help many people, then it is a good thing. The other part of me wants to say that because America was founded on a free market economy, we should stick to one’s principles. What’s funny is that as I was writing the sentence before the one I am writing now, I came upon a realization that my argument for not bailing out businesses in the second paragraph is flawed. Just because one has principles does not mean they are right. Actually, one’s first judgement is typically wrong. So… Based on this fact, I’m siding with the pro-bailing out businesses people because that is what seems morally right to me, not sticking with one’s principles (that could be wrong) like I had argued in some of the above paragraphs. Sorry for the confusion on that. Thank you and good night.
Namaste 🙂
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hopehayes
said
I say yes the government should and is justified in helping private businesses. The businesses give people jobs which pays them and they spend the money which helps the economy! The government loaning them money not only helped but profited them “for every $1 spent rescuing General Motors and Chrysler in 2008/09, $8 were saved to the U.S. economy, including by those who would have been adversely affected if they’d been allowed to fail.” This cause things but also prevented them as well! “It remains true that taxpayers will lose $13.7 billion from the bailouts of both Chrysler ($1.9 billion lost) and GM ($11.8 billion lost), but says the study, the damage control prevented more bankruptcies that would have sapped $284 billion in household income for 2009 and 2010.” http://www.hybridcars.com/did-the-gm-and-chrysler-bailouts-do-america-a-huge-favor/
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madisonlineberger16
said
Okay, so I didn’t really understand either article so I’m just going to state my opinion. I feel as if the government should help only to for the reason of the economy crashing. Small businesses fall out every day without government funding and this is not fair to them. So just because we feel we need to save one we need to look into the big picture of things. Maybe we need to learn to adjust without that big business. I also feel like this kind of shows a bias by the government because if you are going to help one why can’t you help them all atleast a little. Does the government have favorite businesses? I feel like I would ask such questions if I were a business owner not receiving help in my times of need.
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catherinebynum
said
But the think tank said those funds “saved or avoided the loss of $105.3 billion in transfer payments and the loss of personal and social insurance tax collections — or 768% of the net investment.”
http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#ixzz2nhN6jJyt
“According to a new study by the Center For Automotive Research (CAR), for every $1 spent rescuing General Motors and Chrysler in 2008/09, $8 were saved to the U.S. economy, including by those who would have been adversely affected if they’d been allowed to fail.”
http://www.hybridcars.com/did-the-gm-and-chrysler-bailouts-do-america-a-huge-favor/
These two websites state that the bailing out of GM saved the US government money. Either way the government goes into debt, and if less debt is created by bailing out big companies I’m all for it. It saves much needed jobs, and helps the economy to have big businesses like GM, so I don’t really see a problem with bailing companies out. I’m sure there is some sort of problem I am missing, but the general idea of bailing out these companies is not a bad one. If a business is accountable, and well established, it is not likely that people would stop buying their product, so it would be okay to bail out a company like that. If it is a company that seems like it will not make it anyway, I don’t think it should be bailed out. I think most of the bigger companies would be expected to make it anyway. This isn’t really fair to the smaller companies though.
One of the website was saying that the government is losing money either way, so you have to pick the lesser of the two evils. It would be nice if all could be helped, and small business could thrive. I think that’s what our country needs, but it seems to be a vicious circle that small companies fall through he cracks.
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rahnia527
said
I think the government has the right to bail out private companies but I cant exactly decide on when and when the government is not justifiable in helping private businesses.
Without these high profit companies the economy would be way worse than it is now. the first site states that in 2009 the bailout saved almost 2.6 million jobs which would have been million of people unemployed trying to get by in life without a sturdy job. Yes at time a company has their downfall and fall into a crisis. so the company calls on the government of course for assistance I mean isn’t that part of the government job? when i think of opposing the bailout i think how at a extent the use of all these top notch cars is a waste of time and money. but then again it is useful. sometimes i think that the way the industries make it seem as a big necessity is boasting i guess that’s the word for it.. which it is in some ways. I just don’t think the government should fund unnecessary stuff and different people with different believes trying to decipher what is a necessity and when something is justifiable is a difficult situation.
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lamexicana96
said
NO! No, no, no, no, NO!!!
Yeah yeah, I get that big businesses means more jobs and more money, but it is not the government’s responsibility to bail them out every time they screw up. I mean, do you honestly think my mother would bail me out if I screwed up really bad? (if you were wondering, the answer would be a resounding “aw h*ll no!”)
“This plan would nationalize the money-losing part of the financial sector, to the benefit of capitalists who have made spectacularly bad decisions—fostering more bad decisions in the future.” (http://reason.com/archives/2008/09/25/the-case-against-the-bailout)
“The point of the plan, after all, is to shore up struggling firms by awarding them more for those assets than they could get anywhere else. As an analysis in The Washington Post put it, “the more effective the plan, the more expensive it will be.” (http://reason.com/archives/2008/09/25/the-case-against-the-bailout)
“It remains true that taxpayers will lose $13.7 billion from the bailouts of both Chrysler ($1.9 billion lost) and GM ($11.8 billion lost), but says the study, the damage control prevented more bankruptcies that would have sapped $284 billion in household income for 2009 and 2010.” (http://www.hybridcars.com/did-the-gm-and-chrysler-bailouts-do-america-a-huge-favor/)
I get that letting the GM and Chrysler would have been an even bigger catastrophe, but isn’t it kind of their own fault?? I’m not going to pretend to know everything about economics, or even this entire government bail out problem, but that doesn’t mean I can’t share my wonderful opinion.
I’m sitting here typing this just thinking about how in less than 2 days I will be at the hospital for my jaw surgery and how I have to get through these last couple hundred words for the EE (good luck, juniors!).
I don’t know what else to say. I’m not going to go steal from someone else’s post and try to sound like a genius, because at this point, I just really want to go to sleep.
However, I must answer the questions.
Okay, so y’all know that I don’t think it’s the government’s responsibility to bail out failing companies. That doesn’t mean I want a bunch of people to lose their jobs. I just feel like if you are capable of getting your company up to the top, you should be able to keep it there. You shouldn’t worry so much about how much of bonus you can add to your salary, it should be about success for your company.
Yes, GM and Chrysler failing would have screwed up the economy, but we have been in worse situations.
Finally, I am going to close with a quote from Pastor Thomas Robb:
“There is a race war against whites. But our people – my white brothers and sisters – will stay committed to a non-violent resolution. That resolution must consist of solidarity in white communities around the world. The hatred for our children and their future is growing and is being fueled every single day. Stay firm in your convictions. Keep loving your heritage and keep witnessing to others that there is a better way than a war torn, violent, wicked, socialist, new world order. That way is the Christian way – law and order – love of family – love of nation. These are the principles of western Christian civilization. There is a war to destroy these things. Pray that our people see the error of their ways and regain a sense of loyalty. Repent America! Be faithful my fellow believers.”
[Let me know if you can guess where I found this WITHOUT Googling it]
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thatgirldeven
said
Late, I know but oh well. Private businesses are so invested in the government and this is what we need to take in when evaluating Obama’s decision. Now, I’m not one to comment on car dealerships but any private business can help an economy grow and prosper. In this case, GM and Chrysler were helping Americans and we didn’t even know it. “It remains true that taxpayers will lose $13.7 billion from the bailouts of both Chrysler ($1.9 billion lost) and GM ($11.8 billion lost), but says the study, the damage control prevented more bankruptcies that would have sapped $284 billion in household income for 2009 and 2010. Beyond that, it’s estimated this would have cost the government $105 billion in reduced tax revenues and increased expenditures for services such as unemployment compensation.” So when I read this, it made me realize that these companies did more for the common amercian household than what it led on. We need these companies and as long as Obama’s investment was justified by results, we have nothing to worry about. This much money to be given is something to think about but as we see in the quote above, Obamas investment helped us rather than tear us down.
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mcol987
said
I believe that the bail out of GM and Chrysler was reasonable. Even though the government will lose money in the end this bail out saved many jobs.
“U.S. government will lose about $13.7 billion on its bailout of GM and Chrysler Group…“saved or avoided the loss of $105.3 billion in transfer payments and the loss of personal and social insurance tax collections — or 768% of the net investment.”Additionally, the center said the bailouts and financial restructurings saved about 2.6 million jobs in the U.S. economy in 2009 and $284.4 billion in personal income over 2009 and 2010″
(http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#ixzz2qRXySCkV)
With unemployment already so low, if those companies would have shut down unemployment would have plummeted, and Obama would have been blamed then. Either way it goes what Obama did is going to be questioned. I personally could not decide when would be a good time to bail out a company. While I feel that the government should not mess with private businesses because it is their job to keep themselves afloat. Also we are supposed to have a limited government. ” If this bailout goes through, the term “limited government” will have to be permanently retired.” (http://reason.com/archives/2008/09/25/the-case-against-the-bailout)
BUT the loss of these major companies would have hurt our economy. “According to a new study by the Center For Automotive Research (CAR), for every $1 spent rescuing General Motors and Chrysler in 2008/09, $8 were saved to the U.S. economy, including by those who would have been adversely affected if they’d been allowed to fail.” (http://www.hybridcars.com/did-the-gm-and-chrysler-bailouts-do-america-a-huge-favor/)
Decisions like these make me happy that I’m not in politics. No matter what you choose not everybody is going to be pleased. I think the fact that people were able to keep their jobs made this investment worth it, even if they had to take a pay cut just having a job is good.
I feel that if we were not in such economic distress then letting GM and Chrysler fail would have not been too devastating. With our economy the way it is and unemployment I feel we need good companies on our soil to help us.
.
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jhenninger78
said
I do not think that the government should have bailed out these companies. I think that we spent to much money to do it and it put us as a country in debt. as far as the unemployment that is something you would have to deal with to save money. we gave GM 13.7 billion dollars. This is way to much and i think it would have been better to just let them close.
http://www.latimes.com/business/autos/la-fi-hy-gm-bailout-cost-20131209,0,1973037.story#axzz2n5jgDXrd
http://reason.com/archives/2008/09/25/the-case-against-the-bailout
http://www.hybridcars.com/did-the-gm-and-chrysler-bailouts-do-america-a-huge-favor/