Bankruptcy Before Bailouts

United States Senator Jim DeMint, Republican from South Carolina, was interviewed by National Review Online regarding a possible federal bailout of the Big Three automobile industry.

GM had its best sales year ever in 2007. It sold over 9 million cars around the world — the same number as Toyota. But Toyota made $20 billion, and GM lost $40 billion. Their viability is not going to change if the cost structure is such that they cannot succeed. Until they restructure, we’d just be throwing good money after bad to prop them up for a few months.

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It is a dangerous and socialist idea that the government can intervene and guarantee outcomes. We can’t guarantee outcomes. And in fact, the reason we are in a financial crisis in our country is because of government involvement — such as the mismanagement of Fannie Mae. In the financial industry, for years, we forced banks to make loans to people who didn’t have good credit as part of a social-engineering strategy.

Likewise with the unions in Michigan. We’ve forced people to join unions in Michigan if they want to work for the auto industry, and thus we’ve forced them basically to fund a political party through their dues. They’re the only kind of organization that is given that kind of government protection. And so forced unionization, sanctioned by government, has essentially put the backs of these American auto companies to the wall. And now the government is going to come in and say we have to save them.

Government has been doing that on many fronts. Our policies create a crisis, and once there’s a crisis, we say we need to get the government more involved. We’re inching our way toward a European style of socialism. The auto bailout is just one more big step in the wrong direction.