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November 20th, 2008
01:05 PM ET

Hansel and Gretel and the Big Bad Bailout

Tom Foreman | Bio
AC360° Correspondent

Two roads are diverging in a Washington wood, and frankly that’s scaring the hell out of Congress.

I’m talking about the economy of course. The latest numbers from Dr. Obvious (meaning whomever has pumped out the most recent terrible news about jobs, production, failing businesses, you name it) is just confirming what we all know: The economic woods are growing very dark ahead of us. And our nation’s leaders are standing at a crossroads.

In one direction is the sign that points to Bailout Town. With the stumbles over the car industry’s request for help, it is possible that this road is fast closing. But let’s say for a moment it remains open. The best hope for anyone traveling this way is that massive infusions of your tax dollars will help stabilize a series of key industries, which will in turn help stabilize the economy overall. But there are plenty of potential pitfalls on this path. Already rumbles are arising from everyone else lining up for assistance: telecommunications firms, insurance companies, airlines, municipalities, and on and on the list goes. You pay a lot of taxes. I pay a lot of taxes. Trust me, we still don’t pay enough taxes to cover every company that would like a check right now. And we don’t know if the road to Bailout Town will really get us anywhere.

Our other potential path is marked by the sign to Market Forces-ville. Problem is, we were following that path pretty darn confidently right up until we found ourselves suddenly out on the edge of town, getting lost in these woods. If we take this path now, the idea is to let some of these companies fail; swallow the bitter medicine of some hard hits to unemployment; launch some painful reorganization of our financial plans at all levels of the economy, and hopefully emerge stronger and invigorated. But plenty of leaders, both Democratic and Republican, are warning that unless we load our backpack with new regulations on business, and some pretty serious oversight, there is no reason to believe those market forces can produce results in a time frame that most Americans will be willing, or able, to accept.

So which path is right? Or is there some combination of both that might work? At the moment, no one in Washington seems to know for sure. They know this: The economic woods are getting darker, we don’t have a map, and winter is coming fast.


Filed under: Bailout Turmoil • Raw Politics • Tom Foreman
soundoff (13 Responses)
  1. Alejandro

    The government on behalf of us- the tax payers- should not bail out the big three automakers. These three have spent the better part of the past 20 years fighting innovation and efficiency in the name of "protecting the american car industry".

    The entire management teams at all three companies should go- specially GMs-, they shoudl go into chapter 11, restructure and come out a new, innovative and competitive companies with products that we would want to by.

    They want a bail out simply to continue with the business model they have had in place that has put them in the situation they are in.

    November 20, 2008 at 4:38 pm |
  2. Bart

    why should we help them I don't see them helping us when they was making a big profits !!!!

    November 20, 2008 at 4:07 pm |
  3. Marg

    Why is it everytime Paulson has a news conference the stock market takes a divve? I thought he was supposed to make things BETTER.

    November 20, 2008 at 3:17 pm |
  4. Tony R

    Congress is so quick to give up tax money to supposedly save many jobs. But are they saying that there will be less cars in the market place in the future or will someone else step in?? Why are they not looking at the demand side of the equasion? Instead of handing money out to companies that have been run poorly help a start up or bring in more foreign plants. The big 3 even colluted together to keep any other American auto manufacturers from starting up in the past so they could not face competition. Also people have to remember there are no such things as American companies unless they are privatley held they are global companies with stockholders from all over. So why save them these companies losses in job will be short term and new jobs will be created to meet demand by who ever steps in to meet demand. It boggles the mind that nobody discusses that other companies will step in to meet demand. If they want to create American jobs put tariff's in place on foreign auto exports to make them build plants here instead of importing them in.

    November 20, 2008 at 3:04 pm |
  5. Louise Jacobsen

    Government seems willing to give money to everyone EXCEPT the taxpayer. I don't know how many news stories I've read that say, in spite of the huge investment in bailout money, if consumers do not spend, jobs will continue to disappear and the whole plan will fail. Well, where is this "spending money" supposed to come from?

    It's been proven over and over since the Reagan Administration that "Trickle Down" economics DOES NOT WORK. How about trying TRICKLE UP economics??? Give every taxpaying American family $250,000 or $500,000 and see what happens.

    Mortgages would be paid off - one big problem solved. Credit card debt, the same (what a load off those worried banks' minds!). Student loans, medical bills..... People could pay their kids' college tuition, buy health insurance, start a small business, buy a new car, travel, invest; the list is as vast as the human imagination.

    This is the one solution the government seems absolutely blind to - allowing the taxpayers to save the companies that deserve to be saved and letting the others fail. And taking a whole lot of stress off a whole lot of good, hard-working people in the bargain.

    November 20, 2008 at 2:56 pm |
  6. earle,florida

    Crossroad's are everyday obstacles we navigate daily. Regulation/Reform ,and better oversite were in place when this systemic problem first festered. The mortgage problem isn't the cause/effect of our financial industry meltdown? Don't be fooled by wall street,and their mouthpieces,(ie. Paulson,Cox ,and Bernanke,etc.) there selection was merely based on loyalty to the financial institutions to begin with(the fox guarding the hen house) , and has nothing to do with public interest in mind! The banks,Investment firms,government mortgage programs(fannie/freddy) literally cooked the books, with the politicians and wall street stirring the pot! We'll there's no money left folks, and won't be for some time(3 to 5 years) with alot of pain for everyone! We as taxpayers will pay for our (those responsible) father's (greed) sin's,and what's ironic is, you can't ,"pin the tail on the donkey",because that's been rigged also....,no one goes to jail,etc., get my point, folks,really pathetic......

    November 20, 2008 at 2:55 pm |
  7. Joy

    No bailout until the CEO's take a 50% cut in pay and get rid of the jets.

    November 20, 2008 at 2:33 pm |
  8. Maria Briggs

    The Big Three and UAW created the American middle class culture. My dad, a white collar worker for Edison, always praised the 2 formentioned as the reason he had great benefits and salary. Should there be a loan with strict regulations and mandatory outcomes? Yes.
    Because of a few greedy Americans,(politicians, auto, financial & oil CEO's, and the health care system) must our American middle class culture be dissolved? No. The reality is the auto industry is the backbone of America! Everyone including you, Anderson, have benefitted from their advances in industry, technology, and healthcare.

    November 20, 2008 at 2:33 pm |
  9. Michael Priller

    One can bail out whomever they want , but if the working poor do not have the jobs or the money to spend , then it becomes a wasted effort.
    With the amount of money being put into failed companies and businesses that still operate in the foreign market when will we have the security for our future?

    November 20, 2008 at 2:30 pm |
  10. Cindy

    Regardless if we want the bailout of the auto industry or not it will happen. Obama has already said that he is for it and will make it happen when he gets into office. So either it will happen now or in a few months.

    The problem is will the big 3 be able to stay up until then if they don't get it now? If they fail it will affect way more people then just those who work for them. There is a very long line of companies that work hand in hand with them and they will go under also. Not to mention those who own cars made by them will be stuck with a warranty that is useless and a car that they can't repair if it breaks down since there will be no parts to fix it if they go under.

    Letting them fail will only cause us way more grief in the end.

    Cindy...Ga.

    November 20, 2008 at 1:44 pm |
  11. Patricia E Cook

    WE MUST NOT LET THOSE 3 FAT CATS REPRESENT THE AUTO INDUSTRY IN OUR MINDS. Demand they resign. What is before us are 3 sleeze balls who, unfortunately, are representing thousands of struggling auto workers, parts manufacturers, etc. . We look at those CEOs with disgust, and don't want to give them a cent. So don't. Demand their resignations. Please put the faces of the workers and their families in your minds before you deny help to the auto industry. There has to be a way. Turn the question over to the Boards? Tell them they have to accept restructuring? Tell them what is real, and require a plan that we can stomach. Make them sell off all of the fluff. Retool those plants with fuel-efficient cars. Tell them to replace these slimy characters with some guys who would place the thrill of success before $$$. There are people out there that can do this.

    November 20, 2008 at 1:41 pm |
  12. Mazie M. Brandt

    No Bailout for auto industry!!!!! For 30+ years the auto industry has known of the need to conserve our natural resources–namely, OIL! There has been NO real effort to make feul efficient cars. Profits, huge salaries, CEO golden parachutes, and an insane proliferation of different gas-guzzling autos seem to have been the order of the day. Time to pay the piper and if it's Chapter 11 bankruptcy so be it! They need to figure it out or go under. The blood bath taxpayers have suffered (disappearing pension benefits/and other savings) and fraud perpetrated on us by Wall Street is enough already! Taxpayers cannot save everyone–not should we be expected to. Does anyone in our Congress have a backbone or a voice of reason??!!! NO BAILOUT!!!!

    November 20, 2008 at 1:35 pm |
  13. Mazie M. Brandt

    NO BAILOUT FOR THE AUTO INDUSTRY!!!!!

    November 20, 2008 at 1:27 pm |