Auto bailout wrong for many reasons

Bob Jack, North Las Vegas

Sunday, Dec. 14, 2008 | 2:02 a.m.

Sen. John Ensign was totally correct to have asked President George W. Bush to show some courage in light of the U.S. automaker bailout proposal. The use of the $700 billion Troubled Asset Relief Fund (TARP) for an auto industry bailout is a breach in faith with the American people.

TARP was intended to be used to ease the financial and credit markets, not to bail out other U.S. industries. In the event TARP is misused by the Bush administration in this manner, then Ensign and other members of Congress, with the courage to deny the auto industry bailout without significant UAW concessions, should investigate what legal recourses are available to bar the Bush administration from using TARP funds for this unauthorized purpose.

Bailouts do not prevent unemployment. Recall that Bank of America was the recipient of $25 billion in TARP funds and will be laying off 30,000-35,000 people, about 10 percent of its workforce.

The number of employees in businesses of all sizes should be determined by their fundamentals: supply and demand, revenue, and cost and profit margins. Bailouts do not influence these fundamentals.

Neither will the bailout of the U.S. automakers force them to operate optimally. All signs point to a bailout merely extending the miserable fashion in which these companies are being managed.

Critical to the success of the Big Three are radical measures focused on physical downsizing and UAW labor cost reform.