Bailing Out the Big Three
2008 was an apocalyptic year for the American car industry, with sales of Ford, General Motors, and Chrysler cars all falling by 25 percent. Supporters of the Big Three automakers argue that the government needs to provide Detroit with at least $50 billion in taxpayer money in order to save the American car industry, on top of the billions of federally subsidized loans they've already received. President Barack Obama agrees, having attacked John McCain during last year's presidential campaign for opposing a bailout of Detroit.
But while many commenters and union advocates paint Detroit's economic troubles as a consequence of the financial crisis, necessitating its inclusion in the bailout sweepstakes, the financial troubles of the Big Three long predated the current mess. Indeed, in 2007, GM sold more cars and trucks than Toyota. Yet Toyota made almost $2,000 per vehicle while GM lost more than $1,000. So why does the United Auto Workers union and President Obama want taxpayers to reward Detroit-and punish her competitors-for making unprofitable cars?