I've thought of another condition (in addition to bankruptcy first) on Federal aid for automakers. Rather than hand-out cash or guarantees--even with conditions--shouldn't the taxpayers instead get something for that money? In particular, the Federal government must buy or lease big-3 vehicles. Couldn't any bailout be structured as a forward purchase agreement, for example, contracting and paying in advance for cars and trucks to be acquired over the next three to five years? That would provide some guaranteed revenues during, and immediately after, the reorganization of the companies, which would increase their attractiveness as an investment. The contract could help to convince car buyers that the companies will survive and be able to service automobiles in the future. The deal could include the same or similar conditions as any aid or loan. And, as I said, at least the taxpayers would be getting something back for their bucks, as opposed to wasting money.
There's a potential flaw in my plan: I don't know whether the volume of vehicles purchased or leased by the Federal government over a few years represents a significant percentage of total new car sales. Anyone know?
National Review's Jonah Goldberg floats an even more radical idea:
[R]ather than blow money on a lavish reenactment of the New Deal, or continue bailing out undeserving corporations, why not really think outside the box? Rep. Louie Gohmert (R., Texas) suggests an across-the-board reprieve on paying 2008 income taxes. This would leave an extra $1.2 trillion in the hands of Americans, who are the best stewards of their own money. Nobel Prize-winning economist Robert Mundell proposes a one-year moratorium on corporate income taxes in order to stimulate investment, job creation and the like. That wouldn’t be as popular, for understandable reasons.
The details can be negotiated, but this sort of approach would certainly create more jobs and spur more consumer demand than paying for a lot of asphalt. It would buy a lot more prosperity than any corporate bailout. Politically, it could buy Obama and Congress a year to formulate a serious tax-reform proposal. And -- here’s the amazing part -- it would be much cheaper than what we’ve spent already.