Should the government bail out GM?

sketchtrack

There is no wonder GM is going under since it hasn't been selling fuel efficient vehicles in America. Now they are going under because people aren't buying as many big trucks and SUVs. GM sells fuel efficient vehicles in other countries that they don't sell here, and why?

Why should they be bailed out by tax money, which is unconstitutional, just because they were too dumb to see things coming?

D H

The federal government has been involved in several bailouts, including New York City, Chrysler, and Bears Stern. So what is it that makes you think these bailouts are unconstitutional given that several have already taken place?

sketchtrack

Show me where the constitution gives congress the power to bail out corporations.

Just because the constitution has been violated before doesn't mean it wont be done again.

D H

The Commerce Clause is the usual justification for such activities.

I pointed out some bailouts that were allowed to proceed. The ball is in your court (pun intended) to show that such activities are truly unconstitutional or just something that you wished were unconstitutional.

turbo

US auto-makers have been given favorable tax status, protective tariffs, etc for many, many years. They should not be bailed out at the expense of the taxpayers. If they fail, another smarter, more efficient company will step in. Case in point - Ford closed its Marysville plant, claiming it was old and inefficient and that the work-force was unproductive. Honda bought the plant, retooled, hired back a lot of the Ford workforce, and launched into production of the Accord. It was the most popular car in the US, and had the highest percentage of US-made parts at the time. The only way Ford could get Taurus sales to exceed those of the Accord was to sell Tauruses to themselves internally and lease them to rental companies and other fleet users. Their claim that the Taurus was the "best selling" car in the US was based on internal fleet sales, not sales to individuals.

sketchtrack

Article I, Section 8, Clause 1,3:

“ The Congress shall have power . . . To regulate commerce with foreign nations, and among the several states, and with the Indian tribes; ”


"The Tenth Amendment states that the federal government of the United States has only the powers specifically delegated to it by the Constitution. Other powers are reserved to the states, or to the people. The Commerce Clause is an important source of those powers delegated to Congress, and therefore its interpretation is very important in determining the scope of federal power in controlling innumerable aspects of American life. The Commerce Clause has been the most widely interpreted and abused clause in the Constitution, making way for many laws which are contradictory to the original intended meaning of the Constitution."

http://en.wikipedia.org/wiki/Commerce_Clause#Text

Maybe it is just me, but I don't see a connection with the commerce clause and using tax money to loan to corporations. I think it is clearly an abuse.

Mk

If anybody intends on bringing it up, Wikipedia is discussing how that paragraph should be written, as it may not follow Wikipedia's Neutral Point of View guidelines:
http://en.wikipedia.org/wiki/Talk:Commerce_Clause

D H

I noticed that. Wikipedia is free; you get what you pay for.

Moving on, the Constitution also authorizes Congress

• To establish ... uniform Laws on the subject of Bankruptcies throughout the United States.
  (Article 1, Section 8, Clause 4)
  
  
• To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.
  (Article 1, Section 8, Clause 18)

The fact remains that Congress has bailed out corporations in the past and that such bailouts were allowed to proceed. Strict constructionists have some very funky stuff in their pipes. The Constitution does not authorize the Air Force, for example. The Constitution is very explicit about the branches of the military that Congress can fund. Nobody in their right mind would think to challenge the Air Force on the grounds of constitutionality.

To claim that bailouts are unconstitutional on the grounds that such acts are no explicitly mentioned in the Constitution is a red herring. The Constitution is intentionally quite short. It does not spell out everything that Congress is allowed or forbidden to do.

sketchtrack

Ok, so your argument is that even if it is unconstitutional, so what, we already broke it before.

How about an argument as to why we should bail out GM?

Also, the Air Force isn't a private corporation, and I believe that adding the Air Force and funding it is clearly constitutional.

"To provide for organizing, arming, and disciplining the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;"

D H

No, my argument is that your original statement on unconstitutionality is flawed. That it is unconstitutional is your opinion. You are entitled to your own opinions, but you are not entitled to your own facts.

quadraphonics

Nor is there an obvious connection between the commerce clause and the DEA using helicopters and SWAT teams to storm medical marijuana clubs in San Francisco, but there you have it. The thing about the constitution is that it's a legal document, and the way its words appear to a layperson is not relevant. This is how lawyers stay in business.

wildman

Like it or not the Supreme Court decides what is unconstitutional and they have decided that bail outs are constitutional.

drankin

I agree with turbo, the government shouldn't be bailing out corporations or any other capitilist venture. Let free market do it's work. Out with the old, in with the new. Including airlines, farming, etc.

Government bailouts interfere with the free market, IMO.

Vanadium 50

A few points:

1. As mentioned before, there is precedent with Chrysler in 1979. The constitutional authority for this is the Commerce Clause, and at least this is obviously related to interstate commerce. The case Wickard v. Filburn in the 1940's greatly expanded the interpretation of this clause, when it was held that a farmer growing wheat on his own land for his own consumption could be regulated under this clause. Since then, I believe there were only two cases the federal government lost in arguing that they were empowered to regulate under the Commerce Clause.

Like it or not, this is how the courts have ruled.

(As an aside, this is also the clause under which national health care advocates argue that the federal government is empowered to act).

2. The Chrysler bailout didn't cost US taxpayers a dime. Arguably, it saved them money, through the taxes paid by the Chrysler employees.

3. For those who argue for a laissez-faire policy of "let them fail", the present system is hardly laissez-faire. There are many, many government regulations on the industry, and they add cost to the vehicle. While all manufacturers face the same regulations, so the playing field is level, as the cost of cars go up, the number of people who buy them goes down. People drive their cars longer, and so buy fewer of them, so GM sells fewer of them.

Additionally, the Sherman Anti-Trust act has the unintended consequence of placing US manufacturers at a relative disadvantage. As Lee Iacocca put it, "GM and Toyota can form a joint venture to put Ford out of business, but GM and Ford can't form a joint venture to put Toyota out of business."

WarPhalange

GM deserves to burn to the ground for completely raping the public transportation system in the US.

drankin

I don't care if it saves or costs us money. The government shouldn't be bailing out failed manufacturers. Increasing tariffs on Toyota wouldn't bug me at all.

drankin

What? Can you support your rape allegation?