Punishment for the Hummer

In Detroit, the economic crisis is already very visible. In some neighborhoods of Motown, the city where the heart of the American car industry has beat for over a century long, one third of the houses are not for sale anymore but are simply empty, bare and deserted. And that will only get worse. Because tonight the Senate in Washington has rejected a special support operation for the car companies. Republicans were the driving force behind this. A day earlier, the House of Representatives did approve of the plan to save the car industry from ruin with an injection of 14 billion dollars. Both chambers in Congress reserved rolls this way. Earlier this fall, it was the Senate that agreed with a savior plan of the bank sector. Then the House rebelled against this ‘sale’ by the government with a value of 700 billion dollars.

In both cases, it evolves around the question whether faltering entrepreneurs should be saved with tax money. “Many struggling Americans wonder where their bailout is,” as a Republican senator put it. His Democratic counterpart turned it after the vote. “It will be a very, very bad Christmas for many people.”

Both are right. The three largest car companies in Detroit are on the verge of the financial abyss. Ford has the most chances for survival. The exactly 100-year-old company General Motors has a debt of 60 billion dollars and might still be standing if it gets help soon. And for Chrysler it is, according to experts, already too late. To avoid mass unemployment, future President Obama has ranged himself behind the support package. The vote in the Senate is therefore a political defeat for him. That does not matter. Because the proposition that got killed last night has not been carried to term. The three companies should have had to decrease their job conditions to the less expensive level of foreign competitors like Toyota, where the unions have less power. But the Democrats wanted to postpone that moment to 2011 and, different than the Republicans, not already force it next year. With that, a far reaching form of unfair competition is threatened in the internal market in the U.S.

Against this form of support an argument exists, that also in Republican circles has not been elaborated. The classical American industry also balances on the verge of bankruptcy because it has consequently been producing the wrong cars for decades already. Motown in Detroit runs behind financially and innovatively. The Hummer is a symbol of that, especially in these somber recession times. Government support would rather confirm that mismanagement than punish it.

It therefore is to be hoped that parting President Bush and his successor Obama will not give in to the seduction or the pressure to, via a judicial backdoor, come up with a bridging loan after all. Tax money can and must be spent more inventively.