Wednesday, November 12, 2008

Garrett vs. GM

Represntative Scott Garrett has officially started beating the drum against saving GM, Ford and Chrysler. From today's Wall Street Journal:
Another Republican, Rep. Scott Garrett of New Jersey, said that "the real problem with this is that [a bailout] is not going to change the company, but simply to perpetuate the same business practices that created the problem in the first place."

"You will be asking the average middle-class taxpayer that doesn't have as rich of a benefit package to subsidize buyouts," Rep. Garrett added. "There are a lot of jobs on the line, but a bailout does not permanently solve the situation. Who's to say we won't be facing the same crisis in 2009?"
I'm not surprised by Garrett's stance, and even heard someone use the same line on the train this morning. Unfortunately, it's a sentiment, a subtle kind of class warfare if you will, that is likely to gain traction.

Instead of addressing the root cause of this issue; Garrett and others are going to go after the employees. While the credit crisis and gas prices were the incendiary added to the Big Three's cash burn, it's not the cause. It's health care.

Unfortunately, GM saw this crisis coming back in 2005, and started pushing for meaningful reform then. Back in 2006, the CEO's of the Big Three were given an audience with the President, who paid them the typical lip service. They weren't asking for a loan then, they were asking for health care reform. Our health care crisis is killing them.

The problem is, from a competition standpoint, that their competitors all come from nations with socialized medicine. The last estimates I saw in 2006 were that health care per car is costing more than steel per car. Obviously, we can't flip a switch and eliminate that cost to save the Big Three overnight. However, there may be another way.

While it may be too late for this, instead of a loan, the Big Three should be able to buy into the government health benefit plan. They'd pay for it, not taxpayers.

The main reason this could be a win win is from the massive cost savings both to the Big Three and taxpayers; the more people in a pool the lower the costs. Right now, GM is insuring more than a million people. Ford and Chrysler pooled with that would create a new group of close to 2.5 million all together.

Pooling the Big Three's employees with Federal workers would offer unparalleled savings to taxpayers as well, once again, as the bigger the pool the lower the cost per person. It's simply how insurance works.

I realize there will be those who would falsely claim this is some kind of expansion of government. In fact, it would be more cost effective than loans or bailouts; while at the same time lowering fees for insuring our government employees. And the Big Three would be paying for it, not taxpayers.

In essence, this option is a practical shrinking of government while preserving the companies who provide so many jobs to so many people across the country.

1 comment:

Anonymous said...

Good one it to Pelosi!