Editorial: Big Three must steer toward hard decisions

The executives of America’s “Big Three” automakers are arguably in the most unenviable position businesspersons in this country can find themselves. They are being forced to take financial advice directly from members of the U.S. Congress.

Perhaps the worst part is that many members of Congress are dead right about the outdated business model of America’s automakers.

In a story that has received non-stop coverage for seemingly weeks, U.S. automakers are seeking billions of dollars in government loans to keep their doors open. It is the second bailout of a major private sector industry since November’s elections with Congress and the White House already teaming up for a $700 billion loan to the country’s sinking finance industry.

These failures of private sector industries are complex and their ramifications far reaching. A collapse of the finance industry would have brought commerce in the U.S. to a grinding halt, with businesses unable to access credit. Already, though, U.S. business is having trouble accessing credit even with the bailout package.

Automakers claim the recession and accompanying lack of spending is the source of their problems. A collapse or market correction — i.e. bankruptcies — for the U.S. auto industry could mean deeper job losses than the 500,000 already experienced in November as well as further downward momentum for the recession.

At this point, Congress seems simply willing to stem the tide of bleeding when it comes to Americans losing jobs. As of last night, Congress and the White House were working out another deal to bail out the Big Three. Senate Republicans appear ready to fight the measure after the financial industry bailout struck a negative chord with their conservative voting base in last month’s elections.

We would urge other GOP senators to follow the lead of Tennessee’s own Sen. Bob Corker, who last week appeared to be making more sense than anyone else in Washington, D.C. about the auto industry “bridge loan.”

Corker told the chief executive officers of the Big Three to either drastically reorganize or face bankruptcy, specifically by eliminating 70 percent of their debt by March through a series of draconian cuts.

Corker and others have also spoken to Detroit’s intransigence to make cars that Americans need, specifically fuel-efficient models that compete with foreign made and designed cars.

Yes, this buyout is not something that is entirely palatable, nor is it something Congress should do with no strings attached. The American auto industry has essentially traded its independence for government oversight due to this financing. Since Congress will be in control of this recovery, not only do American jobs need to be safeguarded by American tax dollars as well. The kind of action Corker is demanding is likely the only way to balance both goals. America does need an auto manufacturing industry and the jobs that come with it. At some point, though, performance and difficult decisions must be faced. We urge Corker and other like-minded senators to keep pushing for those decisions.