Tags: Bush | Auto | Bailout

Bush Auto Bailout Destined to Fail, Lawyer Says

Friday, 19 Dec 2008 01:22 PM

By Newsmax Staff

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Sam Kazman, general counsel of the Competitive Enterprise Institute, issued the following statement on the White House bailout plan for car manufacturers:

“Today’s White House auto bailout represents both the continuation of a handout strategy that has proven worthless, and a missed opportunity to free the auto industry of a needless burden. What the president should have done was to lift the federal fuel economy standards on the grounds of economic practicability, similar to the government’s rollback of these standards in the late 1980s. The new standards have been estimated to impose a $50 billion R&D burden on the industry over the next five years. They could have been suspended at zero cost to taxpayers.

“Such a suspension would end up benefitting not only the auto industry, but consumers as well — by expanding the availability of new car models, minimizing R&D-induced price increases, and, most importantly, reducing the traffic deaths attributable to the vehicle downsizing promoted by the Corporate Average Fuel Economy (CAFE) regulations. The only obstacle to suspending CAFE is the holy-grail nature of fuel economy mandates among many politicians and environmentalists. It’s a pity that the president couldn’t muster up the courage to challenge that view in this time of crisis.”

Additionally, John Berlau, director the Competitive Enterprise Institute’s Center for Entrepreneurship, points out the economic impediments created by existing antitrust law:

“The deal does nothing to remove government impediments to what could be the most effective step for the auto companies to avert a collapse: a merger between Chrysler and General Motors. Experts have said that even in the companies’ dire straits, antitrust laws may serve as severe obstacles to a merger, based on outdated methods of measuring market ‘domination.’ The Detroit News reported that a merger review would take at least a year, effectively putting it off the table. If the government really wanted to make the companies viable, they would immediately suspend antitrust rules to allow a merger to take place.”

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