GM CEO Rick Wagoner slipped. In Senate testimony he implied that a U.S.-made car with 75,000 miles on it has a lot of miles on it. That's precisely the problem. Toyotas are expected to go 200,000 miles, American cars 100,000.
And during their shorter life, American cars break down more often and need more maintenance. The public knows that thanks to Consumer Reports and from their own experience. U.S auto execs, engineers, suppliers, and union workers all share in the blame.
No matter how large the bailout (using working- and middle-class taxpayers' precious dollars,) unless US automakers create Toyota-quality, Toyota-longevity cars, the "Big" Three will never survive. And they can't create Toyota-quality/longevity cars as long as they keep using lifetime-job-security $75 an hour (including benefits) workers and inferior parts. (Mechanics tell me that U.S. car parts are lower quality.) Would you buy a $40,000 Chevy Volt or a $22,000 Toyota Prius?
And next year, Toyota plans to release a next-generation version (more powerful, higher mileage, and using solar roof panels as a supplementary energy source.) Yet it will cost only slightly more than this year's model. And in 2011, Toyota plans to release a 100-mpg version.
The government isn't stupid. It knows the bailout won't work, even if its Car Czar demands green cars. Then why are the Democrats pushing to use our tax dollars to bail out the U.S. automakers? As payback to the UAW for helping them win the election, because the Dems know they'll need union support to pass future legislation and in the 2010 elections, and Michigan is a key swing state.
Per my previous posts, bailouts will not work, punishing the good guy and rewarding the bad. That will only encourage more bad behavior. Perhaps more important, bailouts are a huge slap in the face to the innocent taxpayers and a stake in the heart of upstart companies, the linchpin of the American edge. Entrepreneurs now know they can never compete with the big companies because the government will always bail the big guy out as"Too Big to Fail."