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Roundtable on a Bailout for Detroit

Roundtable on a Bailout for Detroit

FOX News Special Report With Brit Hume - November 11, 2008

(BEGIN VIDEO CLIP)

J.D. FOSTER, HERITAGE FOUNDATION: There is a real question whether we should be sending money to General Motors and Ford and Chrysler to keep them up and running in the current crisis, because their problems are long term. They're not driven by the recession or the credit crunch.

MARTIN FROST, (D) FMR TEXAS REPRESENTATIVE: I believe that it needs to be done, and it needs to be done sooner rather than later. I don't know that you can wait until January 20th, the day that the president is sworn in.

(END VIDEO CLIP)

HUME: There you have pretty distinct views on what ought to happen with the proposal to bailout the big three Detroit automakers.

Some thoughts on this issue now from Mort Kondracke, executive editor of "Roll Call," Mara Liasson, National Political Correspondent of National Public Radio, and the syndicated columnist Charles Krauthammer, FOX News contributors all.

Well, it seems this business about the leaked conversation has been cleared up. Yes, President Bush and Barack Obama did discuss the trials and tribulations of Detroit. No, there was no proposal to link presidential support for Detroit's bailout to the Colombia Free Trade Agreement. So we got that out of the way.

But what about the underlying issue here, what to do about the automakers, if anything--Mort?

MORT KONDRACKE, EXECUTIVE EDITOR, "ROLL CALL": If AIG is too big to fail, the insurance giant, then probably the auto industry is too big to fail completely, too. There are two to three million jobs involved, and if they sank in the middle of a recession, that would be terrible for every region where they are.

So they probably need a bridge loan of some kind. But then the question is what do you do about them in the long run?

And it seems to me that the best idea I have heard is what you might call the "Pearlstein plan," Steve Pearlstein, the columnist for "the Washington Post", who was endorsed also by the Washington Post Editorial page, amounts to a structured bankruptcy, a precooked bankruptcy, where the government would offer some aid.

But, basically, the bankruptcy court could eliminate their pension burden, rationalize their dealership structure. They've got many, many more dealers than they need or can support. Rewrite the union contract to the level of non-union contracts--

HUME: Is that something that labor would ever sit still for?

KONDRACKE: Well, you know, probably not, and probably it won't happen because the Democratic congress, you know, won't allow it to happen. But it is probably what ought to happen, because these are companies that, as the introduction said, have long-term problems that are their own fault. They probably need new management.

But you will never get it if things are allowed to continue as present. And if you just feed them money, it will go down a rat hole.

HUME: Wait a minute--it would be in the form of loans they would have to pay back, though, right?

KONDRACKE: Will they ever be able to pay it back?

HUME: The one instance was Chrysler. There are all kinds of arguments about whether that was a good idea, but it did get paid back.

KONDRACKE: It did get paid back.

MARA LIASSON, NATIONAL POLITICAL CORRESPONDENT, NATIONAL PUBLIC RADIO: Every one of these bailouts have come with some kind of strings attached, some kind of protection for the taxpayers, or something that the government wants the automakers to do better than they're doing now.

Whether it's a precooked bankruptcy or some kind of a structured workout, there has to be something other than just throwing money at the automakers.

The other thing, even though I know there was no quid pro quo, and that's been cleared up, I think the question about trade is interesting.

And we don't know whether Barack Obama is going to stick to his campaign utterances about renegotiating NAFTA an resisting these new trade deals, or whether he is going to be, as he suggested after the heat of the primaries, he will be more favorable to them.

I think that raises a fascinating question.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: I think what is fascinating here is the philosophical divide that you can see emerging between the Bush administration and the future Obama administration on what to do on the bailout.

The Bush administration wants to restrict the bailout to the financial institutions. It sees it as a utility, as a power company. You can't allow a power company to go under and the electricity shut off to all the other industries.

HUME: That affects everybody.

KRAUTHAMMER: If the credit is gone, nothing happens. So if it had this restriction in the $700 billion, it would be only financials.

What the Democrats want is to have it expanded to include industries-large ones, because its concern is unemployment. If you have a large number of people thrown out of jobs at a time, you get a decrease in consumer spending, you get an increase in mortgage defaults, more unemployment, you get a spiral and a depression.

So there is a logic there, but the problem is that the Democrats prevail, the question is where does it stop, and why autos and not others?

It becomes extremely arbitrary and political that the companies that will be saved outside of the financials will be those with the biggest political influence and lobbyists, exactly what Obama said he was running against.

And, secondly, it will be inefficient. As Mort indicated, it's a way of saving the old obsolete and ruinous union contracts which have driven the big three into bankruptcy at a time when the manufacturing of Japanese companies and others in the south is succeeding.

So, in the end, you have to make a decision. Are you going to throw money into the auto companies? It will be a maw that will be endless. And you have to draw a line.

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