In a surprising show of common sense, Congress has decided not to dole out billions more to a failed and irresponsible industry. The importance of General Motors and the Big Three to the country at this stage is significantly smaller than what the auto makers are trying to make out, and in the worst case scenario they could file for chapter 11 bankruptcy. As the free market dictates, weak and inefficient companies go under, and the strong survive. Ford seems to be best suited for Congressional rejection of an auto-bailout, and has sufficient cash reserves to handle such a situation. GM, on the other hand, will run out of the cash it needs to operate late this year, or early next year. Chrysler LLC CEO Robert Nardelli told the Senate Banking Committee that his firm is also at risk of running out of cash .
Ron Paul believes that a bailout will only delay the economic consequences of the Big 3’s current predicaments, and that Congress should allow the market to work so that the fallout can be dealt with and overcome as quickly as possible. He also believes that this action would move us further away from the free market ideas that made America great. Mitt Romney also shares similar views, and is quoted saying the following:
“If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.”
“Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.” -Mitt Romney
Only time will tell if Congress remains strong against bailing out a failed industry and going against the principles of the free market. Although truth be said, the auto industry is one of the most regulated industries and a free market approach to alleviate their problems would be less regulation and taxes.
 Isidore, Chris. “Consumers to suffer if GM goes under” CNNMoney.com November 19, 2008