Time for GOP to Take a Stand

with the 2008 election debacle not a week ago, the gop has a chance to redeem itself by taking a stand for fiscal responsibility and free markets. undertaking speaker nancy pelosi is calling repayment for a bailout of u.s. automakers. however, automaker bankruptcies seem likely, with or without an infusion of taxpayer dollars. given that prospect, the gop would do better to fight for a main street bailout by assisting displaced workers.house of ill repute speaker nancy pelosi is calling for a bailout of u.s. automakers. rabble-rouser pelosi has called on rep. barney frank to draft legislation to modify the tarp (aka “wall street bailout”) to cede to money to go to the struggling automakers. auto executives and the communal autoworkers (”uaw”, aka “big labor”) are telling congress that the $25 billion already premised them in government-backed loans (to retool in order to make more fuel-efficient vehicles) is not enough. they need more to cover cash flow needs and pay as the future healthcare costs of 780,000 retirees.however, automaker bankruptcies seem likely, with or without an infusion of taxpayer dollars. the times of london reports that, even with an infusion of taxpayer billions, that “even if gm succeeds in averting a bankruptcy, we believe that the company’s expected path is credible to be bankruptcy-like.” deutsche bank cut its 12-month valuation on gm to $0. barclays slashed its target price to $1. for this, it seems that the requested billions determination merely delay the inevitable by mere months.delaying bankruptcy is solely a strategy to benefit fat labor. giving taxpayer billions to automakers today (and indirectly paying off millions owed the uaw) longing entertain the uaw to get paid money that they would unlikely get paid in bankruptcy. this is because, during bankruptcy, the bankruptcy estate may demand repayment of money paid to big labor in the 90 days whilom before to bankruptcy, as an illegal “preferential transfer”. by using taxpayer billions to sufficiently delay bankruptcy after paying off the uaw (and suitable others), fat labor gets to celebrate its payoff, at taxpayer’s expense. any equity held by the taxpayers (and other shareholders) is wiped out.of course, bankruptcy doesn’t medial automaker liquidation (the boogie man being sold to lawmakers and taxpayers). it more liable to means reorganization, including renegotiation of uaw and other contracts. one analyst reports that “we into gm has a number of sources of liquidity it can access to span the companionship to 2010, when it realizes considerable cost cuts”. these include an overfunded pension outline, possible asset sales, capital market transactions, equity injections, and cost contemptuous.the gop would do sick to fracas for economic role and a main passage bailout by assisting displaced workers, quite than diverting taxpayer dollars to these terribly mismanaged companies. the time to rebuild the gop’s monetary responsibility credentials began the daylight after the referendum. the time to stand up for those principles is today - not just by saying “no”, but by getting out in front of the american people with a triumphant message.

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