No more automaker bailouts

The heads of the three major U.S. auto companies and the head of the United Autoworkers Union sat down last week with House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid to discuss the companies' current troubles. The subject was a request from the companies for $25 billion in low-interest loans, on top of $25 billion in previous loans, ostensibly to help automakers develop more fuel-efficient vehicles.

Now, Nancy Pelosi is quite wealthy and Harry Reid is hardly hovering at the edge of the poorhouse, but they don't have that kind of money to lend personally. So the discussion was about loans from U.S. taxpayers.

There's little question that the formerly Big Three are in trouble. U.S. vehicle sales as a whole have fallen 14.6 percent this year. The October figures were worse, with sales down 31.9 percent compared with last year. GM sales fell 45.1 percent in the month, while Ford dropped 30.2 percent and Chrysler 34.9 percent.

It's also true that some of these problems are beyond the companies' control. The recent upturn in gasoline prices hurt them, and the financial crisis brought on by the collapse of the government-induced housing bubble has made it more difficult for the companies and their would-be customers to get credit.

But the downturn has affected all kinds of businesses, from other manufacturers to coal miners to hairdressers. Should all get a bailout from the taxpayers, who are not exactly wallowing in wealth themselves these days? Or do we pass the bills on to our grandchildren?

The sad fact is that the U.S. automakers also brought many of their troubles on themselves, and critics have been warning of this day's dawning for decades. Even after Japanese companies became a huge factor in the marketplace, Detroit continued to work with unions to grant disproportionately high wages and benefits as if the Big Three were still effective monopolies that would never face real competition. Even after several lessons, they dilly-dallied on developing more efficient or alternate-fuel vehicles and acted as if the SUV boom would never end. They ignored consumer preferences.

Giving taxpayer money to these companies, even in the form of loans, would be a reward for incompetence. It would deter reform. And every dollar sent to Detroit is a dollar not available for more productive economic activity.

Consolidation and downsizing will be painful, but delaying it will be even more painful. No more bailouts.