Auto Industry Bailout

Topics: Barack Obama, President of the United States, Unemployment Pages: 2 (429 words) Published: July 7, 2013
We agree the United States auto industry could not survive without government support for the following reasons: first is the loss of market share to foreign auto makers such as Toyota, and Honda. Secondly, the US auto industry is unable to withstand an economic recession. Lastly the alternative of the government not supporting the US auto industry will result in an increase in unemployment, and can cause other social and economic issues.

According to the Wall Street Journal research, foreign companies capture 1/3 of the US market. The leading US companies are GM Motors, Ford, and Chrysler totaling around 46.2% of the market. The leading foreign companies are Toyota, Honda and Nissan totaling around 31.4%. This is a significant loss of revenue to foreign competitors. In the US market economy the better firms are more innovative, more efficient, and supply the demand of consumers, therefore they gain more market share. The US companies are losing a large market to foreign companies and in result of that struggle to survive hard economic times.

The first significant US auto industry bailout took place during the George W. Bush administration. After the recession in 2008 the auto industry faced another difficult era resulting in another bailout from the President Barack Obama administration. Obama bailout totaled $85 billion for GM motors, and Chrysler. Bush also defended the decision of Obamas’ bailout because he believed without the bailout the country would have had a second great depression resulting in 21% unemployment. Twice the US auto industry leaders have been unable to withstand hard economic times, resulting in government aid. This proves that our industry leaders are unable to survive without government aid.

Similarly to what George W. Bush states if the US government does not bailout our auto industry what is the alternative? We understand how tax payers find this difficult and frustrating, however it is necessary. In conclusion,...
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