Dec 31, 2008

Auto Bailout a Bad Precedent?

After bailing out Wall Street, the White House has set the dangerous precedent that it is prudent to bail out entire industries, according to the non-profit conservative think-tank FreedomWorks. Billions of taxpayer dollars will be lent to General Motors and Chrysler LLC in exchange for a promise that the Detroit Three become profitable soon, and conservatives believe this is a slippery slope.

Small government conservatives believe that the government has no place in picking winners or losers in the market place, FreedomWorks said. It asserted the process takes money from productive companies and industries and rewards failing enterprises at the expense of more productive sectors of the economy. Using TARP funds to bailout the auto industry also raises additional questions about the constitutionality of the Emergency Economic Stabilization Act (EESA) that created the TARP program, the group said.

"To be a free-market conservative means believing in limited government values in good times and in bad," FreedomWorks President Matt Kibbe commented. "Recessions are part of the economic cycle when overextended and uncompetitive companies get punished and resources are reallocated to the most productive parts of the economy. Bailing out failed enterprises only serves to burden the productive sectors of the economy and prolongs the inevitable."