Editoral: As Big Three return to D.C., focus should be on workers

U. Michigan, Ann Arbor, MI, Dec 01, 2008 (Michigan Daily/UWire via COMTEX) -- GM | Quote | Chart | News | PowerRating -- For the Detroit Three, round two begins today. After executives from General Motors Corp., Chrysler LLC and Ford Motor Co. paraded onto Capitol Hill off of their private jets last month, whined about their misfortune and looked thoroughly unprepared to explain what they would do with the billions of dollars in federal money they were requesting, Congress sent them a stern rebuff and a demand for a plan. Those plans are due today. In the debate that will inevitably follow, Congress needs to keep in mind one important reason to bail out the Detroit Three that got buried in last month's spectacle: This is about more than three car companies.

As critics -- including Michigan Gov. Jennifer Granholm -- have almost universally agreed, GM's Rick Wagoner, Ford's Alan Mulally and Chrysler's Robert Nardelli inspired no sympathy last month. Seemingly expecting assistance, they didn't pay much attention to the image they conveyed or the embarrassing lack of thought they had put into where the $25 billion they were requesting would go. It was a typical display of how these companies -- especially Chrysler and GM -- have ignored the rest of the world for decades.

Today promises to be different -- if only because so many people have demanded it be that way. There will be plans, real answers and no private jets. But what also needs to change is Congress's focus and the conclusion it reaches. This time, Congress needs to approve a bailout for these companies to protect the millions of workers, the state and the many institutions that depend on these companies.

Take, for starters, the sheer number of jobs that would be lost if the Detroit Three severely contracted. According to the Center for Automotive Research, if the Detroit Three reduced operations by 50 percent, almost 2.5 million jobs would be lost next year across all sectors of the economy. The government would lose more than $20 billion in tax revenue, owe almost $12 billion in social welfare payments and lose more than $17.5 billion in Social Security receipts in 2009 alone -- figures that add up to a lot more $25 billion these companies are requesting.

Michigan would be devastated by these losses. For a state that has teetered on the edge of complete economic ruin for years, this would tip it over the edge. Already, a study by researchers here at the University of Michigan is predicting Michigan's unemployment rate to jump to double digits in upcoming years from its current 16-year high at 9.3 percent. Couple that with the fact that Michigan's unemployment fund is not just empty but owes the federal government $472.8 million, and it's easy to see how a death knell for the Detroit Three might as well apply to the state of Michigan, too.

There are still more victims of a Detroit Three collapse -- the University of Michigan being one of them. These companies have typically contributed millions of dollars to the University, are responsible for numerous programs and scholarships here and have created thousands of jobs for graduates. If any one of these companies goes belly up, a ripple effect will certainly be felt here.

When Congress debates a bailout for the Detroit Three again this week, it needs to remember these consequences. This is what the debate should be focused on, not private jets.

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