National Press Release

FALLS CHURCH, Va., Nov. 13 /PRNewswire-USNewswire/ -- Peter Flaherty, President of the National Legal and Policy Center (NLPC), today criticized efforts by President-elect Barack Obama and Rep. Barney Frank (D-MA) to bailout the automakers. He said:

"We should not hand over billions in taxpayer funds to the same executives who got us into this mess. The social compact between the Big Three and the United Auto Workers (UAW) may have been sacrosanct during the 1960's but it is not a viable model now. Carmakers have had decades to wean the companies off unionized labor, but have not exercised the leadership to do so, even as their competitors have built plants with non-union workforces.

"These executives are too close to politicians who rely on the UAW for political support. Ford CEO Alan Mulally was reportedly suggested for the job by former Rep. Richard Gephardt, a protectionist politician in hock to the unions. A bailout would just perpetuate this culture.

"This culture has placed ideology over rational business decisions. Before he hired Mulally, Bill Ford, Jr., called for a 50 cent tax on gas. GM is betting its future on the Volt, an electric vehicle that will cost $40,000. Much of the nation's electricity is generated by coal, an industry Obama says he wants to bankrupt. The result is a coal-powered car that no one will buy without tax breaks. All three automakers are investing in flex-fuel vehicles that can burn ethanol, a fuel that cannot compete with gasoline without subsidies and protection from imports.

"Moreover, American automaker executives have failed over the years to protect the interests of their companies by acquiescing to CAFE mileage requirements and other regulations. Automakers have never asserted the principal that government should stay out of their businesses; they have only sought to make such intervention more manageable. Carmakers are broke not because of insufficient government interference, but because of it.

"None of this is an argument for replacing present management with government-appointed receivers. It is an argument for stopping the bailout and protecting the taxpayers from the same ravages that have afflicted automaker shareholders."

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NLPC promotes ethics in public life and sponsors the Organized Labor Accountability Project. Since 1997, NLPC has published a newsletter titled Union Corruption Update every two weeks.

SOURCE National Legal and Policy Center