Should he or shouldn't he? That is the big question in Washington, D.C., as President George W. Bush seems to be backing off earlier statements that the government should provide some form of bailout to the auto industry.
With GM and Chrysler angling for bailout money, but not getting it from the Senate, President George W. Bush is looking in a different direction. A free-marketer at heart, the President's administration is looking into "orderly" bankruptcies as a possible solution.
First, the President said he was not in favor of giving money meant for financial institution recovery to the auto industry, then he signaled that he had changed his mind when the Senate did not aprove a separate bailout. Now, it seems, the President is going back on his decision again by suggesting the companies head to bankruptcy court.
White House Spokeswoman Dana Perino said, "There's an orderly way to do bankruptcies that provides for more of a soft landing. I think that's what we would be talking about."
The outgoing President apparently thinks an "orderly" bankruptcy of any of the Big Three would not be nearly the magnitude of problem as a "disorderly collapse," which the President has said would be hard for the U.S. economy to handle. Already, both companies have announced plans of closing the doors and stopping all production for at least a month in effort to save cash.
At a speech to the American Enterprise Institute, President Bush was quoted as saying, “In ordinary circumstances, failing entities should be allowed to fail.”
"I have concluded these are not ordinary circumstances, for a lot of reasons," he added.
The biggest concern is for GM and Chrysler who may not have enough cash on hand to pay suppliers next month. The chairman of Chrysler's parent company, Cerberus Capital Management, is John W. Snow. Snow is the former Treasury Secretary to President Bush.
Ford has said they have borrowed enough cash to get through 2009.
However, there were an estimated 554,000 new unemployment cases in America. The auto industry accounts for roughly 2,000,000 jobs in America from both manufacturers and parts suppliers.
Under Chapter 11 bankruptcy protection union contracts, debt, and other financial matters could be renegotiated with a judge's approval. Republicans, who have had little support from labor unions over the years, are in favor of bankruptcy.