The auto bailout being fashioned by liberal lawmakers with Bush’s apparent acquiescence contains no meaningful limits on the bloated union contracts that have helped make American automakers uncompetitive by giving autoworkers compensation that exceeds $70 per hour, meaning that the billions of dollars spent on the bailout will simply be wasted.
The bailout is similar to the failed British auto bailout of the 1970s, which destroyed whatever chance the British auto industry had left to survive by diverting its focus from producing good cars at low cost to providing inflated wages for Big Labor and manufacturing vehicles that pleased government planners but not consumers (akin to liberal lawmakers’ demands that U.S. automakers produce “green” vehicles as part of the bailout).
The bailout fashioned by Congressional leaders also contains a provision that violates the First Amendment, by requiring automakers to drop their lawsuits challenging state fuel-economy laws enacted in the name of preventing global warming (which are probably preempted by federal law). In its 2001 Legal Services Corporation v. Velazquez decision, the Supreme Court ruled that federal funds generally cannot be conditioned on dropping lawsuits, because litigation is protected by the First Amendment’s freedom of petition unless it is meritless. (Even if a lawsuit fails, it is still protected if it fails for complicated or technical reasons, rather than because the plaintiff made false factual claims).