TARP and American Auto Companies Persuasive Essay by Nicky

An argument supporting Presidents Obama's decision to bailout automotive companies using TARP funds originally intended for financial institutions.
# 149973 | 2,455 words | 15 sources | MLA | 2011 | US

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The paper discusses the positions of those who believe that using TARP funds to bail out the auto industry is unconstitutional, those who are unhappy with the notion of the government running a company using taxpayer dollars and those who feel that placing more money into the carmakers' failed business strategy makes no sense. The paper argues, however, that the President has the right to exercise executive power to use the TARP funds for the auto industry, and, prior success with bailouts in the auto industry demonstrates that they can work. The paper further relates that the bailout is coming with requirements to restructure that should spark greater innovation and cut costs. The paper asserts that a collapse of the Big Three automotive companies would have crippled the economy, and so the President made a wise decision to rescue Chrysler and General Motors.

The Legal and Political Debate
The Economic and Social Debate

From the Paper:

"Adding to the political turmoil, the government soon revealed that the 17.4 billion in low-interest loans that Bush had just approved for General Motors and Chrysler would not be enough to avoid bankruptcies. Under the Obama Administration, both companies have recently headed to bankruptcy court. Chrysler's bankruptcy filing involves the assistance of another $8 billion in taxpayer money and a restructuring that would consist of ten percent ownership by United States. and Canadian governments, 35 percent ownership by Fiat and 55 percent ownership by the United Autoworkers ("Obama Backs Chrysler Bankruptcy", 2009). General Motors, on the other hand, would require even more government assistance with United States financial aid for the company expanding to nearly $50 billion (Miller, 2009). This investment would be in exchange for a United States government stake in the company of 60 percent. Also, under the bankruptcy plan, Canada agreed to provide $9.5 billion in funding and would get a 12 percent stake. The United Auto Workers union would have 17.5 percent share of General Motors, and bondholders would get a ten percent stake (Miller, 2009). The magnitude of the bankruptcy is tremendous; General Motors' bankruptcy will be the fourth largest in the history of the United States and the largest ever by an industrial company (Miller, 2009)."

Sample of Sources Used:

  • Abouhalkah, Yael T. "The Big Three Bailout vs. Big Bank Handouts for AIG, CitiGroup." Kansas City Star 4 Dec. 2008. http://voices.kansascity.com/node/2983
  • "1979 Chrysler Bailout Holds Lessons" The Washington Times 24 Nov. 2008. http://www.washingtontimes.com/news/2008/nov/24/1979-chrysler-bailout-holds-lessons/
  • Grossman, Andrew M. and Gattuso, James L. "TARP: Now a Slush Fund for Detroit?" 12 Dec. 2008. http://www.heritage.org/Research/Economy/wm2170.cfm#_ftn2
  • Kiley, David. "Auto Bailout Hung Up in the Senate." BusinessWeek 10 Dec. 2008. http://www.businessweek.com/bwdaily/dnflash/content/dec2008/db20081210_152585.htm
  • Liu, Henry C. "The Burden of Elitism." Asia Times 6 May 2009. http://www.atimes.com/atimes/Global_Economy/KE06Dj04.html

Cite this Persuasive Essay:

APA Format

TARP and American Auto Companies (2012, January 16) Retrieved July 12, 2020, from https://www.academon.com/persuasive-essay/tarp-and-american-auto-companies-149973/

MLA Format

"TARP and American Auto Companies" 16 January 2012. Web. 12 July. 2020. <https://www.academon.com/persuasive-essay/tarp-and-american-auto-companies-149973/>