Granholm: GOP wants 'creative destruction' for the auto industry
Two struggling automobile manufacturers, General Motors and Chrysler, have asked the U.S. government for $21.6 billion in loans to avoid bankruptcy, promising to repay them in full once they restructure. However, skeptics have cast the proposal as a bailout for a dying industry which is unlikely to be repaid.
"They still haven't shown a clear path to solvency," host Chris Wallace charged on Fox News Sunday. "Why should the taxpayers keep them on life support?"
In response, Democratic Governor Jennifer Granholm of Michigan gestured towards Republican Governor Mark Stanford, who was seated next to her. "My pal here from South Carolina," she began, "who I think is a bit – I mean, you'd have to say he's a bit of an outlier in terms of economic theory, he's somebody who's more of a libertarian than the rest of us, or most folks – would say that this creative destruction would be good."
Granholm may have been using the term "creative destruction" sarcastically, since it generally refers to the idea that innovation can create economic growth while destroying long-established monopolies, which hardly describes the current situation in the auto industry.
Granholm went on to insist passionately, "Every single country that has an auto industry is stepping forward to help that auto industry. ... It means 3.5 million jobs. ... Communities all across the country...would be seeing devastation."
Wallace then turned to both Sanford and the panel's other Republican, Governor Tim Pawlenty of Minnesota, for help in refuting Granholm.
"You have a BMW plant in South Carolina, which I think is not asking for any federal help," Wallace suggested to Sanford. "So tell Governor Granholm why residents of your state don't want to keep bailing out her companies."
Sanford replied that the US auto companies have to kept under economic pressure to force them to make changes, leading Granholm to ask, "Do we want, in this nation, to lose the backbone of manufacturing in this country? Do we want to be a nation that doesn't want to manufacture anything?"
Wallace, however, quickly interrupted her to bring in Pawlenty. "The reason that the unions and the other stakeholders have not cut a deal with the automakers," Pawlenty asserted, "is because they believe the federal government is going to bail them out. And so the best way to get this thing restructured, I believe, is in the bankruptcy court."
"The unions have made enormous concessions!" Granholm replied. "Starting wages have taken a 50% pay cut. Don't tell me that they haven't done that!"
"How about their retiree health fund?" Pawlenty charged. When Granholm replied that American business is at a disadvantage because every other country provides health care, he took advantage of the opportunity to charge, "You want the government to take over the health care system!"
"I do want our government to provide a level playing field," Granholm concluded, as Pawlenty and Sanford laughed in unison.
This video is from Fox's Fox & Friends, broadcast Feb. 22, 2009.
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