Reply #152: An auto industry failure would harm millions

[Wiegee]

If you don't want to consider helping the auto industry because you have some gripe against it, consider it for another reason. The collapse of the auto industry would harm millions of families, make unemployment soar and spiral us into 30s-style depression.

http://cargroup.org/documents/FINALDetroitThreeContractionImpact_3__000.pdf">Center for Automotive Research came out with a study this week that pointed out that more than 732,000 people in the US work for auto manufacturers or companies that supply them with parts. Each of those jobs support spin-off jobs (wages from automakers go to buy food at the grocery store, creating jobs there, and so on.) Were all three domestic automakers to collapse, in the first year there would be a job loss of 2.9 million jobs. It would mean a loss in personal income to those employees of by over $150.7 billion in the first year, and $398.2 billion within three years. And as consumer spending is 70 percent of the economy, just imagine what that would do to everyone.

To the government, the loss would represent $60.1 billion in the first year, in lost tax income, expenditures for family aid, etc. Over three years, the loss would be $156.4 billion. And with that hit to federal income, how would the Obama administration be able to put some of its programs in place?

It would cost far more to let the companies go bankrupt than to save them. And that is why I do believe there will be help coming from the government.