In the fall of 2008, General Motors, Ford and Chrysler-known for decades as the Big Three encountered a very serious automotive industry crisis that they haven’t met before. This unprecedented crisis made these three leading companies in automotive industry step at the edge of bankruptcy. Facing this critical problem, automotive companies can not deal with this severe difficult situation all by themselves then they turn to the United States Federal Government for help not only once but several times.
According to a report published by Center for Automotive Research in the United States, the United States Federal Government successfully avoids a lose of 28. 6 billion dollars by offering assistance to automotive manufacturers in this crisis. Even though this amount of money can not be comparable with the tremendous amount of money the United States Federal Government loaned to the automotive industries, it does demonstrate that the government has done something really helpful and successful in term of the outcome of this action and the federal government’s functions in some extent.
Therefore, as far as I am concerned, the United States Federal Government should have assisted the automotive manufacturers from going bankrupt. Then I will illustrate my reasons to support my opinion in the following statement. First of all, we take actions in order to achieve some specific goals. In term of achieving goals, the United States Federal Government actually does a good job in this action by assisting the automotive manufacturers with a large amount of money which comes from taxpayers.
The main purpose for this government’s action is to save jobs. According to the CNN news, we can clearly see that about 113,000 of 400,000 jobs which lost in the year leading up to the Chrysler and General Motors’ bankruptcies have been recovered. Let’s imagine that 113,000 people will lose jobs and live with no source of income if the United States Federal Government does not assist these automotive companies when they are in danger. It will be a really huge problem to American society and it will be a really huge burden to the Federal Government.
When people lose their jobs, they will have no income to support their daily expenses on living then they will become the one who need government relief. Therefore, the government might use a large part of government tax income to support more people who live below the average living level. And this may result in more loses for taxpayers than to assist the automotive industries directly. The government’s action successfully avoids the increase of unemployment rate since it helps to recover a certain amount of jobs, which successfully achieves the original and ultimate goal of this assist action.
The second statement can be present to illustrate my point is that the government uses tax policy to reallocate the wealth of society to make it relatively fair for everyone in this society. By using tax policy, the United States Federal Government can collect money or resources from taxpayers who might be in high statue in the hierarchy of the society and then give the money back in form of all kinds of social welfare expenses to poor people who might be in low statue in the hierarchy of the society.
In fact, the Federal Government uses large amount of money collected from taxpayers to build communal facilities, support educational industry, create health care system, guarantee the nation security and deal with daily operational affairs. Compared to the large amount of money the Federal Government spent on these purposes, the so-called lose of money the government spent on assisting the automotive companies isn’t worth mentioning. What’s more, the money spent on these companies is not all in vain. They actually helped a lot for these companies in danger to avoid going bankrupt and recover.
“The fact that the company has done so well — that they were able to go out and raise private capital to repay us the loan so quickly, is really the big story,” said Tim Massad, Treasury assistant secretary for financial stability. Admittedly, if the United States Federal Government does not assist the automotive manufacturers, it will save money collected from taxpayers. Some people who against the loan to these manufacturers might say that the government can use the money to do other useful things such as supporting the education industry or building communal facilities instead of rescuing these manufacturers.
But we can not imagine what it would bring to the American society if the government doesn’t take actions to prevent these companies from going bankrupt. In 2008, the bankruptcy of Lehman Brothers initiates the global financial crisis which gives the whole world a heavy blow and influences the global economy for a long time. So the government has the responsibility to take actions when the situation can be controlled to stop the situation getting worse.
In conclusion, it is prudent for me to say the United States Federal Government should have assisted the automotive manufacturers from going bankrupt based on the reasons I listed above. Firstly, the government has achieved its goal-saving jobs by taking this action. Secondly, the loss isn’t massive enough to make the government regret what it have done to assist these automotive companies and reconsider what to do facing this problem. And these companies are surviving from the severe crisis and getting better now. So the government should have assisted the automotive manufacturers from going bankrupt.