It is now apparent that the Chrysler Corporation will soon file for bankruptcy. This is not the first time the automaker has faced this prospect. Sen. William Proxmire (D-WI) died in 2005 but if he was alive today he could say “I told you so.” He opposed the Lockheed and Chrysler bailouts of the 1970s. He said both companies need to go through bankruptcy to obtain the necessary concessions. He was worried not that the bailouts would fail but that they would work, thereby “inflaming government’s interventionist proclivities to future bailouts.”
Proxmire served on Capitol Hill for 32 years (1957 – 1989) and was Chairman of the Banking Committee. He was a liberal Democrat but a fiscal hawk. He was well known for his “Golden Fleece Awards” which went to people who cheated the taxpayers.
He blasted the 1979 Chrysler bailout as “a massive giveaway for the taxpayers, and a massive windfall for the banks, stockholders and others who have the main stake in a Chrysler bailout.” The loan was repaid in 1983 but Proxmire was still not satisfied because “the terms should have been tougher.”
Chrysler is not alone. GM has also avoided tough choices for three decades, and now it will enter bankruptcy. GM lost $31 billion in 2008, and the stock lost 97% of its value since 2000. My generation well remembers when GM was the world’s largest and most profitable corporation. In 1980 it had 833,000 employees. The new GM products: Camaro, CTS, Enclave, Acadia, Silverado, Malibu, and the Hybrids are all hits. They can be the basis of a new GM.