Wednesday, 04 March 2009 10:04
In recent months, the U.S. government has sought economic recovery through successive, and wildly expensive, bailouts. The primary recipients of their and (our) generosity have been big banks and the American automobile industry. What lawmakers don't seem to understand, and what is all too clear to America's small business owners, is that the crisis the government hopes to address is rooted not in hedge funds or corporations, but in Main Street.
Injecting money into a couple of automakers won't fix our economy, because it does nothing to improve consumer confidence. Domestic automakers may now be able to stave off layoffs for a few more months, but those federal funds don't change the fact the dealers can't afford to buy cars from the manufacturers. Some dealers can't get the credit to floorplan, and those that can still can't get buyers into their stores.
This reality, of empty showrooms and idle employees, can be seen in every part of the country, and in every sort of dealership, domestics and internationals. This isn't a Detroit problem, it's an American problem. And it's threatening to destroy an auto retail industry that has served as the back bone of small town America for generations.
One good sign: earlier this month Congress passed a stimulus package that allowed buyers of new cars to deduct all state and local sales taxes paid on the purchase from their federal income tax. It's a start, but it's not enough. Let go farther, and offer new car buyers substantial rebates similar to those being offered to new home buyers.
The key to solving this crisis is simple: Use tax incentives to ignite interest in car shopping and restore consumer confidence. I can't speak for every consumer, but I know watching billions of tax dollars funneled into corporations makes me feel anything but confident.
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