They were directly affected by the rise in oil prices that occurred over the last two years. After 9/11 auto makers were the first to start the effort to move the economy with lowered prices and 0% financing. Banks adjusted their standards and types of loans, but that was often worse for the borrower when they took on an ARM or interest only product. Lower payments today but a bigger total debt. $25Billion is such a small amount compared to the $850Billion total and at least they are making something other than money for themselves.
It was warned that several large industries would follow suit once the bailout was passed for the banking industry. It should be no surprise that the auto companies are following. Or, at least no surprise to those of us outside of Washington, DC. More and more the "bitter" middle Americans will see the voting of the masses in urban areas laying hold to our hard-earned, frugally saved money. Sharing the wealth it is called. Of course, looking around one might ask, what wealth are we sharing?
But the amounts are so big that people don't notice how it affects them. $850 Billion / 300 million people (not the number of taxpayers the number of people) = $2,833 per person. A family of four makes that $11,333 for the family. Assuming that is a one-time deal, you could buy a 2002 Chevy Tahoe, fully loaded, I just bought one, for what the government is going to give away on your behalf. Or a brand new small sedan. At least when you had given a car company nearly $12K in the past you got a car out of the deal. Now you get to pay for their kickbacks and be happy because we may save the economy in Detroit.
Of course, the fact is that from 2006 IRS numbers there were 92,713,707 tax payers (people who actually paid income taxes). Split the 850 Billion by those actually paying income tax and you get $9168 per person to pay for the bailout.
It's too much and it will only grow. At what point does the money come back? It doesn't. We pay off the car companies debts, and mortgage company debts, but can't pay off our own debts. Car companies won't turn around and help you pay off your car debt. Banks won't reduce your principal, despite what Obama suggested during the campaign of promised hope. If it is just a sacrifice we have to make, let's get the car companies back on track. At least I will eventually buy a car from them. Maybe they can even use it to build a flying car, I wouldn't mind paying an extra $10000 for a flying car.