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This memorandum appears in the March 24, 2006 issue of Executive Intelligence Review.

On Congressional Emergency Protection and Reorganization of the Auto Industry

by Lyndon H. LaRouche, Jr.

March 9, 2006 (EIRNS)—In response to a question about the specific measure which the U.S. Congress should take to save the capabilities of the embattled U.S. auto industry, Lyndon LaRouche provided the following guidance today.

By Act of Congress, the Automobile Manufacturing Industry, as broadly so defined, is taken under the temporary protection of the Federal Government of the U.S.A., as a matter of most crucial strategic significance for enabling the resurrection and further development of the national economy of the U.S.A., as a measure deemed essential to the general welfare of the nation for its present population and posterity. The included economic and social requirement is that the productive capacity so preserved must be maintained in those states and local communities in which the automotive industry and its principal suppliers have been situated during the recent decade and a half.

The qualitative upgrading of the technologies used in the design of automobiles and related products, will be a continuing, included feature. A targeted level of one-quarter to one-third of present levels of manufacture by U.S. enterprises operating under this temporary protection will continue to produce for the auto industry. The remainder of the capacity of the industry and its principal supporting elements should be devoted to a functionally integrated development of the national space-exploration and development initiative, as associated with NASA, and with missions centered in, and compatible with the function of power, mass transportation. and related matters of national, regional, and local infrastructure.

It should be the intention of such prime legislation, that the concentration of Federally-created credit, as capital of investment, in this large, and rapidly expanding section of the national economy as a whole, shall be an economic driver for many leading sectors of the economy. The impact of this must be a reversal of the preceding decline of the U.S. economy from an agro-industrial power, to a so-called, "cheap-labor"- based "services economy."

These combined intentions, must envisage the restoration of the Hamiltonian conception of national economic development, a shift accomplished by the establishment of a well-defined capital budget, as distinct from an annual operating budget, of the Federal Government. Federally created lines of medium- to long-term credit for capital improvements in matters of national economic and related strategic importance, should be made either directly by Act of Congress, or controlled through a special lending authority created by Act of Congress. The private banks would be encouraged to participate in approved loans to private enterprises for this purpose.

In the course of time, the effects of this program must be sorted out, such that either some elements are retained as instruments of government ownership and operation, or established as enterprises operating within the private sector.

For further elaboration, see LaRouche's 2005 memorandum "On the Subject of Strategic Bankruptcy," and his Open Letter to Bill Ford.

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