It's no secret that American automakers have been in trouble for some time. There's a number of reasons why—the turning radius on the Chevy Cobalt we rented last week being but one datum—but the point is, with the economy gasping for breath like Violetta in Act III, the automakers have come, hat in hand, to beg for money from the government. And to make their case, they did what arts organizations like to do—they cited an economic impact study.
Last November, the Center for Automotive Research released a memorandum on what would happen if the Big Three automakers suddenly stopped or contracted production. Here's what it had to say about the worst-case scenario—a complete cessation of operations within the next year:
In economic terms, the rapid termination of Detroit Three U.S. operations in 2009 would reduce U.S. personal income by over $150.7 billion in the first year, and generate a total loss of $398.2 billion over the course of three years. The impact of this personal income loss on fiscal government operations at the local, state and federal levels include an increase in transfer payments, a reduction in social security receipts and personal income taxes paid. The net impact of all three of these categories is negative on the government balance sheet, resulting in a loss to the government of $60.1 billion in 2009, $54.3 billion in 2010, and $42.0 billion in 2011—a total government tax loss of over $156.4 billion over three years.That's calculated from the loss of jobs in the car factories, indirect or supplier jobs, and spin-off jobs (those jobs that would be lost from the decline in income among the first two groups)—in other words, it's an attempt to measure total economic impact on the affected communities. If you add up the three-year totals of lost income and lost tax revenue, you get a yearly average impact of $184.9 billion.
How's that compare with the arts? Well, according to the 2007 Arts and Economic Prosperity III study by Americans for the Arts, arts organizations generate $104.2 billion annually in personal income, and $29.6 billion in tax revenue. That's a yearly total of $133.8 billion.
So that means that the Big Three automakers' yearly economic impact is about 1.4 times that of the "non-profit arts and culture industry," as Americans for the Arts puts it. Which is interesting, since in the past year, the auto industry received 120 times as much federal money than the arts.
The bulk of the government's bailout response to the financial crisis has been in the form of the Troubled Assets Relief Program, or TARP—that's the $700 billion figure the media has been tossing around. According to The New York Times, out of that, $17.4 billion in loans so far is going or has gone to General Motors and Chrysler, two-thirds of the Big Three. (That doesn't include automakers' financing arms, such as GMAC.) For the record, the 2008 budget of the National Endowment for the Arts was $144.7 million.
Extraordinary times, apples and oranges, &c., &c.—but isn't the crisis hitting arts groups just as hard? Maybe the Baltimore Opera isn't too big to fail, but what about The Metropolitan Opera? The troubles of the Museum of Contemporary Art in Los Angeles might pre-date the financial crisis, but so do the auto industry's; does MOCA get a bailout? How about the Detroit Institute of Arts? Do the math: based on the TARP money collected by automakers and the relative economic impact, the corresponding amount of annual arts funding would be $12.4 billion. Do you expect the government to hit that mark? Me neither. But then the government ought to be telling us one of two things: either what makes the auto industry so special, or else what makes the arts so unloved.