The Wall Street Journal’s Kimberly Strassel injects a necessary dose of reality into the debate over what to do about the Big 3. She reminds us that the same Democrats who sanctimoniously remind us that ‘something must be done’ to save the U.S.-based automakers, refused to do anything when they had the chance:
Democrats have been trying to shuffle money to Detroit since summer, but their timing has been off. The Michigan delegation’s big push for auto funds coincided with September’s financial crisis. With Washington in a panic, voters howling over $700 billion for banks, and an election in the offing, the leadership decided a Detroit bailout was one hot potato too many.
This decision was made easier by the fact that the Big Three’s balance sheets have made even sympathetic Washington spenders worry about throwing money at a bankruptcy. Democrats decided it would be better to direct the funds in a way that allowed them to later deny fault.
The plan? Make it the Bush administration’s responsibility to give Detroit cash — namely by claiming after the event that the $700 billion rescue package for financial institutions was in fact a rescue package for auto makers. This was attempted with several hilarious “colloquys” — pre-scripted dialogues between members that were quietly inserted into the Congressional Record after the vote, all aimed at rewriting the “intent” of the law. Say, this one, from Oct. 1:
Michigan Sen. Carl Levin: “As Treasury implements this new program, it is clear to me from reading the definition of financial institution that auto financing companies would be among the many financial institutions that would be eligible sellers to the government. Do you agree?”
Connecticut Sen. Chris Dodd: “Yes, for purposes of this act, I agree that financial institution may encompass auto financing companies.” As they say, read the whole thing. Democrats feared that a Big 3 bailout would alter the political status quo in Washington — one that saw them on their way to a win in the presidential race and a sweep in Congress. What would have happened if they had given John McCain the chance to thunder against a union bailout just a few months before election day? There’s a good chance it would be McCain organizing a cabinet today, rather than Barack Obama. So Democrats refused to take the risk of staking the election on the future of Detroit. And now they’re trying to pin blame on the Bush administration for hanging Detroit out to dry, happily ignoring that they consciously chose to let Bush do so. If GM fails before Barack Obama becomes president, rest assured they’ll try to make it George Bush’s legacy — since Iraq now seems to be going well.
And for a reminder of just how clear it was that the Big 3 were in obvious crisis mode when Congressional Democrats chose to keep them out of the TARP, read this piece from Forbes from July:
General Motors’ situation is particularly noteworthy, since its stock recently hit a 50-year low amid increased talk of bankruptcy. With a market cap of $5.7 billion, GM’s market value is now less than that of Bed, Bath and Beyond.
While GM’s vitality is increasingly irrelevant when it comes to the health and size of the U.S. economy, it is sadly a very relevant entity within the friendly confines of Washington, D.C. A collapsed GM would predictably lead to all manner of protectionist and currency-related punishment for those automakers who’ve apparently committed the grave offense of producing that which U.S. consumers want– while being foreign.
With that in mind–if the intent is to help–true aid would involve letting the antiquated symbols of an overrated economic past fail or be sold. Only then will the capital that’s been wasted on them be redeployed in ways that create real jobs and companies that aren’t reliant on the state to achieve what has become the antithesis of success.
None of this is to say that spending billions of taxpayer dollars to save a badly-managed sector with huge competitiveness problems is a good idea. It’s not. But it’s also important that Democrats in Congress not avoid the consequences of their decision not to act. It’s clear that Congressional Democrats made a conscious choice not to steer aid to them when they could have done so, and when it would have made a difference. Now they want to reap the political benefit. The only way they’ll be forced to take responsibility for the mess is for the Big 3 to struggle along with no help from the taxpayers, until after Barack Obama takes the oath of office — assuming they can last that long.