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City of Brass


Bush bails out the auto industry

posted by Aziz Poonawalla

The Republicans are furious with President Bush for agreeing to use TARP funds to bail out the auto industry:

Sen. Judd Gregg (R-N.H.), one of the architects of the $700 billion
Wall Street bailout, thinks Bush may be skirting the Troubled Asset
Relief Program rules.

“These funds were not authorized by Congress for non-financial
companies in distress,” Gregg said, “but were to be used to restore
liquidity and stability in the overall financial system of the country
and to help prevent fundamental systemic risks in the global
marketplace.”

McConnell said he realized the Bush auto bailout was coming, and is insisting more strings be attached.

“I have strong objections to the use of Troubled Assets Relief Program
(TARP) funds for industry specific bailouts. And I do not support this
action,” McConnell said. “But since the administration has chosen to
use these funds to aid the automakers, it is important that the
date-specific requirements on all the stakeholders be enforced.”

House conservatives are railing against the bailout, but it’s clearly too little too late.

“Using TARP funds to bail out failing companies is incredibly risky and
poor public policy, and was not the designated intention of the program
when Congress approved it,” said Rep. Jeb Hensarling (R-Texas), a
leading voice for House conservatives. “I fear that a devastating
precedent has been set that the federal government will now be
pressured to bail out every failing company in America — something that
taxpayers and future generations cannot afford.”

Interesting how when it’s a middle class, blue-collar industry like the auto workers on the line, these Republicans fall over themselves to portray it as the end of the fiscal universe. But when it comes to big banks and financial executives, they sang a different tune.

At any rate, House Republicans have only themselves to blame; they could have worked to pass the auto industry loan package – a package that was VERY strict indeed and used no new funds only re-allocated funds that the automakers were going to get anyway for various environmental initiatives. Instead the GOP scuttled that deal for essentially trivial quibbles over policy: As Kevin Drum says,

This is nuts. If you’re just flatly against the bailout, fine. Vote
against it. But if the wage cuts, along with the debt-for-equity swap
that was also part of the bill, were enough to bring you around, why
would you cavil at the cuts happening in 2011 instead of the end of
2009? It’s only about an 18 month difference, and cutting wages makes a
lot more sense in 2011 than it does in the middle of a massive
recession anyway.

Another shining moment in the history of the modern GOP. Ideology uber alles.

Given how petty their reasoning was in walking away from last week’s legislation, crying about using TARP funds now is just childish. This is why the Republicans are out of power and in the political wilderness – all they have to offer is mindless ideological obstruction rather than any coherent desire to sit down and make the compromises needed to move things forward.

Related – NYT article about the loan that the GOP refused last week for the automakers.



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