Mr Bush announced on Friday the government would provide $17.4 billion in emergency loans to financially strapped General Motors and Chrysler LLC to prevent them from failing. Ford decided it did not immediately need similar loans.His reason?
US president George Bush said today that offering government loans to US car manufacturers was the only option left to prevent the industry from collapsing after alternatives were ruled out or failed.We have no way of knowing what alternatives were ruled out. My guess is that relieving some of the conditions that made those two U.S. automakers uncompetitive were not among them. Did he suggest repealing Sarbanes-Oxley? Doubt it. Did he push for removal of CAFE standards? Never heard so.
It might be argued that repealing onerous legislation (apart from debates about their 'social value') would take too long to have a positive effect. Fine, how about some short term, big boost options.
Did Bush ever suggest relieving the Not-So-Big 2 of all corporate taxes for two years? I never heard that. Did he recommend suspending capital gains taxes for two years on investors who might thereby be incentivized to loan them funds? I'm pretty sure both Democrats and Republicans would've gone along. The Republicans often side with proposals to lower taxes and the Democrats would not want to be seen as the party that let the UAW workers become unemployed.
Ok, let's get really creative here. Did he call a meeting of the 170 richest Progressives in the country and ask them to pony up $100 million each in short-term loans to save their beloved UAW? I doubt it. By the way, if you think none would have agreed, what does that say about the estimated odds that GM and Chrysler will pay back the Federal loans? (Not to mention the standard hypocrisy of limousine liberals.)
No, Bush did none of these things. The only reasonable conclusion we can draw is that either he has zero understanding of economics, or his fealty to the free market is as wobbly as his commitment to winning the Iraq war was solid. Whichever is the case, we can be certain of one thing. It will turn out badly.
The amount of money is really small change at this stage, compared to the nearly $8 trillion already promised for various measures. But the plan triggered a request by the Treasury for the second half of the $700 billion of TARP funds. No one knows what plan may be afoot to spend the remaining $346B. (There was $13 billion left in the first half.) It's bound to be a doozy.
That's one truly horrific aspect of this plan, the precedent set. Not that there haven't been plenty already, but this just unleashes a whole new round. The TARP funds were intended to prop up ailing financial institutions. When that failed, the Feds went looking for other 'helpless victims' to help, in the process victimizing the rest of us. It soon extended to automakers because heaven knows we couldn't have them fail. Why, people might have to find other jobs!
There's no telling who or what will be next on the list of the distressed to save, "in order to save the system" (as if saving the capitalist system could be accomplished by eroding it faster than at any time since the 1930s). It makes one wish a Progressive would please come along soon and save us from the saviors of capitalism.
Oh, yeah... That's due to happen in another month. Goody. Just when I thought things were about to get boring.
Update: George Will has written an excellent commentary on Bush's brazen disregard of the law and Congress (the latter, admittedly, much less morally questionable as ignoring goes). Among other superb insights he says,
"If TARP funds can be put to any use the executive branch fancies because TARP actually is a blank check for that branch, then the only reason no rules are being broken is that there are no rules."
"The expansion of government entails an increasingly swollen executive branch and the steady enlargement of executive discretion. This inevitably means the eclipse of Congress and attenuation of the rule of law."