Commentary Magazine


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Snatching Defeat

The White House put out a statement indicating the President might, after all of this, resort to the use of TARP funds to bail out the car companies. With purposeful vagueness, the statement is unclear about whether the President intends to give away the store (i.e. provide the loans with little or no conditions, as the Demcorats’ failed plan envisioned) or insist on some tougher concessions by management and labor:

Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms. However, given the current weakened state of the U.S. economy, we will consider other options if necessary – including use of the TARP program — to prevent a collapse of troubled automakers. A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time.

While the federal government may need to step in to prevent an immediate failure, the auto companies, their labor unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable.

A capitulation in the face of diligent work by the Republican Senate would be in some ways a fitting coda to the Bush administration, which has offended and disappointed the conservative base again and again on domestic policies and displayed an utter disregard for fiscal discipline. Why was the Bush administration conspiring with Democrats in the first place, rather than working on a Corker type plan to force real restructuring? It is practically unfathomable.

Then there is the President’s own credibility. After weeks of telling anyone who asked that the TARP funds couldn’t legally be used outside the financial sector, that last, “final” position is no longer operative. Now it seems it’s perfectly appropriate to do what, weeks ago, was utterly out of bounds.

It would be a sad and unseemly way to end a presidency. But perhaps the President will think better of it. If he resorts to alternative means of funding the Big Three, he could still revive the Corker plan which offers the only meaningful approach to protecting the taxpayers’ money and putting the car companies on the road to recovery. That might be a better way to conclude his time in office — standing on economic principle, maintaining intellectual consistency and assisting his struggling Republican comrades.