Commentary Magazine


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Pre-Packaged Penalty

This report suggests that President Bush is contemplating some sort of pre-packaged bankruptcy for the auto companies. The President can’t be accused of ideological rigidity on this one. Indeed it is hard to make any sense of his conflicting statements. On one hand, he doesn’t want to send “good money after bad.” But, then again, he doesn’t want to see the companies fail – his press secretary says that “doing nothing” isn’t an option. And he doesn’t want to make this President Obama’s problem. (Why, I’m not sure since he’s the one to live with the consequences.) Yes, it is all a bit muddled.

But if out of this comes a significant restructuring of the recipient companies, it will be a good thing. Or at least a less awful thing than just handing the companies a pot of money with the hope that they’ll “work things out.”  And if the message goes out that bankruptcy, in whatever form, is the price of poor management that would be a good thing as well. A price must be paid before the taxpayers are forced to cough up any more.