You know things are getting out of hand when the Washington Post rails against “the insidious costs of all bailouts” and invokes a “moral hazard” to critique the latest cash infusion for GMAC. The criticisms come simultaneously from the Left and the Right:
In short, through the GMAC bailout, the U.S. government is enabling GM to overcome (or try to overcome) the market’s resistance to its inferior merchandise — and it is doing so in a way that directly clashes with public goals such as conserving energy and fighting global warming. Perhaps this will indeed be, as GM has vaguely promised, the last hurrah for the second-rate, U.S.-built SUV — or perhaps the government has purchased GM a chance to fail at something new. Either way, it’s another reason to look forward to the recession’s end and to the swiftest possible decoupling of government and big business.
If the Left is concerned about corporate welfare efforts which contradict its social and environmental aspirations, and the Right is worried about the eradication of market discipline, from what quarter will the support for continued bailouts come? As the new Congress and administration surveys the results of the first round of bailout-mania, it may just be that their ardor for this sort of anti-recession activity fades. Indeed, there’s quite a bit of skepticism in the air, we learn from this report:
Can a $400-million injection of federal bailout money to the “bank to the stars” in Beverly Hills really help revive the troubled U.S. economy? That’s one of the questions the Treasury Department’s inspector general is asking in a review of the decision to award bailout funds to City National Bank. . . [I]nvestigators see the review as a case study into how the Treasury Department is implementing its controversial program to infuse $250 billion into the nation’s banking system and why certain institutions were selected to participate. The program was launched at the peak of the financial crisis in October to strengthen banks and encourage them to lend money, thawing the freeze that has deepened the yearlong recession. But critics are questioning the effectiveness of the effort and whether bureaucrats can ensure that the money will actually be used to make loans.
If Republicans are looking to play a constructive role and join forces with Democrats to help revive the economy, they might suggest a serious bipartisan effort to examine how the bailout money has been spent and what it’s given us. That might be the basis for a fruitful discussion — one that both ends of the political spectrum might embrace — about whether, now that the immediate panic of the financial crisis has passed, we have had quite enough of bailout-mania. Perhaps both parties can begin to recognize that there are better ways to spend taxpayaer money than bailing out incompetently managed firms and failing industries.