Friday, December 12, 2008


Keep Bailing?

So, with the collapse of the congressional bailout Thursday evening, the Bush White House now says that it will move to tap some of the Troubled Asset Relief Program (i.e. bank bailout) money to help keep the Big Three floating for another few months.

Amazing. For those keeping track, this is now the third use of the TARP money since Congress voted the $700 billion three months ago. First, it was going to be used to purchase so-called "toxic" assets; then it was going to be used for direct investment into banks to help thaw the credit markets. Now, it's going to be used as a de facto bridge loan to troubled U.S. car companies. Two weeks from now, boys and girls, it will be used to buy Christmas presents for everybody!!! Yaaayyyy!!!!

The abuse of this amount of money -- in hindsight, pretty predictable, of course -- forces those of us who were nominally supportive of the bank bailout to want to offer up some major mea culpas. Yes, it makes us feel just like we did with the whole Iraq invasion situation: There's a crisis; we need near unlimited support to deal with this crisis -- and then after the congressional authority has been given, various follow-up reasons are and strategies are adopted to "win the war." Can't wait for the financial "surge" that will manage to reduce the economic "violence" that continues to rage. Fool me twice -- shame on me.

But, I digress.

The big irony here is that a case can be made that the $15 billion to shore up the auto industry may not be the worst idea in the world. After all, the government has already spent more than half the $350 billion of the financial bailout -- and it's far from clear whether it has actually done anything to help the economy. Given the 1.2 million in job losses over the last three months, I'm not sure letting the Big 3 (or two of them anyway) go bankrupt over the next few weeks is the best thing for the US economy. Even stipulating that UAW contracts get the autoworkers into this mess, just letting the companies die now -- when the country is facing one of its most severe economic crises in decades -- is not a good option.

Yet, there is something really bad about an administration requesting funds for Purpose A -- and then turning around and using them for Purpose B. Talk about misappropriation of funds. And oversight? What oversight?

And so, once again Congress and the Bush administration (and yes, incoming Obama administration, I'm looking at you, too) have put the country into a position where there are no ideal options.

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