Bush’s $17.4 Billion Auto Bailout Softens His Negative Legacy
Yesterday’s news cycle was dominated by reports from the White House that President George W. Bush was floating the idea of a government-managed bankruptcy of the ailing Big 3 American automakers.
Today, Bush un-floated it and instead offered a $17.4 billion loan bailout to the Big Three automakers. Stocks immediately began to rise on Wall Street — something that would most assuredly not have happened if Bush had announced a thumbs-down on a bailout.
It’s clear that that yesterday’s suggestion by Bush and other White House officials about a possible bankruptcy meant it was on the table — and that it didn’t look good because it clashed with the financial recovery plan tablecloth. Bush’s decision is HIGHLY significant to him, the country, the economy and the international economic scene:
1. It buys time for the industry and the incoming Obama administration. It avoided a new economic body-blow hitting the country right around Christmas and before Barack Obama is sworn in as President.
2. It will help at least the avoidance of more damage to the American auto industry going into 2009. Yesterday’s White House feelers about a possible managed bankruptcy sparked broadcast news reports quoting experts who said if a car company was in bankruptcy it would likely never survive since a large chunk of customers wouldn’t buy from a company if they felt their vehicles could have far less or no value upon resale…which is what happens to many vehicles made by companies that went under.
3. It will help add a positive note to the legacy of Bush who, at best, will be considered a highly-flawed President and, at worst, rank as one of the worst in American history. The Republicans in the Senate, acting on ideology, regional politics and anti-union sentiment, had scuttled the bailout — giving the GOP an image once again of a party stuck on ideology.
4. It means if the auto industry does go under, it can’t be said that George Bush fired the final shot in its head. Now, if it goes under, it’ll likely be under the Obama administration (Happy New Year Barack…).
5. It further puts Bush at odds with many conservatives in his own party who grumbled about bailing out banks and insurance companies but did so quickly but balked when it came to automakers becaus,e in at least some cases, they wanted to short-circuit the UAW. It also puts him at odds with many conservative radio talk show hosts.
6. It will likely send a signal (even if fleeting) to international markets that both the existing and incoming administrations are at least partially on the same wavelength in ensuring the United States has proactive policies to stem financial bleeding.
None of this means the American auto industry will be around in two years or in the same form. But it avoids yet another punch to the reeling economy’s gut and helps Bush go out on a note suggesting he agonized over this decision and looked at all angles.
Here’s Bush’s announcement this morning:
UPDATE I: For more blog reaction GO HERE.
UPDATE 2 AND CORRECTION: For some reason, the following link and update vanished from this site even though it had been posted earlier. For an opposing view of this bailout and other viewpoints that do not agree with this post GO HERE.