Bailout Watch 294: Where Is That Bailout Anyway?

Edward Niedermeyer
by Edward Niedermeyer
bailout watch 294 where is that bailout anyway

Yes, bailout watchers, President Bush was under pressure to make an announcement today on the possible use of TARP funds to rescue the domestic auto industry. And by the looks of things round Chrysler way, waiting even until today was probably a stretch. But Bush has juked expectations (and not for the first time) by failing to make any kind of announcement by close of business today. And this mysterious defiance of the media-proclaimed deadline has ABC News wondering “What’s Taking So Long?” No, seriously, that’s the headline. Not being the kind of news source that asks a question with no convenient answer, ABC quickly reveals that “some of the GOP senators who killed a congressional bill to save American carmakers last week have written to the president to say they don’t believe ‘any amount of money’ will save the struggling car companies without major changes to how they operate.” The letter was signed by senators Jim DeMint; Jeff Sessions; John Ensign; Tom Coburn; John Cornyn; Mike Enzi; and Saxby Chamblis as well as more than two dozen Republican members of the House. The White House responded through spokesman Tony Fratto, who told ABC “it’s a huge industry, and both the problem and the potential solutions are complicated. Congress is leaving the administration with suboptimal choices to deal with the issue.” Meanwhile, for Chrysler and GM the choices become increasingly “suboptimal” with every passing hour.

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  • John Horner John Horner on Dec 17, 2008

    It is very strange that the administration has been actively leaking word of a bailout any day now for nearly a week while holding off on actually announcing anything. Something strange is going on behind the scenes.

  • Kanightsky Kanightsky on Dec 18, 2008

    Using Lagrangian analysis, this system has but two outcomes. 1. UAW is eliminated. It has bit off the hand that fed it. Work rules + excess costs make their workforce unable to compete. 2. UAW, Chrysler, GM, and Ford are all eliminated. They can't compete with 5000 pages of work rules that prevent competitiveness. There is no future for the UAW unless taxpayers get so totally ripped off that they rebel. Free of UAW, management must quickly produce competitive work environments viv-a-vis Honda et-al.

  • Jkross22 Jkross22 on Dec 18, 2008

    @Ronnie: "And of course, the Japanese government’s MITI has never, ever, ever assisted their automakers." Yes, and Michigan gave away hundreds of millions of dollars to GM for that new engine plant in Flint that was supposed to build Volt engines, but has been put on hold. This still comes down to sales. Everyone is hurting right now, but the weakest players in the US market are likely toast. As it should be. Government, err, tax payer funded bailouts will only delay the inevitable.

  • Ronnie Schreiber Ronnie Schreiber on Dec 18, 2008
    Yes, and Michigan gave away hundreds of millions of dollars to GM for that new engine plant in Flint that was supposed to build Volt engines, but has been put on hold. Actually, the incentive plan was primarily in the form of tax abatements, some new and some extended. It's not like the state government just handed GM the money. The city extended an existing abatement of 100 percent of the personal property taxes until 2033 and granted GM a 50-percent, 15-year abatement of real property taxes. The City Council also approved a GM redevelopment plan for the proposed engine plant that makes GM eligible for state tax credits. Since GM isn't profitable, they're not likely to get any tax credits any time soon.