1 p.m. ET: In an exchange of wisdom matched in history only by the Lincoln-Douglas Debates, Chris “The Fix” Cillizza has responded to The Rundown’s earlier post on the auto bailout’s winners and losers. Specifically, The Fix quibbles with the idea that Barack Obama is a winner today. He writes: “What Bush has done by approving this loan is push off the ultimate reckoning until March -- right smack dab in the middle of Obama's supposed honeymoon period.”
The Fix may well be right about that – you know what they say about stopped clocks. But consider the alternatives to today’s action:
1) Bush could have chosen to do nothing. Chrysler factories might have stayed closed. GM might have run out of cash. Their stocks would continue to plummet. And the U.S. auto industry might legitimately have become insolvent right around … January, when Obama will be sworn into office. And what would he have done then, when the auto companies were beyond saving? Extend unemployment benefits? Perhaps Obama wouldn’t be blamed for the death of the auto industry, but he would have to deal with its horrendous aftermath – skyrocketing unemployment, plummeting consumer confidence, an eroded industrial base. Plus: smaller tax receipts, creating an even bigger budget deficit and a tougher time finding the money to pay for his $850 billion stimulus plan.
2) Bush could have pushed GM and Chrysler into an “orderly bankruptcy,” as lots of observers think the companies need to do anyway. But that approach would have brought its own problems. What would happen to the suppliers? And what would happen to Ford? The Bush administration is concerned that bankruptcies by GM and Chrysler would drag down the one relatively healthy auto company with it. Bankruptcy could well lead to even worse economic problems than in scenario No. 1. What’s more, bankruptcy would let the auto companies get rid of their existing labor contracts, which is one reason why many conservatives like the idea and the United Auto Workers don’t. Given how strongly organized labor backed Obama, he would be wary of any move that significantly weakened the movement.
It’s true that, as The Fix writes, “poll after poll shows that a majority of Americans oppose the idea of bailing out the auto industry.” That’s why it’s better for Obama that Bush – who could hardly be more unpopular, anyway -- take the hit for doing this now. At worst, Obama will have to deal with these questions again in March, which is certainly better than dealing with them on Jan. 20. And at best, the loan program might just work and keep the auto industry on its feet. Either way, Obama should be happy with what transpired today.
9:45 a.m. ET: Well, now we know exactly what President Bush will dump in the lap of the Obama administration: A plan to give GM and Chrysler access to $17.4 billion in government loans to help them stay afloat, in exchange for concrete steps by the automakers to restructure their companies.
Aside from the most obvious winners -- the auto companies -- the proposal also looks to be a victory for congressional Democrats, who appear to have gotten what they had sought all along -- money for the auto companies siphoned from the Treasury Department's TARP fund, rather than from the existing $25 billion pot already earmarked to encourage the auto companies to make more energy-efficient cars. Congressional Republicans, who took such pride in scuttling a bailout deal on the Hill, are now left standing on the sidelines as the adminstration goes ahead with bailing out the companies anyway, and apparently without many of the strong concessions from the United Auto Workers that the GOP had sought.
The biggest political winner, obviously, is Obama, who now gets at least a couple months of breathing room after he takes office. But might he have to repeat this process all over again in March, if this initial burst of loans doesn't do enough to help GM and Chrysler stave off insolvency? Yes, and maybe that's why Bush looks somewhat relieved to be leaving the job soon.
8 a.m. ET: Orderly transitions of power being the American way, President Bush has been working to smooth the path of Barack Obama. Forty-three plans to host 44, 42, 41 and 39 at a White House lunch in January, and Josh Bolten had a jocular meeting with his predecessors as chief of staff for Rahm Emanuel's benefit earlier this month.
In that spirit of cooperation with his successor, Bush said of the auto bailout yesterday "that good policy is not to dump him a major catastrophe in his first day of office." So what exactly will Bush be dumping on Obama in January? On one hand, the current administration is now at least "considering" the possiblity of letting GM and Chrysler go into bankruptcy. On the other hand, Bush is also reportedly mulling a plan that would give the two auto companies enough loans to stay afloat until March, with bankruptcy for GM and Chrysler seen as a bad move because it "would put Ford at a competitive disadvantage." So under that scenario, Obama wouldn't face "catastrophe" on his first day of office, but rather in his second or third month in office.
Speaking of "catastrophes" in office, the man perhaps most responsible for the fall of the Nixon administration died yesterday. Mark Felt, aka "Deep Throat," passed away three years after his identity was finally revealed to the public. He outlived the president he helped bring down, Richard Nixon, by 14 years.
Staying on the subject of ex-presidents: The Clinton Foundation donor list, which would have been hailed by journalists as the Rosetta Stone had it been revealed during Hillary Clinton's presidential campaign, is now instead seen as interesting and newsworthy but only temporarily so. For all the talk that this might "complicate" her confirmation as secretary of State, it's hard to see her nomination really being put at risk unless a massive new scandal oozes to the surface in the coming weeks. And the eight-figure donations from Saudi Arabia -- enjoyable as they are for the New York Post's headline-writers -- couldn't really have surprised anyone, given the kingdom's long and well-known courtship of American politicians of all stripes. Again, why else would George Tenet be drinking Scotch and cursing neoconservatives by Prince Bandar's pool? (Allegedly.)
In New York, Caroline Kennedy continues her abbreviated tour of the state and its centers of political power, including lunch yesterday with Al Sharpton in New York. For every supporter, like Sharpton, who emerges, it seems that another critic comes forth to question why exactly Kennedy should be considered for the job. And stories like this -- she has missed voting in several elections in the last 20 year -- don't help her cause.
You're focused on these Senate appointments because you thought the 2008 election was pretty much over, didn't you? Ha! The Minnesota Senate recount lives on, with Norm Coleman now a mere five votes ahead of Al Franken and the counting expected to drag well into January. Perhaps that contest will be get resolved right around the time the auto bailout does.
December 19, 2008; 8:00 AM ET
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