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Auto Bailout Winners and Losers: A Response

In the minutes after President George W. Bush announced that he would authorize $17.4 billion to help provide a bridge loan of sorts to the Big Three automakers, Post.com's Ben "Political Browser" Pershing declared President-elect Barack Obama a winner.

Wrote Pershing: "The biggest political winner, obviously, is Obama, who now gets at least a couple months of breathing room after he takes office."

True enough, but we have to disagree with Ben -- and we do this as sparingly as possible because he is way smarter than the ole Fix -- on the idea that Obama won anything today.

Here's the problem. This emergency bailout is widely regarded by industry analysts as akin to putting a Band-Aid on a gaping wound. It may stop the bleeding but it doesn't heal the underlying problem.

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.

Obama released a statement praising the decision as a "necessary step to help avoid a collapse in our auto industry," but noting that the car companies need to institute significant reforms in their way of doing business between now and March if they want to remain viable.

While there is no doubt that the near-collapse of the auto industry will stir GM, Ford and Chrysler to make some changes -- and even some significant ones -- the extent of the problems make it nearly impossible for the automakers to fix their financial ships in three months time.

That means that come March we are likely to be in for another round of contentious hearing on Capitol Hill where lawmakers attack the CEOs of the Big 3 for the lack of action and insist that there will be no blank check to save them.

Combine that likely food fight with the fact that poll after poll shows that a majority of Americans oppose the idea of bailing out the auto industry (55 percent in the most recent Washington Post/ABC national poll) and it's hard to see Obama as anything but a loser in this bailout deal.

So, Ben, what say you? And what say you Fixistas? Is Obama a winner or a loser based on the news today?

By Chris Cillizza  |  December 19, 2008; 12:00 PM ET
Categories:  White House  
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Comments

The people who work for GM, Ford and Chrysler are the winners because they still have jobs and are able to draw a paycheck, which will allow them to support their families and contribute to the econmy, as opposed to drawing unemployment benefits.

Bush may be a winner, of sorts, since the economy hasn't completely collapsed during his administration.

Obama and the next Congress still have a lot of work to do on this, and each could be either winners or losers.

The Big three and the UAW at this point appear to be the biggest losers since 55% of the people polled believe that three car companies should simply go bankrupt. Chrysler, Ford, GM and the UAW each need to do a better job of explaining what the problems are and how each will help contribute to the solution.

Posted by: allen13 | December 22, 2008 2:11 AM | Report abuse

Oops! Meant to say that Republicans would have been effectively dead in the industrial North forever if the auto industry had collapsed on Bush's watch with Senate Republicans causing it.

Posted by: OHIOCITIZEN | December 21, 2008 5:05 AM | Report abuse

The decision saves the Republican Party from southern conservative Republican Senators' short-sightedness. Had the domestic auto industry been permitted to collapse, the Republicans would have been in the industrial North forever.

Posted by: OHIOCITIZEN | December 21, 2008 5:04 AM | Report abuse

Obama gains nothing out of this. Bush doesn't either. Nobody does, ultimately, except maybe the industry execs who have once again threatened the country that they are too big to fail, thereby holding us hostage to the tune of billions of dollars in their pockets.

Fundamentally, the bailout is not going to change Detroit business practices. It tries to force some weakening of the union contracts, but otherwise it allows Detroit to continue losing money.

Several of the major airlines failed, went through bankruptcy, and continue to fly today after emerging from bankruptcy stronger and more focused as companies. Are they perfect? No, but bankruptcy was good for them. Detroit needs to face the same reality, and by pushing their failures off into next year, this bailout guarantees that their falls will be even harder and that Obama will face a greater share of the burden in dealing with the problem.

Posted by: blert | December 20, 2008 8:32 PM | Report abuse

Pershing is right of course. You are wrong, but not so wrong you can't throw in Bobby Jindal as a winner just to be completely wrong.

Posted by: havok26 | December 20, 2008 4:49 PM | Report abuse

All Bush did was "Kick the can down the road" for three months. At that time it is still very much possible that the biggest losers will be the 250,000 men and women that will lose their jobs. In light of this reality it is silly to debate whether Bush or Obama will be winners or losers. Both will have a warm bed and plenty to eat three months from now. Neither of them will lose anything as important as the people that work in these places and are liable to lose everything unless those that have earned ten times what they do start doing their jobs and do it right. And that includes our President-Elect. We know that Bush did not do his job well enough to protect the working stiffs in this country. Lets hope Obama does.

Posted by: Opa2 | December 20, 2008 12:52 AM | Report abuse

All Bush did was "Kick the can down the road" for three months. At that time it is still very much possible that the biggest losers will be the 250,000 men and women that will lose their jobs. In light of this reality it is silly to debate whether Bush or Obama will be winners or losers. Both will have a warm bed and plenty to eat three months from now. Neither of them will lose anything as important as the people that work in these places and are liable to lose everything unless those that have earned ten times what they do start doing their jobs and do it right. And that includes our President-Elect. We know that Bush did not do his job well enough to protect the working stiffs in this country. Lets hope Obama does.

Posted by: Opa2 | December 20, 2008 12:51 AM | Report abuse

Posted by: Bushlegacylies | December 19, 2008 9:33 PM | Report abuse

I believe in philosophy they call this a "categorical error" in some measure. The goal post on the wrong field, but this is more likely a contest of "least bad" benefit than "most [direct] benefit".

[Chris, as always keep up the great Fixin's!]

Posted by: Bushlegacylies | December 19, 2008 9:31 PM | Report abuse

Obama's a winner, because he now at least has a chance to fix things; had the Big Three (or, more accurately, Chrysler and GM) collapsed in the interim period, things would have become perhaps irredeemably awful for the economy.

Posted by: SeanC1 | December 19, 2008 6:14 PM | Report abuse

Pershing's right on this.

The worst thing that could have happened for Obama would have been for Bush to allow GM and Chrysler to completely tank. This nightmare free-fall scenario has been averted. The next-worst thing would have been for the Bush administration to implement a comprehensive solution, which no doubt would have had a decidedly Republican cast to it. The Bushies have already done plenty to try tie Obama's hands (last minute regulations, burrowing political appointees). Getting stuck with a Republican solution to the big three mess is the last (OK, next to last) thing Obama needed.

Obama dodged a bullet.

Posted by: dhilleub | December 19, 2008 6:05 PM | Report abuse

allegedly....
after 9-11-2001 (folks remember that don't ya??)
Baby Bush (as in our current Pres), asked the BIG 3 to continue a "normal life".
He went to the BIG 3 first.
And granted, the BIG 3 helped us tremendously after 9-11-2001......
in the proverbial "maintaining an even strain".

7 years later, they need a bit of help....
Bush did this because he knows that the BIG 3 answered the call after 9-11.
I am "behind" this auto "bailout" more than I am behind the housing/mortgage bailout/buyout.

Posted by: TheBabeNemo | December 19, 2008 5:17 PM | Report abuse

Don't see it as a win for Obama, but a huge win for Bush. He gets to wash his hands of the crisis with the least effort possible.
If the Big 3 do go down, though, the Republicans will be the biggest losers and can write off Michigan, Ohio and Indiana for a generation, the way the Democrats had to write off the South post-Civil Rights Act.
Of course, we may be in too deep an economic depression to care at that point...

Posted by: dbitt | December 19, 2008 4:45 PM | Report abuse

While Obama does 'benefit' by having one less crisis on January 21st, I'd hardly say that anyone is a 'winner' or 'loser'.

Of course Bush also 'benefits' by assuring that the collapse of the American automotive industry didn't happen on his watch - which might tarnish his legacy.

Honeymoon period? Didn't the RNC just cancel it? Or are they restraining themselves on the Blago thing?

Posted by: DonJasper | December 19, 2008 4:35 PM | Report abuse

I would say that Obama is 'a winner'. What is the point of a honeymoon if you can't get things done? And get something done that reflects a your own ideas.

Sorry Chris you shouldn't disagree on this one.

Posted by: Roofelstoon | December 19, 2008 3:56 PM | Report abuse

It's a trick question. There can't be a winner.

Senate republicans killed the bailout plan and want to kill the UAW so the foreign manufacturers in their home states will be more profitable without competition and contribute more cash. Republicans are likely be out of power for a generation, the length of time it will take for them to regain the trust of the middle class. Republicans lose.

Obama is being dumped on by the failure of an outgoing president who went off the deep end years ago. Without two wars, financial and housing markets in collapse, the problems faced by the big three would be certainly troublesome, but perhaps manageable. After eight years of republican bungling and stumbling, Obama is clearly not the winner in this case. Obama loses.

In collapse, the big three will not only take tens of thousands of auto workers and managers, but probably hundreds of thousands of jobs related to the manufacturing, transporting, selling, repairing of cars in our country. Workers lose.

Whether the government foots the bail out through loans or pays the unemployment and other welfare benefits for all those unemployed workers, the tax payer is going to pick up the bill. Perhaps with loans tied to concrete restructuring and new management, the taxpayer may someday recover the investment.

If the big three just collapse and shut down, there can't possibly be any winner.

DAStubbs,
Minneaoplis

Posted by: dastubbs | December 19, 2008 3:16 PM | Report abuse

Why does this column continue to report about the GOP?
It has been marginalized as a regional party, centered in the south consisting largely of lesser educated white males.

Posted by: bobnsri | December 19, 2008 3:16 PM | Report abuse

It would clearly be better for Obama if the problem did not exist. It would also be better for Obama if Bush had made a significant contribution toward fixing it. It probably would have been worse for Obama if George Bush had forced GM into chapter 11 because the direct consequences would have intensified the urgency to deal with the pain of our immediate economic problems. But the net result is that Obama has a very difficult problem to deal with early in his administration. Success could help set a direction toward a long term process of resurrecting a substantial American manufacturing base. But the costs to all major stakeholders including management, labor, and the holders of GM's debt will be at a level that most are not yet ready to accept.

Posted by: dnjake | December 19, 2008 2:45 PM | Report abuse

Pershing's piece is what actual "analysis" looks like, Cillizza. Instead of arguing with him, you should be studying him.

Posted by: swallen1 | December 19, 2008 2:37 PM | Report abuse


i certainly hope this money is coming from Kennebunkport.

Ford was the only one that maybe, just maybe, could have survived.
Why?
Because of the implementation of Total Quality Management in the early 90(s) that Ford undertook. Problem is, they never truly "bought in" to TQM and never finished out their "maturity grid".
Quality was job #1 at Ford. Remember the Public Relations campaign they took in the 90s. If they would have followed through, they would be in better shape.
TQM (you remember, what we said NO to and Japan took up in the 40s) cannot be accomplished by just "forming a team" or "naming a quality circle" to deal with issues. It is the new way of doing business and folks better start buying into it.
It's called Total Quality Management and it is a well defined state of mind. But, of course, Americans refuse to accept it.
So I ask you, why? Why hasn't the business model of the USA accepted Total Quality Management?

Posted by: TheBabeNemo | December 19, 2008 2:04 PM | Report abuse

I want to know why it's okay to give banks and insurance companies a blank check to spend on themselves as they wish, but it's not okay to save millions of jobs for people who don't have big bonuses and 4 houses and 10 cars already?

What is the matter with people?

Posted by: llong9 | December 19, 2008 1:26 PM | Report abuse

Watch this Detroit News Video
http://info.detnews.com/video/index.cfm?id=1189

Explain to me again why we are asked to bail out the UAW jobs? Only Ford seems to have a grip on reality but they can't do what they want to in the USA! The UAW won't permit it. Ford also has very fuel effecient autos but, again, not for America. Why? Because they're diesel.

So tell me again why I want to subsidize the auto industry!

In the video you heard right --- The U.A.W. voted against this ????

This is a short video of a new Ford plant in Brazil . One look at this and you will be able to tell why there will probably never be another one built in the USA or Canada.

And… pay attention to the last few words. That sentence says a lot!

Posted by: BillCatz | December 19, 2008 1:12 PM | Report abuse

The Fix 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."

Dealing with it in the middle of March gives a little more breathing time & a longer honeymoon than dealing with it on Jan 21st. Ergo, Pershing is correct, The Fix is wrong; Obama comes out ahead. Marginally, but ahead.

Posted by: bsimon1 | December 19, 2008 12:55 PM | Report abuse

The only winners are the autoworkers. And it may be pyrrhic victory.
http://www.Soonerthought.blogspot.com

Posted by: soonerthought | December 19, 2008 12:31 PM | Report abuse

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