Thursday, December 4, 2008

It's not that much money, so why all the strutting?

Josh Marshall makes the obvious point that in relative terms $25 (or even $34 billion)billion just ain't that much money. We gave Hank Paulson 25+ times that without anywhere near the amount of kvetching, hand-wringing and Congressional hearings that we're subjecting Detroit too.

That's not to say that there shouldn't be Congressional oversight before taking such a plunge but the difference in the process from the financial bailout to the auto debate is striking. What accounts for it? I don't think it's simply learning from the botched job that Paulson has done thus far. Congress-critters like a good whipping boy and Detroit makes an easy target. There's also ideology driving much of the outcry from the right, they see an opportunity to further weaken the institutions that provide for a viable middle-class. As usual many Democrats see an opportunity to draw a distinction between themselves and the perception of old Democratic (read labor) politics and are eager to discard their constituents at the first opportunity all in the hopes of appearing "independent" or "bipartisan." It's a mugs game but they fall into the trap every time.

That capital interests are not subjected to the same preening and posturing demonstrates where Congress' loyalties actually lie.

1 comment:

Andrew Oh-Willeke said...

It isn't much money, but there also isn't much of a plan.

As a business law prof I know likes to point out, the financial companies mostly have operating profits with brief bumps in the road. The automotive companies are in long term operating loss land for reasons very different from the financials.

If Toyota were American it would make sense to bail it out, faced with a spat of bad business industrywide.

But, the Big Three are consistently losing market share, losing money per car, and don't have any real good paths to success in sight.

We may want to cushion workers. The businesses may be salvagable if they reorganize. But, the problems run far deeper than lack of short term capital and didn't appear suddenly.