The bailout failed in Congress due to principled objections, offering the prospect of drawing a line for the nonstop series of bailouts.
However, the Bush administration decided to use its own discretion. In other words, as veteran (and prescient) auto industry report Paul Ingrassia noted this morning: “Bush Blinks on the Auto Bailout”
You have to hand it to Ron Gettelfinger, president of the United Auto Workers union, and his colleagues. Negotiating for a living is, you know, what they do. And they're good, very good. They know when somebody's about to blink.This is consistent with the Bush kick-the-can economic philosophy of the past 4-5 years. While he articulated some free market principles in his initial campaign, our 9-11 president spent the rest of his term making short-term economic choices rather than spending any political capital on a long-term fix.
So it was last Thursday night that Mr. Gettelfinger rejected the deal offered by Senate Republicans for interim bailout money to keep General Motors and Chrysler alive for a few more months. The UAW chief was betting that the Bush administration would blink, and that the union would get a better deal from the politicians than it would get from the marketplace or from a bankruptcy judge. It's a ploy we all learned in childhood. When dad won't give you what you want, turn to mom.
Mr. Gettelfinger was right, of course. By the next day the Bush team was rapidly reversing course and declaring its willingness to use TARP money -- from the $700 billion designated to bail out financial firms -- to keep the Detroit companies going without the concessions sought by the Senate GOP.