The Politics and Policy of the Auto Bailout for the Republicans

Everything that I have heard today about the bailout tells me that not only is it a bad idea but that this bailout offers a serious opportunity for the Republican party to regain their niche in the political world. The current bailout is for about $15 billion.

Congressional Democrats and the White House worked to resolve their last disputes Monday over terms of a $15 billion bailout for U.S. auto makers -- complete with a "car czar" to oversee the industry's reinvention of itself -- that's expected to come to a vote as early as Wednesday.

Top Democrats gave the White House their proposal for rushing short-term loans to Detroit's Big Three through a plan that requires that the industry remake itself in order to survive.

The Bush administration gave a cool initial response, saying the measure didn't do enough to ensure that only viable companies would get longer-term federal help. Negotiators worked into the night Monday to resolve differences.

Yet, this $15 billion is nothing more than a stop gap. Here is how Speaker Pelosi describes it.



So, essentially, the powers that be have decided to give a bailout that will do nothing but keep the companies operating for a few more months until they all need another bailout. This isn't merely bad policy but bad politics. (H/T to Hot Air) The bailout polls poorly.

In a new Washington Post-ABC News poll, 54 percent of respondents said they oppose the bailout request of up to $34 billion in government loans; 37 percent backed the plan. Support for the plan was little changed from late November, with the percentage of those "strongly opposed" outnumbering the plan's strong proponents.

As such, the Republicans have an opportunity, finally, to not only get on the right side of the public but finally get back to their small government and free market roots.

Those that support the bailout are counting on those that opposing it have weak knees because of the potential disaster that the failure of the automakers will create. Richard Shelby has hinted that the Republicans might filibuster a bailout.



Now, proponents of the bailout will immediately pounce on any filibuster and paint a gloomy picture if the autos fail. As such, Republicans must not only take a stand but be prepared to defend their position. A bailout does nothing to solve the structural issues facing the automakers. Democrats that are proponents of the bailout are also in bed with the UAW. It costs nearly $25 an hour more for GM to build a car than the foreign automakers that have no unions. No bailout will do one bit of difference to make a difference to help these companies be viable in the long term without doing something to renegotiate these contracts.

Small concessions by the unions are nothing more than window dressing. The reality is that their insistence on squeezing every last dime from the autos to pay their workers has caused these three to be on the brink of collapse. Unless the contracts, the pensions, and the health care plans are alll renegotiated so that costs can be put in line with those of the foreign automakers no bailout is worth anything. That is the case that those ready to oppose this bailout need to make, If they make it, the Republicans will finally grab an issue, and they will finally get back to their roots.

The Bailout Chess Match Continues

Hopefully, there was no one out there that actually thought our politicians would put politics aside and try and do what's best for the country only and disregard how things would work out for their party. It appears the political positioning is in full force.

Ed Morrissey has figured something out. The Democrats don't need the Republican leadership to pass this bailout. The President would be more than happy to sign it, and the Democratic leadership can withstand any filibuster threat in the Senate. So, what's the problem? Let's let Mr. Morrissey explain.

If Pelosi has her entire caucus in line to support the Paulson plan, then she has the vote to pass it. Some estimates have as many as 50 Republicans ready to support the plan in defiance of Boehner. If that’s true, Pelosi could lose all of her Blue-Dog Democrats and still pass the bill.

So why not just call a vote? Pelosi doesn’t want to get married to George Bush, that’s why. She wants to spread the political risk and get consensus on a bailout plan so that the responsibility for any failure doesn’t rest solely on her shoulders, at least in the House. Both Pelosi and Harry Reid wanted John McCain to deliver both GOP caucuses to cover their own butts on the bailout bill, and McCain — at least thus far — hasn’t convinced Boehner to do so.

Meanwhile, her deputy Barney Frank is echoing those thoughts.

President Bush scrambled Friday to bring rebellious members of his own party behind a multibillion-dollar government bailout of the financial system amid bitter political recriminations from both Democrats and Republicans over collapsed negotiations.

Bush delivered a terse statement from outside the Oval Office of the White House, acknowledging that lawmakers have a right to express their doubts and work through disagreements, but declaring they must "rise to the occasion" and approve a plan to avert an economic meltdown.

"There are disagreements over aspects of the rescue plan," he said, "but there is no disagreement that something substantial must be done. We are going to get a package passed."

Given that only yesterday afternoon there was an agreement in principle, what exactly is the problem? It isn't the entire Republican caucus that is against this bill just most of its leadership. This brings up another interesting observation. Why was the agreement hammered out on this bill minus all remnants of any Republican leadership? Folks like Richard Shelby and Jim DeMint came out afterwards to say that they were not in favor of the agreement. Why weren't they merely included in the original negotiations? Of course, only the powers that be know why Robert Bennett of Utah became the front man for the Republicans in the original negotiations. I suspect that some thought that if they got enough Republicans on board the leadership wouldn't dare go against it. If that was their thought, they were wrong.

Fox News is reporting that the House Republican leaders are planning on meeting at noon Eastern Time. Expect the leadership to come out of that meeting with a radically altered proposal. Expect this proposal not to allow a bailout, but either a loan or insurance on these bonds. Expect this package to be full of stimulating tax cuts, an end to marked to market, along with an alternative mechanism to a bailout.

Then, the Democrats will get a very good view at the space the occupies what is between a rock and a hard place. The Democrats have spent the last half a day blaming McCain for the collaps of the BAILOUT.

After the hour-long White House meeting, [Dodd] said: ‘What has happened here is that we have spent seven straight days to find a rescue plan for the economy.

'What this looked like was a rescue plan for John McCain. To be distracted for two to three hours by political theatre doesn’t help.’

Democrats said the Republicans were on board with the deal until Mr McCain intervened an injected presidential politics into the situation.

There are two serious problems with going all in on this position. First, the public doesn't like the bailout. Second, the very unpopular President proposed it. You want to know what a bad position is. It's when you agree with the unpopular President (who will never again be on the ballot) of the opposite party on an equally unpopular bill, and the other party proposes something the public at large will like even better.

What will the Democrats do? It isn't as though they have an idea of their own. Will they force a vote down everyone's throats and announce to the world that it was they that forced American taxpayers to bailout out greedy and irresponsible bankers with tax payer money and in so doing socialize mortgage securitization? Talk about bad politics. That's the poster child for bad politics. No, instead they will stall and huff and puff looking for an alternative. They'll likely demand a conference to try and hammer out an agreement. They'll likely even get the Republicans to capitulate on things like CEO pay limits and even a small stimulus pay out "to the middle class". I don't mind. I can use a $600 check.

Ultimately though, it will be the Republicans that will look like the party that saved the country from an obscene bailout. It will be the Democrats that looked as though they agreed with the unpopular President from the other party. It will be John McCain in the middle of all of it. This will be the game changer we will be talking about for decades.