Tough line on auto bailout may extend to other industries
Congress's rescue of financial institutions may prove the exception, as automakers learned last week.
Joe Imel/Daily News/AP
In punting on a $14 billion rescue plan for the US auto industry, the US Senate has signaled that the struggle over who gets federal help – and who is left to take their lumps in the marketplace – is likely to be an acute and ongoing issue for lawmakers into the next Congress.
The auto bailout now falls to the Bush administration, at least for the moment. The White House said Friday it may tap part of the $700 billion meant to buttress the shaky financial-services sector for the purpose of saving any of Detroit's Big Three from collapse. At time of writing, the administration was deciding what mechanism to use to help the industry.
Regardless, this month's fight in the lame-duck Congress over the auto bailout is a cautionary tale for how lawmakers are likely to deal with future calls for help. Lesson No. 1 is that swift congressional action based on the premise that an industry is too big to fail – or that job losses in the absence of a government bailout would be cataclysmic for the economy – cannot be counted on.
It's an argument that worked for the financial-services industry, which in early October extracted from Congress as much as $700 billion in government funds to save it from ruin tied to mortgage-related debt. But the way the Treasury Department has allocated the first $350 billion in the Troubled Asset Relief Program (TARP) has led to buyers' remorse among many lawmakers – and appears to be making them more reticent to dole out dollars to ailing industries.