The main questions about the bailout right now seem to be what will be done with the half of the money that Paulson is still holding, will the Big Three auto companies get part of the bailout, and will there be more bailouts and stimulus packages? The answers: The rest of the money will go where Obama and the Democrats generally want it to go, yes, and yes.
That half of the bailout is still available means more Democrat playgrounds like Freddie Mac will get bailout money. In other words, we’ll prop up the guys who contributed to the mess, and keep the same Democrats in charge. Any bets on how this will work out?
For the same reason, the auto companies will likely see bailout money after Obama takes office. Do you think that Michigan Governor Jeniffer Granholm, who is on Obama’s economic transition team, isn’t ensuring that her pals in the auto unions get a piece of the bailout pie? Besides, with the energy legislation that Obama and the Democrats want to pass that will hurt the auto industry, the guys in Detroit are going to have to get something, right?
Barney Frank is already warning that the auto companies will need much more than $25 billion, and he’s excited about the government lending it to them in return for more control. I wonder if Congressman Frank and the Democrats are excited about the Fannie and Freddie bailout providing the government more opportunity to control lending?
The best answer to the auto bailout question is the one Shil wrote about below, articulated by Mitt Romney.
We can also expect more stimulus packages from the Democrats, as they’ve already announced. These stimulus packages will surely include payments to all the usual friends of the left.
UPDATE: A few Senators have proposed that the auto companies’ first bailout be used for capital instead of fuel efficiency initiatives. Leading Democrats had a press conference today and tried to shift blame onto the corporate executives for not passing a bailout. Nancy Pelosi challenged “Until they show us the plan, we cannot show them the money.” Pelosi and the environmentalist Democrats are opposing the aforementioned compromise on the original $25 billion loan to the auto industry.
Meanwhile, Obama is staying quiet. I’m guessing he wants something to pass before taking office so he doesn’t have to take the blame with either the environmentalists or the auto industry. How will the Democrats please both sides?
