Back in the early autumn, those of us who opposed the massive $700B bailout plan asked (as I did in this post): “[A]re you telling me I am wrong to worry that this bill gives the Treasury Secretary unduly wide latitude to feed taxpayer money into businesses that should fail because they’ve been irresponsibly leveraged and utterly mismanaged?” Giving the Treasury Secretary such a free hand would have been a disastrous idea even if the free hand had been limited to throwing money at the credit markets. But already back then, as we opponents also noted, Democrats were making noises about raiding the slush fund to bail out mismanaged cities and states.
Now it’s going to mismanaged businesses and the UAW. Treasury won’t say no even though at stake are just these three bloated companies — it can’t even be said that the auto industry is near collapse, much less the financial system.
If the White House follows through and forces the taxpayers to subsidize the failure of the formerly Big Three, that will be a crushing betrayal, especially to the GOP senators who battled valiantly here. But the time to fight was back in October, when Paulson was given an unfettered license. It’s not like the handwriting wasn’t on the wall. Now we live with the consequences.