The Detroit Outsider postpones the promised post to fire off an update on the fascinating chess game that continues to play out among Detroit, Congress and the White House. The D.O. is actually heartened to see the various players, little by little, making pragmatic decisions. Now, even the infamously obstinate Bush administration is considering blinking and using funds from the Troubled Asset Relief Program (the original $700 billion given to Wall Street) to assist the Detroit 3 into next year when the Obama administration can deal with it.
What happened? It didn't hurt that the world markets took a collective dump overnight since word spread that efforts to get this plan done stalled—again—last night in the Senate. In the meantime, foreign governments continue to prop up their own domestic automakers, or at least are contemplating such. Maybe, just maybe, America is starting to accept the Detroit Outsider's assertions spelled out in Predicates A and B in Called to Serve: This really could bring down the global economy and cost far more than a bridge loan.
Quick review: One of the biggest fights has been about where the money for a bridge loan would come from. Most Democrats wanted the money to come from TARP, which would satisfy people who retroactively think the grant was a mistake—possibly because it doesn't seem to have done a thing to help, unless you count massages and facials for AIG employees. It also would bring a little social equity, assisting the working class and not just the banker/investor class that it has helped, so far, only in ways that have given the taxpayers what's called "bailout fatigue." The D.O. must point out at this point that there's a big difference between $700 billion in cash and a $25 billion loan, but that's another story. TARP money is administered by our pal Hank Paulson at Treasury, who could have made this go away weeks ago in a matter of moments if President Bush blessed it. Naw, the prez wanted Congress to figure it out, and maybe accelerate the $25 billion promised earlier in the year to help the D3 retool to produce more efficient cars.
House Speaker Nancy Pelosi resisted this on the grounds that it robbed the environmental initiative (again), but finally Senate leader Harry Reid and his majority must have gotten it through to her that $25 billion next year isn't very useful if the companies collapse before then. (Like saving the new-deck-chair fund when the Titanic is taking on water.) The other plus of this plan was that it didn't sound like more billions of taxpayer money—just an application of the existing allocation.
Finally, Senate Republicans, some of whom represent states with significant foreign-car transplant factories (just sayin'), yanked the wheels off the wagon yesterday demanding more safeguards against eventual bankruptcy. That brings us to where we are now.
In the past 24 hours, there's been some ballsy brinksmanship (or perhaps desperate last options) on the part of GM and the Democratic Congressional leadership. GM publicly secured bankruptcy counsel after resisting all along. Reid came out last night and said it's over, can't do it in this session. Have to wait until 2009, by which point GM and Chrysler claim they will run out of money.
And then the seemingly impossible happened. Bush reconsidered. It's possible TARP funds will come about. Could W recognize that this would be the straw that broke the economy's spine? That he could add to his extensive list of failures the distinction of having triggered the Great Depression II: Even Greater? Anything's possible.