In a surprise move, the Bush administration has indicated that it might use taxpayer dollars previously earmarked for banks through the Troubled Asset Relief Program or TARP, to save the Big 3 automakers.
No, no, don’t read it again. You got it right the first time.
The White House had initially said “no way” to the auto industry pleas for a bailout. Maybe it’s the snow falling outside, maybe it’s the holiday spirit… or maybe it’s just the crappy economy… but the administration has now reversed its position on the automakers bailout.
The announcement came one day after the Senate voted no on a bailout.
The White House warned that a “precipitous collapse of this industry would have a severe impact on our economy” and said:
Given the current weakened state of the U.S. economy, we will consider other options if necessary — including use of the TARP program — to prevent a collapse of troubled automakers.
Details – including how much and how fast – haven’t been made available yet.
GM, of course, was thrilled. GM claims that it will need $4 billion in government aid by the end of the year – and $6 billion more in early 2009. Chrysler has indicated that it needs $4 billion in 2009. Ford Motors says that it anticipates that it can hold on through the end of the year and most of 2009 (rumor has it – and it’s just rumor – that the company has been kept afloat by my own family who has continuously owned Fords for as long as I can remember, including two ugly-colored Pinto station wagons and one deep blue Granada with vinyl seats).
So, it’s holiday cheers all around, right?
Not quite. Notwithstanding the idea that many in Congress, including Republicans, are reportedly angry at Bush for stepping in at the 11th hour, there are practical issues. Only half of the TARP money is available without further approval from Congress – that was part of the original deal with the Treasury. Only $15 billion of the $350 billion remains – it is, after all, the season of spending. So, the ultimate say will go back to Congress in early January for approval. Whether Congress is ready for a compromise at that time is anyone’s guess.
What is clear is that the automotive industry is breathing a sigh of relief from a near miss this holiday season. Whether voters – who are also taxpayers and consumers – will agree is another matter altogether.
