The auto bailout: Treading water until the new guy takes over

By Justin Fox | December 19, 2008 | +

The $17.4 billion auto bailout package that President Bush announced this morning is a stopgap measure intended to keep GM and Chrysler alive until the Obama administration and the new Congress can figure out what to do about them. This is exactly what the Democratic congressional leadership wanted to have happen and it’s about the best outcome the automakers could have hoped for.

It’s not quite the bankruptcy-by-some-other-name that could help get GM in particular out from some of its more crushing obligations to creditors. But managing something like that in these lame-duck days would have been nearly impossible.

And so, in time for the holidays, the President (well, really Hank Paulson) has delivered us another kludgy, temporary fix for a problem that will now continue to occupy Washington for years. But it’s probably better than the alternatives. I can think of worse Christmas presents.

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This will kill at least one of the auto makers, not now where it doesn’t cost the taxpayer anything, but farther down the road, after the government has put many billions into helping them not change.
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