Happy days are here again: Agreement on auto bailout

An auto in every pot, and a car czar to nationalize an industry.  Aren’t we glad we have a Republican administration running things?  The White House reached an agreement with Congressional Democrats this morning on a $15 billion bailout of the Big Three automakers in Detroit, infusing their operations with enough cash to keep them afloat through the end of March, while transferring significant authority to the government to dictate their operations:

Weary Democratic congressional leaders and White House officials agreed in principle Tuesday on a $15 billion bailout of U.S. automakers that would give the government extraordinary power to restructure the failing industry. But the rescue faced snags as Republicans raised deep concerns.

Congressional aides and a senior administration official said the proposed deal would speed the loans to Detroit’s struggling car companies and place a “car czar” named by President George W. Bush in charge of overhauling the auto industry. Congress could vote on the plan as early as Wednesday and the money could be disbursed within days.

A breakthrough came when negotiators reached a compromise to require the czar to revoke the loans and deny any further federal aid to automakers that don’t strike a deal with labor unions, creditors and others to ensure their survival by next spring — essentially pushing them into bankruptcy.

NBC reported that under the agreement, the czar would bring together all of a company’s stakeholders — creditors, labor, shareholders, management, dealers, etc. — to negotiate a restructuring by March 31. A 30-day extension could be granted if the czar believed the stakeholders were negotiating in good faith and if the czar believed a deal could be reached.

If there was no deal by March 31 and no extension, the czar would be required to call the loan, which would send the company into insolvency. The czar would then be required to propose a course of action, which could include Chapter 11 bankruptcy reorganization.

So why offer the $15 billion now?  Why not just force them into Chapter 11 now and allow them to renegotiate the contracts under those circumstances?  All this does is spend taxpayer money to maintain a status quo for an extra four months that has already proven unsustainable.  Management and labor won’t have to change positions at all until that time, under this agreement.

Democrats want this as a Trojan horse for government control of private production, and they’re going to get it, unless Republicans stop it.  Republicans in the Senate have already begun to align themselves for a filibuster of the bailout, and a new IBD/TIPP poll shows they have backing from the public.  Almost two thirds of adults, including a majority of Democrats, oppose a bailout:

Sixty-three percent of Americans surveyed in the latest IBD/TIPP Poll — including 66% of investors, 59% of Midwesterners and even 53% of Democrats — disapprove of financial aid for U.S. automakers. Respondents also opposed bailouts for banks and other financial institutions by 53% to 45.5%, with only Democrats and Midwesterners in favor. They were more ambivalent, with 50% opposed and 45% in favor, when it comes to mortgage holders. Help for state and local governments won grudging approval. Republicans were opposed across the board.

Can Senate Republicans hold the line?  It will probably be a close-run thing, especially with the Bush administration signaling its approval of the package.  I’d watch Olympia Snowe, Susan Collins, and Arlen Specter most closely on this question.  The GOP is fortunate in that this question will come before the 110th Congress rather than the 111th, where they will barely have enough in their caucus to block anything.

Of course, that will require Republicans to act like Republicans, and not Democrats Lite.  They have public opinion strongly on their side.  Can they exercise some political courage and stop the runaway bailout train?

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