But even if Obama still had the ability to bail out Detroit, it’s not likely he would do so, said Jared Bernstein, senior fellow, at the Center for Budget and Policy Priorities, a liberal think tank.
Bernstein was the top economic adviser to Vice President Joseph Biden and on the task force that came up with the bailout plans in 2009. He said the carmakers were bailed out because, after the meltdown in financial markets, there was no money available to fund operations at GM and Chrysler as they reorganized.
Without a bailout, both companies would have closed and liquidated, which would have rippled into bankruptcies and job losses across the rest of the auto industry and the U.S. manufacturing base.
“For the government to intervene, it’s a very big deal. You only do so if the alternative is a market failure that will have systemic disruptions to the economy,” Bernstein said. “That was the case then. I don’t think that’s the case here.”