President Bush announced Friday that he would be making $13.4 billion from the Troubled Asset Relief Program to bailout General Motors and Chrysler.
During brief remarks at the White House, President Bush said in normal times he would have not been in favor of preventing a bankruptcy of the two companies. But the current state of the economy and credit markets left him no choice but to act.
"Government has a responsibility to safeguard the broader health and stability of our economy," he said. "If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers."
"In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action," Bush added.
Allowing GM and Chrysler to go into bankruptcy so they can restructure their debts -- including their onerous UAW contracts -- is the right course. Instead, Bush used Treasury Secretary Henry Paulson's TARP money to do what Congress refused to do.
And let's not forget that that TARP money was supposed to go to buy up toxic assets from foundering financial institutions. Instead, Paulson used the money to buy equity in the banks themselves.
If you thought the TARP money was a blank check before, I'm not sure how you would characterize it now that it has been extended to automakers -- not a financial institution.
You'd think that a Congress that has been so concerned in recent years about accumulated executive power would be howling at what's been done. But Congress doesn't know what to do and as long as someone is throwing money around, they're apparently fine with it.