Ideology Meets Reality

There might have been a lot of better ways to solve the American automakers potential collapse. However, the collapse cannot be allowed to occur. In our imperfect world, ideology must sometimes be jettisoned. We face a Depression or worse if something isn't done. The following, just in from Politico, reports what may be the President's most important contribution to stopping this financial fiasco:

Politico - Mike Allen - 12/12/08 9:36AM

Facing the potential bankruptcy of iconic American firms, President Bush on Friday abandoned his longstanding objection to using using the Wall Street bailout fund to help save G.M., Ford and Chrysler.

A frustrated Republican congressional official said: "If only they had said this last week, we could have saved ourselves a full week."

Ten hours after the Senate rejected a separate lifeline for the automakers, White House Press Secretary Dana Perino said in a statement it would be "irresponsible" to let the companies crash. So she said Bush will "consider other options," including the $700 billion Troubled Assets Relief Program that Congress created for the Treasury Department in October.

"Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms," Perino said in a statement. "However, 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. A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time."

A Republican senator told Politico that Vice President Cheney had told senator Thursday that it could be "Herbert Hoover" time if the bailout failed, which it did several hours later.

Democratic congressional leaders had urged Bush to take that step, but Treasury Secretary Henry Paulson and other administration officials insisted the original bailout was limited to the financial sector. The beginning of Perino's statement was: "It is disappointing that while appropriate and effective legislation to assist and restructure troubled automakers received majority support in both houses, Congress nevertheless failed to pass final legislation. The approach in that legislation provided an opportunity to use funds already appropriated for automakers, and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds go only to firms whose stakeholders were prepared to make the difficult decisions to become viable, competitive firms in the future."

Perino ended by saying: "While the federal government may need to step in to prevent an immediate failure, the auto companies, their labor unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable."

Ford has said it can operate without federal money for now, but analysts said General Motors and Chrysler might not make it to Obama's inauguration on Jan. 20.