Free Markets, Free People

Throwing the BS Flag (Update)

The usual suspects have blamed the usual suspects in the GM bailout:

Austan Goolsbee, a senior economic adviser to President Obama, said the administration’s options were sharply limited by President Bush’s handling of the auto industry, and accused the prior administration of running out the clock.

“They shook up the can. They opened the can and handed [it] to us in our laps,” Goolsbee said on Fox News Sunday.

“When George Bush put money into General Motors, almost explicitly with the purpose — how many dollars do they need to stay alive until January 20th, 2009, there was no commitment to restructuring, to making these viable enterprises of any kind,” said Goolsbee, who serves as staff director and chief economist of the Obama’s Economic Recovery Advisory Board.

All of that is probably true, but the BS flag is thrown at the implication that the Bush administration left them with few options such that it had to funnel more and more bailout money into GM.

There was a clear second option – back off, tell GM that bankruptcy and restructuring are the best option and let the system take care of it. But they didn’t. They made the case that GM was “too big to fail” and that the “downstream impact” in terms of unemployment was unacceptable.

The continued bailout had two outcomes that the Obama administration wanted but won’t admit. One – they got a majority equity stake in the company. And they manipulated the bankruptcy proceedings to preserve that majority.

Secondly, it saved the jobs of a favored special interest group, the UAW, until such a time they too could be handed an equity stake in the “new” company through the manipulated process.

Without the Bush administration’s bailout, none of that would have been possible. And, of course, previous to taking office, Obama had lauded the handling of the GM problem.

So the Goolsbee blame shifting is more than nonsense, it’s nonsense on stilts.

UPDATE: Keith Hennesy, a member of the Bush administration who dealt directly with this subject and the incoming Obama administration throws a very detailed BS flag of his own.  [HT: Rick Caird]

~McQ

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7 Responses to Throwing the BS Flag (Update)

  • and no one will call him out it in the media…it just gets thrown out there and is allowed to live as fact

  • Keih Hennessey was in the meetings with the Obama people discussing the auto bailout plans.

    http://keithhennessey.com/2009/06/07/dr-goolsbee-gets-it-wrong-on-the-auto-loans/

    Rick

  • What a load. At the point there were effectively 2 Presidents – Baracky was keeping his mouth shut on the tough stuff like Israel, but was shooting his mouth off over domestic economic issues- and Bush was generally accomodating him.

    Too bad SENATOR Baracky and his party couldn’t do anything at all in that window.

    Baracky didn’t “inherit” anything he didn’t have a hand in creating.

  • The comments of Keith Hennesy are interesting in that it was obvious that Team Obama wanted no blame .. better yet, they wanted to be able to blame Bush by keeping their fingerprints off any loans, etc. with GM or Chrysler and, in the process, jeopardized 1.1 million jobs, many of them union members, for what appears to be only for the purpose of political gain.

    • And, best of all, while most of this was going on durin the waning days of the Bush Administration, Team Obama was busy saying that things are going to get worse before they get better, almost as though they wanted a big GM and Chrysler failure to kick off the “blame Bush” campaign at the start of their 4 years.

  • As my DI said of excuses, "everybody’s got one and they all stink." 

    The unemployed will have enough time to hear the message that the Democrats controlled both House and Senate since 2006 and the Presidency since 2008.   Do you suppose the stupid party will remind them of that?  The unemployment numbers already exceed the worst case scenario.  At some point, even the gullible have to realize that the captain has no clue.

  • Do you suppose the stupid party will remind them of that?

    Never assume that the Stupid Party will do anything to help themselves. Helping their opponents is another story…