Sunday, March 11, 2012

Take Pride in the Bailouts, Comrades!

The wisdom and propriety of the Obama Administration's bailout of General Motors and Chrysler is sure to be a significant issue in the fall campaign. As such, the speech that the president gave about two weeks ago in front of  the UAW convention in Washington has been on my mind because, I think, it illustrates just how much is a stake in the November election.

This post is not intended as a comment on the merits of the bailouts themselves, though I oppose them, whether initiated by President Obama or his predecessor. Rather, I wish to direct attention to the way in which Obama touts the bailouts as a proud achievement, a central piece of the policy that helped bring about our economic recovery.

Long ago and far away, say three years ago, there seemed to be a consensus across the political spectrum that bailouts are undesirable. Some believed, however, that, during an extraordinary emergency, such as the financial crisis and its immediate aftermath, bailouts of certain industries were a necessary evil to prevent economic calamity. Nonetheless, all agreed that bailouts are unfair and, basically, un-American. Everyone, including President Obama, pledged to end bailouts forever as we emerged from the crisis of 2008-09.

In other words, at best, having the government save, subsidize and quasi-control private industry was regarded as a highly undesirable policy that should be implemented only in a temporary and dire emergency, if at all.

But Obama has since discarded this cramped view of bailouts. Indeed, he is making the quasi-nationalization of GM and Chrysler a centerpiece of his bid for re-election. Now he damns bailout opponents as cowards who simply wanted to let the domestic auto industry fail (never mind that Toyota, BMW and others also make cars here and never sought a dime from the federal government).

Speaking in the first person, in order to take maximum credit, to the union to which he partially sold these GM and Chrysler, he praised the bailouts as a positive good and a sign of his personal commitment to the domestic auto industry, as if he is a (gasp!) Romney-like private investor who staked his personal fortune on turning around two failing giants.

This attitude is deeply troubling--and it ought to disturb observers across the ideological band. It is not exactly in the American tradition to have a president essentially nationalize favored firms and then campaign in front of the very workers who directly benefited from his use of the public fisc on their behalf. This is the stuff of banana republics; there is no question that Obama's words and manner before the UAW would fit in nicely at a sanctioned gathering in Havana or Caracas.

Conservatives, of course, loath bailouts as unwarranted, even illegal, expansions of federal power. But the left, too, objects. Liberals disdain bailouts as examples of the unholy conjunction of evil corporate American with big government. Witness Occupy Wall Street and the Naderite tradition in the Democrat Party. Why, then, is anyone, liberal or conservative, comfortable with a president who is so comfortable with the bailouts of large private firms?

The truth is Obama likes bailouts--they aggrandize federal power, give him a fair amount of control over large portions of the economy (build move Volts!) and virtually guarantee a political pay-off from the persons and groups that reap the benefits of federal intervention. Obama is unconstrained by such details and niceties as the Constitution, the division between public and private sectors and a general presumption in favor of a market economy with its implicit right to succeed or fail on one's own merit.

Accordingly, he depicts the bailouts not as the regrettable residue of an extraordinarily difficult moment, but as a hallmark of the brilliance of his centrally-planned economy. Too bad he wasn't president during the last days of the Dumont, Packard, Gimbal's or Pan Am. Then we might have up to four television networks! We'd have cars on the road and even department stores and airlines--all industries that no longer exist due to federal inaction.

So the next time Obama praises himself on the bailouts, hear his words with these thoughts in mind. Does anyone, left or right, really want a president who so proudly proclaims himself as industry savior, who so blithely ignores the lines between public and private, the market and the government? It is this mentality that not only makes Barack Obama a bad president, but a dangerous one.

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