December 20, 2008
As expected, President Bush announced that he will make use of $17.4 billion from the "Troubled Asset Relief Program" (TARP) funds to make an emergency bridge loan to General Motors and Chrysler. See Washington Post. (This was not the purpose for which Congress authorized such spending in October, under sever duress, and one again the Bush administration is "changing its tune.") Will bailing out Detroit make any long-run difference? Probably not. It's ironic that a populist president like Bush would ignore the clear anti-bailout sentiment from his core supporters. As I noted on Dec. 12, this is a rare occasion in which "populist politics is in harmony with the national interest." This loan will simply let the auto executives and union bosses off the hook, and will thus encourage other industrial leaders to slack off, expecting Washington to come to the rescue in a future emergency. It's the old "moral hazard" problem, which Bush just doesn't seem to grasp.
From a quick scan of blognetnews.com/virginia, I see that Doug Mataconis, Crystal Clear Conservative, and Republitarian are wise and principled enough to see this awful and regrettable bailout scam for what it really is. As Myron says of Bush: "I've abandoned free-market principles to save the free-market system."
In distressing times like these, the only remedy is humor. So, hurry before our Treasury runs out of money, and apply for your own share of the Federal bailout loot.
President-elect Barack Obama has filled the remaining vacancies in the cabinet, giving us a somewhat clearer indication of his intentions. (The names are all listed on the Politics blog page, along with the outgoing cabinet members.) Staunch union supporter Rep. Hilda Solis (D-CA) will become labor secretary, with the ambitious goal of "creating 2.5 million new jobs." (We're still not sure how they're going to do that, however.) Ron Kirk (former mayor of Dallas) will become U.S. trade representative, a job for which he evidently has little or no experience. Qualifications and expertise seem less important to him than rewarding political allies or placating potential rivals, according to the Washington Post, which also took note of the "prevalence of big-city nominees" chosen by Obama.
The selection of Kirk would suggest that Obama is giving a low priority to trade policy, much as many of us had feared. NAFTA and trade relations with other nations in the Western hemisphere are now in jeopardy, as anti-trade interests will eagerly seek to exploit the precious opportunity that Obama has given them. It should be noted that, historically, nations which take advantage of the principle of comparative advantages and adopt a free trade policy tend to generate the most jobs for their citizens. By turning his back on foreign trade, as seems to be his intention, Obama would -- ironically -- curtail domestic employment opportunities, just when they are most needed. It's like the Smoot-Hawley tariff of the 1930s, which made the Great Depression even "greater" than it would have otherwise been.
CLARIFICATION: When I mentioned on Wednesday that Ray LaHood was Obama's "his first choice of a Republican so far," I overlooked Bob Gates, who will stay on at least temporarily as secretary of defense. Gates is a professional intelligence officer, not a Republican politician, but it's safe to assume that his sympathies lie with the GOP, or else Bush wouldn't have named him to that post.
In Minnesota, the review of challenged ballots in the U.S. Senate race is proceeding slowly, and it probably won't be completed in time for the next session of Congress in early January. As of today, Democratic comedian Al Franken has taken the lead over incumbent Norm Coleman, with a margin of about 250 votes. See CNN.com. If someone as mean and snide as Franken ends up winning such an important office, that would be a travesty of enormous proportions. Coleman has been a decent and respecte senator, often playing an independent mediating role, but he had the misfortune to be associated with a deeply flawed president.