After the Republican Congress tried to kill an auto bailout, the Republican President has gone around them and approved $17.4b in loans from TARP to rescue the auto industry.

Citing danger to the national economy, President Bush approved an emergency bailout of the U.S. auto industry Friday, offering $17.4 billion in rescue loans in exchange for tough concessions from the deeply troubled carmakers and their workers.

The government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry. [...]

Allowing the massive auto industry to collapse in the middle of what is already a severe recession cannot be allowed, Bush said.

"It would worsen a weak job market and exacerbate the financial crisis," he said. "It could send our suffering economy into a deeper and longer recession. And it would leave the next president to confront the demise of a major American industry in his first days of office."

Of course, they're still holding the auto industry to an entirely different standard than they held Wall St. to, i.e., suddenly there are conditions and strings in order for the auto industry to get the money:

Viability Requirement: The firms must use these funds to become financially viable. Taxpayers will not be asked to provide financing for firms that do not become viable. If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury.

Definition of Viability: A firm will only be deemed viable if it has a positive net present value, taking into account all current and future costs, and can fully repay the government loan.

Binding Terms and Conditions: The binding terms and conditions established by the Treasury will mirror those that were voted favorably by a majority of both Houses of Congress...

Interesting that the fact that a majority of Congress voted for it is good enough to sell the President's plan, just not good enough to pass it. Got it.

But notice the further strings attached to this money, buried way down under the "Targets" section:

• Work rules that are competitive with transplant auto manufacturers by 12/31/09.
  
• Wages that are competitive with those of transplant auto manufacturers by 12/31/09.

Or, to put it more plainly, as Marcy Wheeler states bluntly:

The President of the United States just dictated that American corporations pay their employees significantly less than the employees of foreign owned manufacturers. And/or, he dictated that American corporations pick the pocket of their senior retirees.

This was always about union busting and in the hands of our current president, it still is. For now, President-elect Obama is on board with the plan:

"Today's actions are a necessary step to help avoid a collapse in our auto industry that would have devastating consequences for our economy and our workers," he said. "With the short-term assistance provided by this package, the auto companies must bring all their stakeholders together -- including labor, dealers, creditors and suppliers -- to make the hard choices necessary to achieve long-term viability."

But one hopes that once he is in office, perhaps after the March 31st deadline passes, that the loans can be restructured with an eye toward lifting up America's auto workers as well as the industry as a whole. Despite the mantra of conservatism for thirty years, the two goals are not mutually exclusive.

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Roving Holder
Karl Rove, in his post-Bush role of smarmy pundit, has managed to inject his foul stench into the Holder nomination. Patrick Leahy--upon witnessing his GOP Senate colleagues Charles Grassley, John Kyle and Arlen Specter do an about face and withdraw their praise for Holder--noted the following:

Senator Grassley has acknowledged Mr. Holder's impeccable credentials while reserving judgment. But of course since then, Karl Rove has appeared on the Today Show and signaled that Republicans ought to go after Mr. Holder. Right-wing talk radio took up the drum beat.

On the Sunday morning Chris Mathews Show, a Washington Post Reporter backed Leahy's assertion:

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by Bruce Webb
(h/t to Hilzoy commenter nortzax for the idea)(cross posted at Angry Bear)

I mean it is bad enough that failure of the Big 3 means the loss of maybe 3 million jobs economy wide. Why are you trying to put Dale Earnhardt Jr. out of HIS job?

Seriously what would the economic impact be to red states if not only NASCAR but all the other car and truck racing circuits collapsed? NASCAR made a run at getting Washington State to build a track here at taxpayer expense with the claim that the positive economic impact would dwarf the expenditure. (The Leg didn't bite). But you can't deny the economic impact of having some hundreds of thousands of fans visiting town for a couple of weekends a year. NASCAR schedule Sure there are some blue states on the list. But this article claims the impact of the Daytona 500 alone is over $1 BILLION Paddocktalk"Well we stuck it right to the Yankees. Ha Ha! Too bad there won't be any races at Kentucky Speedway this year. Or ever again." Somehow I am not sure Mitch McConnell really thought this one through. How much is he really willing to put on the line to have GM workers take a $3/hr paycut a couple of years earlier?

Plus I hear football is kind of popular in both red and blue states. Who is going to pay for all the truck commercials? I suppose that as long as Americans don't give up drinking beer that televised sports will continue. But the economic impact of the Big 3 goes far beyond parts makers and car dealers. The GOP is playing with dynamite here, the political ads practically write themselves

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CNN's Quick Vote question today:

Should President Bush tap funds from the Wall Street bailout to lend to the auto industry?

Currently, it's about dead even with

Yes: 39,926

No: 40,561

Please vote YES, about 1/3 of the way down on the CNN front page, right hand side, thanks!

http://www.cnn.com/

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Stocks tumbled around the world and the dollar slumped after the Senate rejected a bailout for American automakers, threatening to deepen the global recession. Treasuries rallied and yields fell to record lows.

In a predictable development, Bloomberg reports that the dollar sank to a 13-year low against the yen in the wake of news that the auto bailout has collapsed. Other drops follow.

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