George S. May Business Blog

Congress passes bailout responsibility to the White House. Bush declines.

 Friday, the big three automakers were back up at Capitol Hill. However, this time there seemed to be a different attitude on behalf of Congress.

Democratic Rep Barney Frank – Chmn Financial Services Cmte explained:

“There’s still a lot of disagreement about how to do this. But there is much less disagreement on whether or not to do it.” 

The sudden transformation of approach seemed to be sparked directly from the “awful” job numbers provided by the unemployment report they received from the Bureau of Labor Statistics Friday morning.

And while Chrysler revealed that they have already hired a prominent law firm that specializes in bankruptcy, Chief Economist Mark Zandi, for Moody’s Economy.com, calls it a “key turning point”. He explained that legislators are starting to realize that not helping the big three immediately will turn a “bad recession” into the “worst recession” since the Great Depression.

Although Congressmen have admitted that there is a horrifying problem that requires immediate attention, there still does not seem to be enough votes required to pass what would give the big three the 34 billion dollars they have asked for.

Instead, Congressional leaders wrote Bush saying that he could help the automakers by tapping into the 700 billion already passed to help financial system.

The White House responded promptly insisting that it is on Congress to provide the funds for the automakers. ABC News provided a quote from an unnamed Senior White House Official declaring:

“They want us to do what they do not have the leadership or courage to do’.

Ouch. So as Detroit plummets further into a deep abyss of unemployment, one that seems more and more insurmountable daily, Washington D.C. is a having a classic game of chicken.

Democratic Rep. Paul Kanjorski – Financial Services Cmte – responded:

“That’s like having a starving man before you and then arguing should you take the money to help feed him out of your right pocket or your left pocket. Who the hell cares let’s make sure the man doesn’t starve to death while we’re arguing that point.”

Nonetheless, it has been reported that White House Chief of Staff, Joshua Bolten, was in talks with Speaker of the House, Nancy Pelosi, Friday. Although a conclusion has not been realized, Pelosi says that they will reconvene talks this week and that they are determined to work out a compromise.  

Is it a good idea to give the automakers bailout money? If so, who should be responsible for supplying the money, Congress or the White House?

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