President Bush gave an interview to the American Enterprise Institute, a conservative think tank, today in which he revealed some of his thoughts about the automotive industry. If you want to read the whole thing (and you should), it is here.
So, bottom line, "normally bankrupcy would be best, but now is not normal. I haven't made up my mind yet what to do".MR. DeMUTH: You'll be surprised that I have several questions about the auto bailout. (Laughter.) Let me put it in the context of this discussion. Isn't the Detroit bailout an example of interest groups thinking they can get a better deal from the executive branch than from the Congress?
THE PRESIDENT: That's an interesting way of putting it. First, let me take a step back--I haven't made up my mind yet, So you're assuming something is going to happen. (Laughter.) This is a difficult time for a free market person. Under ordinary circumstances, failed entities--failing entities should be allowed to fail.
I have concluded these are not ordinary circumstances, for a lot of reasons. Our financial system is interwoven domestically, internationally. And we got to the point where if a major institution were to fail, there is great likelihood that there would be a ripple effect throughout the world, and the average person would be really hurt.
And what makes this issue difficult to explain is--to the average guy is, why should I be using my money because of excesses on Wall Street? And I understand that frustration. I completely understand why people are nervous about it. I was in the Roosevelt Room and Chairman Bernanke and Secretary Paulson, after a month of every weekend where they're calling, saying, we got to do this for AIG, or this for Fannie and Freddie, came in and said, the financial markets are completely frozen and if we don't do something about it, it is conceivable we will see a depression greater than the Great Depression.
So I analyzed that and decided I didn't want to be the President during a depression greater than the Great Depression, or the beginning of a depression greater than the Great Depression. So we moved, and moved hard. The autos obviously are very fragile and I've laid out a couple of principles. One, I am worried about a disorderly bankruptcy and what it would do to the psychology and the markets. They're beginning to thaw, but there's still a lot of uncertainty.
I'm also worried about putting good money after bad--that means whether or not these autos will become viable in the future. And frankly, there's one other consideration, and that is, I feel an obligation to my successor. I've thought about what it would be like for me to become President during this period. I have an--I believe that good policy is not to dump him a major catastrophe in his first day of office. So those are some of the considerations that we're weighing.What was the question on autos? (Laughter.)
MR. DeMUTH: The President-elect said--
THE PRESIDENT: Oh, you said Congress and the executive branch.
MR. DeMUTH: Yes, yes.
THE PRESIDENT: Well, just remember a majority of Congress voted for a plan that we thought was a good plan. It didn't get the requisite votes in the Senate in order to move it on, but there was a majority vote if you add up the House and the Senate. So the Congress, in one way, expressed its will for a way forward with some--with a plan, or a strategy for viability.
MR. DeMUTH: But there must be some question in your mind whether the two political branches are better at bankruptcy restructuring than a bankruptcy court. I mean, we do have a law.
THE PRESIDENT: Absolutely.
MR. DeMUTH: Do you think when everybody stops--
THE PRESIDENT: I think under normal circumstances, no question the bankruptcy court is the best way to sort through credit and debt and restructuring, no question. These aren't normal circumstances, that's the problem. This is a hard issue for political people, because people never know how bad it could have been. And so the decisions you make are easy for people to say, why did he do that? Why is he wasting our money on this? Or, why is he doing that? Because without a catastrophe, the reasoning doesn't, it just doesn't really make it down to the grassroots.
People look at, "My money being used because Wall Street got excessive." And I make the case that I didn't want to do this. It's the last thing I wanted to do. Nevertheless, I felt compelled to do it, because it would make life worse for you. We lost 533,000 jobs last month. What would another million jobs lost do to the economy? What would that do to the psychology in markets? What would that do--how would that affect the working people? And so as you can tell, we're all in, in this administration. And if need be, we'll be in for more.
Update:
Bush said basically the same thing this morning, when he announced loans from the TARP for GM and Chrysler.
