StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

Why Is Anyone Surprised About Opposition To A Big 3 Bailout?

28 Nov 2008
Posted by Stan Collender

Interesting discussion over dinner last night: Why is anyone surprised about the increasingly obvious opposition to a bailout of Ford, GM, and Chrysler?

The talk had little to do do with the incredibly poor peformance of the CEOs when they testified before Congress a week or so ago.  To say they got bad marks from the anything-but-scientifically-selected sample of people around the table would be a gross understatement, but that wasn't the point.

Instead, the prevailing opinion was that, long before a bailout was seriously discussed on Capital Hill,  Americans had already passed judgment on the Big 3 by not buying their products and, in effect, by voting with their dollars.  At best, they had already decided they didn't care whether these companies stayed in business.

So when talk in Washington turned to a bailout, that is, to keeping these companies in business, why did anyone think that the same people would immediately agree to the assistance?  Consumers are now being asked to spend tax dollars to do something they decided not to do with what they had left after they paid taxes.  Therefore, were the questions asked, the anger expressed, and the opposition that so quickly developed really that surprising?

This makes the political task in getting a Big 3 bailout very obvious: the value for consumers has to be made clear.  Will it result in cars they want to purchase, lower prices for the vehicles, a stronger economy that will benefit them directly, etc.?  If they see no personal gain, or if the only thing that's promised is more of the same, the political opposition and anger should be expected to continue and perhaps even intensify.

In many respects, this is the same problem the Bush administration had with it's Wall Street bailout: It failed to explain how the average person would benefit from the deal.  As Treasury Secretary Paulson can tell you, the effect of that failure is still being felt.

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