Thursday, November 13, 2008

The Auto Industry Bailout

Megan McArdle of The Atlantic makes compelling points against the Auto Industry bailout.

Some background...
The bailout plan gave tremendous power to the Secretary of the Treasury. Consider "Sec. 8.":

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
Paulson ran with that authority as he attempts to shift the focus of the funds.

Perhaps ironically, Paulson now objects to Obama's (and Barney Frank's) plan to funnel some of the money towards the auto industry.

I wonder if Paulson would have demanded $700 billion if he realized that he wouldn't be able to retain control over it very long, despite the strong language to the contrary in the bill.

In fact, this is why some tend to object to setting large piles of money in the government's hands. It's anybody's guess as to who will manage to spend it first.