Is Obama's Auto Plan "Unprecedented"?


If there is one word that is being used to describe the administration's plan for automakers, it is "unprecedented." The Hill says some Republicans "criticized what they saw as an unprecedented intervention into private industry by the government."

But if there were one other word to describe the plan, it would be ... "precedented." David Brooks, for instance, writes that Obama's decision to keep the automakers out of bankruptcy is "an extremely precedented move."

And some get the best of both worlds. John McCain described the plan as "unprecedented window dressing." His point seemed be that the plan is unprecedented only because it's so thoroughly precedented, which is to say the plan isn't unprecedented enough. What the heck is going on?

The auto bailout (if it can be described as a bailout) certainly seems to be creating unprecedented confusion. And the political response to the bailout -- is it unprecedented or not? -- is also confusing, for three reasons.

One problem is surprise. The administration didn't seem to talk to some key players before pushing Rick Wagoner out the door. For the administration, this has the positive effect of disordering the Republicans, who haven't had a chance to march in lockstep like they did with the stimulus. But it also has the obvious drawback of angering Democrats. Carl Levin is already wondering aloud why he wasn't consulted first.

A second problem is localism conflicting with party ideology. Midwestern senators don't want to see Detroit die, and southern senators -- whose states are fully of foreign auto manufacturers -- don't want to see Detroit get preferential treatment. (George Voinovich, meet Bob Corker.) All this is above and beyond the stereotypical Democratic desire to protect the American autoworker and the stereotypical Republican desire to let the magic of the market do its work.

And all of this is confused by the fact that you really can describe the plan in two completely different ways. One is the "ultimatum" narrative: Obama is telling GM and Chrysler that they have a few more months (and a few more billion dollars) to get things right, or they'll be plopped into bankruptcy or modified bankruptcy. Finally, letting market forces work.

But then there's the "business as usual" narrative: this is just one more instance of delayed deadlines, and one more signpost on the road to full-fledged industrial policy. (That's the story favored by David Brooks and, I guess, the Los Angeles Times.) The government is forcing out the CEO of a company -- a company it doesn't even own! -- and spending billions more to make sure the industry says afloat. Good luck getting GM into bankruptcy court after all that sunk cost.

Something here is unprecedented. I'm just not sure what.

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Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism. He was previously a fellow at The Atlantic and an editor at The Guardian. More

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism, an economics blog that was recently published in book form by Simon and Schuster. He was previously a fellow at The Atlantic and an editor at The Guardian. He is also on Twitter.
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