White House Bails Out Automakers: Everybody Wins, Save Taxpayers

"Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," said Treasury spokeswoman Brookly McLaughlin.

The U.S. stock market was still down Friday morning but the worst fears of some market players did not materialize (at least not yet) after the TARP news broke.

But why Congress - the Senate specifically - failed to act is the subject of debate, and now largely a political discussion, as Henry and I discuss in the accompanying video (taped prior to the White House-TARP announcement).

Given Washington was able to (quickly) come up with the $700 billion TARP plan to bail out Wall Street (plus trillions more in other programs), it's a little surprising politicians weren't able to come up with a much smaller amount to at least tide the "Big 3" over until the new Congress/administration comes in.

On the surface, GOP Senators stood on principle by refusing to lend money to a crumbling industry, especially given the likelihood the $14 billion request would be the first of many.

"In the end, it's the single greatest flaw [of the House bailout bill] is that it promises taxpayer money today for reforms that may or may not come out tomorrow," said Senate Minority Leader Mitch McConnell (R-Ky.).

Beneath the surface, the talks apparently broke down over Senators' insistence the UAW agree to benefit and wage cuts to levels on par with what foreign automakers operating in America pay their workers. (At a press conference Friday morning, UAW chief Ron Gettelfinger said the union was willing to make concessions but was rebuffed by GOP Senators.)

A cynic might conclude that GOP Senators saw the negative reaction to the Wall Street bailouts and lack of public support for a Big Three bailout as an opportunity to "break" the union, which typically votes for the other side.

Taking the cynicism a step further, perhaps GOP Senators deduced they could risk standing on "principle" knowing a lame-duck Republican President will bail them (and GM, Ford, Chrysler) out of any responsibility for the potential economic ramifications of their actions (or lack of action).

This is classic D.C. politics: Everybody wins ...save the U.S. taxpayer.

Not that I'm cynical.