E. J. Dionne: The bailout's secret success

Washington rescued Detroit. Just don't expect to hear about it from those who treat government ineptitude as an article of faith.

Posted: May 10, 2011

Don't expect to see a lot of newspapers and websites with this headline: "Big Government Bailout Worked." But it would be entirely accurate.

The actual headlines make the point. "Demand for fuel-efficient cars helps GM to $3.2 billion profit," declared the Washington Post. "GM Reports Earnings Tripled in First Quarter, as Revenue Jumped 15 Percent," reported the New York Times.

Far too little attention has been paid to the success of the government's rescue of the Detroit-based auto companies, and almost no attention has been paid to how utterly wrong opponents of the bailout were when they insisted it was doomed to failure.

"Having the federal government involved in every aspect of the private sector is very dangerous," Rep. Dan Burton (R., Ind.) told Fox News in December 2008. "In the long term, it could cause us to become a quasi-socialist country." I don't see any evidence that we have become "quasi-socialist"; just big profits.

Rep. Lamar Smith (R., Texas) called the bailout "the leading edge of the Obama administration's war on capitalism," while others in Congress derided the president's auto-industry task force. "Of course, we know that nobody on the task force has any experience in the auto business, and we heard at the hearing many of them don't even own cars," declared Rep. Louie Gohmert (R., Texas) in May 2009. "And they're dictating the auto industry for our future? What's wrong with this picture?"

Sorry to say, but you won't see a news conference in which the bailout's foes candidly acknowledge how mistaken they were.

Everybody knows

The lack of accountability is stunning but not surprising. It reflects a deep bias in the way our political debate is carried out. The unexamined assumption of so much political reporting is that attacks on government's capacity to do anything right make intuitive sense because "everybody knows" that government is basically inefficient and incompetent, especially compared with the private sector.

Government failure gets a lot of coverage. That's useful because government should be held accountable for its mistakes. What's not OK is that we hear very little when government acts competently and even creatively. For if mistakes teach lessons, successes do, too.

In the case of the car industry, allowing the market to operate without any intervention by government would have wiped out a large part of the business that is based in Midwestern states. This irreversible decision would have damaged the economy, many communities, and tens of thousands of families.

And contrary to the predictions of the critics, government officials were quite capable of working with the market in restructuring the industry. Government didn't overturn capitalism. It tempered the market at a moment when its "natural" forces were pushing toward catastrophe. Government had the resources to buy the industry time.

Nobody's perfect

What's heartening is that voters understand that sweeping assaults on government provide better guidance for the production of sound bites than for the creation of sensible public policy. That's why House Republicans are backpedaling like crazy on their plans to privatize Medicare.

Conservatives really believed that voters so mistrusted government that they would welcome a chance to scrap Medicare and purchase policies in the wondrous health-insurance marketplace. Don't people assume that anything is better than government?

But there were deep potholes on the road to a market utopia. Put aside that the Republican budget wouldn't provide enough money in the long term for the elderly to afford decent private coverage. The truth is that most consumers don't have great confidence in private insurance companies, with which they have rather a lot of experience.

When it comes to guaranteeing their access to health care in old age, most citizens trust government more than they trust the marketplace. This doesn't mean they think Medicare is flawless. But what they do know is that Medicare does not cut people off in mid-illness, and that its coverage is affordable because government subsidizes it.

It's axiomatic that government isn't perfect and that we're better off having a large private sector. It ought to be axiomatic that the private market isn't perfect, either, and that we need government to step in when the market fails. The success of the auto bailout and the failure of the Republicans' anti-Medicare campaign teach the same lesson: The era of antigovernment extremism is ending.


E.J. Dionne is a Washington Post columnist. He can be reached at ejdionne@washpost.com.

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