The Chrysler Problem

I agree with Mickey Klaus that President Obama may have stepped in it with his forced deal to keep Chrysler afloat. I see this being a big issue in the 2010 and 2012 elections:

If Chrysler fails in the marketplace again two or three years from now, after billions more in government subisidies, won't that reflect badly on Obama and his "economic team"? Will it then appear to have been better to let Chrysler go into an actual, non-prearranged, non-jawboned bankruptcy, in which it would likely have been liquidated or in which the UAW would have had to make far more substantial concessions, like workers in other bankruptcies? The government could have assumed some of the U.A.W.s pension and health care liabilities (which it will probably end up doing, in part, in any case). But Chrysler's demise would have been a real cautionary example that gave the administration leverage in the GM negotiations (which may be what the U.A.W. was really scared of). Chrysler's rapid departure would also have opened up market share for GM--and for Ford, which is not wildly healthy itself.

If one of the foreign brands that has US plants comes out with an ad that basically says "Made in the US without government bailout money" - then that ad will boost sales for that auto maker. You know that Chrysler will have to dip back into the government's pockets a few more times and each time it will drag the Chrysler name further and further down into the mud. And each time Chrysler gets a big check - the Obama administration and the people who support them will look worse and worse.