Bush's Big Government Gambit

Ken Blackwell

12/31/2008 12:01:00 AM - Ken Blackwell

Although President George W. Bush succeeded with some of his policies, the bailout of the Detroit Three is possibly his most significant mistake. The recent damage he’s done to the Republican brand will take leadership with a command focus to repair. The president’s mistake could repeat the hardship Americans experienced the last time we went down this path early in the last century.

Setting aside President Bush’s successes on such fronts as protecting the homeland against terrorists, his failures have been noteworthy. Some, such as the federal response to Hurricane Katrina, came about because Mayor Ray Nagin’s incompetence was surpassed only by that of Governor Kathleen Blanco. Others, such as the nomination of Harriet Miers to the Supreme Court, were entirely his fault.

But the past three months have seen terrible decisions with long-term consequences. As markets declined, President Bush signed onto massive government bailouts of banks, then other financial institutions that started calling themselves banks. Now, he’s agreed to give a massive bailout to three American automakers that have stubbornly persisted in clinging to failed business plans that leave them in the red, strangled into insolvency by crippling union contracts.

To be fair to President Bush, the bailout failure could not have happened without the Democrat-controlled Congress, led by House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid. Even Senator John McCain had a hand in this situation.

Polls showed voters were against the first bailout 90-10 when it passed. Subsequent polls had voters opposed to it 75-22 on Election Day. Had Mr. McCain taken the conservative line opposing these bailouts, and criticized Senator Barack Obama for supporting the president’s plan, he would have finished stronger.

But none of that excuses President Bush’s decision to give $17 billion of taxpayer money to the Detroit Three, postponing their need to make fundamental changes to their business models. This giveaway radically expanded the reach of the federal government in a manner only seen in socialist nations. Worse, he attached paltry, optional conditions to that federal largesse, leaving the door open to the next administration to waive those requirements completely and use the GOP for political cover.

Out of all the options available to President Bush, he took the worst-possible course.

His actions may not even be legal. Congress considered this bailout and rejected it, while Mr. Bush’s treasury secretary publicly said that using the original bailout funds for automakers would be unlawful without congressional action. The legality of these actions cannot be challenged unless the right party brings a lawsuit, but the fact that ordinary taxpayers cannot bring a lawsuit against federal spending does not change the fact that everyone agreed the first bailout could not be extended to automakers. President Bush therefore usurped the legislative function, doing something Congress refused to do.

The federal government’s shoulders are not big enough to carry a $13 trillion economy. A system of limited government cannot control enough of our economy to fully stave off the consequences of widespread recklessness. Painful corrections are inevitable.

The parallels to the 1920s and 1930s are remarkable. Republican President Calvin Coolidge was a staunch conservative, presiding over the Roaring Twenties. Republican President Herbert Hoover was a moderate who tried major government intervention in the face of the economic downturn of 1929, with disastrous results. This then gave an excuse to incoming Democrat President Franklin Roosevelt to radically expand the federal government, spending untold sums in an effort to end the Great Depression.

But those efforts failed miserably. They did nothing to ameliorate the Great Depression, which instead got even worse in the late 1930s after five years of FDR’s New Deal programs. It was only World War II - the largest military conflict in world history - that finally revived this nation’s economy.

We must learn from these bitter lessons of history. Like Mr. Coolidge, President Ronald Reagan was a conservative whose policies laid the foundation for long-term economic growth. Like Mr. Hoover, President Bush is a moderate who is trying to tackle an economic downturn with big-government intervention. Enter President-elect Obama, promising to emulate Mr. Roosevelt with an unprecedented, radical expansion of the federal government.

Only Republicans offer the conservative principles that can address our economic woes. Since our outgoing president has abandoned those principles - and never adhered to some of them - the GOP must speak with a different voice. The GOP must be the voice of reason before America goes past the point of no return in trading a capitalist economy for a socialist state.

Everyone who knows President Bush will tell you he is an extraordinarily warm and pleasant person, and a true gentleman. Contrary to the left’s portrayal of him, Mr. Bush is full of compassion.

But that is not enough. Some industries need change that government cannot provide. In a free market, company mismanagement and union shortsightedness result in corporate reorganization, not government involvement at the cost of countless billions of dollars that only delays the inevitable.

The Republican Party was once the champion of limited government and economic freedom. President Bush’s recent actions have thoroughly distorted that image. It will take strong leadership for the GOP to reclaim its small government and free market reputation.