Sticking It to Detroit

HuffPo, others fixate on an autos vs. banks narrative

Yesterday, after President Barack Obama announced the relatively tough terms of his auto industry bailout, reporters were quick to compare the administration’s plans for Detroit and its plans for Wall Street. White House press secretary Robert Gibbs faced several questions to that effect during his press briefing. ABC’s Jake Tapper, for example, asked “why there seems to be this disconnect—a lot of tough talk and tough demands from the administration when it comes to the auto industry, but that doesn’t seem to be carried on when dealing with Wall Street or the banking industry;” Chuck Todd questioned “the appearance that there’s more strings for the auto industry than there has been for the financial industry.”

After the briefing, the criticism continued. Sam Stein at The Huffington Post criticized Gibbs’s somewhat unclear answers to these questions, and lamented “an apparent double standard from the administration when it came to the auto industry and financial sector bailouts.” And on The Rachel Maddow Show yesterday, syndicated columnist David Sirota asked:

How could you, you know, essentially berate a CEO in an industry that‘s asking for about $30 billion and do nothing of the sort, really, in terms of toughness like this to an industry that we‘re giving away $750 billion, over $1 trillion? It really doesn‘t make sense. And I think the question is—why?

The question that Sirota and Stein both raise is fair game; while it is, as Elana Schor at TPMDC notes, “an admittedly over-simplified question,” it’s also a valid one. And the why banks, not autos focus can be illustrative in describing the differences between systemic (banks) and non-systemic (auto companies) risk, the priorities of the administration (the good of the economy as a whole), and the political undercurrents that factored into yesterday’s decision (sending taxpayer dollars into a black hole is never a politically good move).

But if you just raise the “double-standard” question without explaining these things—if, for instance, you fail to point out that the companies being compared do present different types of risk, and therefore should be treated differently—then the why banks, not autos framework threatens to become actively misleading. Stein, for example, fixates on Gibbs’s performance during yesterday’s press briefing. (His piece’s headline—“Gibbs Struggles to Contrast Auto, Wall Street Bailouts”—is particularly illustrative in its insistent focus on what is, in the grand scheme of things, something of a cosmetic detail.) He uses that to build an image of a shifty-eyed administration deciding to bail out one prodigal son, but not the other. The article introduces a false parallel, and then doesn’t debunk it.

Unlike the HuffPo piece, Politico raised the question yesterday—with a rather inflammatory headline that read, “Carrots for banks, sticks for autos”—but, fortunately, also proceeded to unpack it. Its lead:

Critics of President Obama’s do-or-die plan for General Motors and Chrysler are making this a fight over fairness: Why do banks get carrots and the autos get the heavy stick? It’s a fair question, and one likely to resonate with those who feel Obama has gone light on insurance giant AIG and bailed-out banks like Citigroup.

OK, that’s similar to Stein’s “double standard” lament. But then comes the unpacking. The main reason, it explains, is that officials “are focused on the broad impact on the economy” (emphasis mine). And, as it goes on to state in no unclear terms:

This is the hard reality facing automakers: their failure would be devastating to their executives, workers and suppliers - but probably not to the broader U.S. economy. Obama is convinced that if AIG or some of the big banks collapsed, the economy could go down with them. That’s not the case with Chrysler, for sure, and probably GM, too.

That’s not a pretty political message to send to Michigan—a state with the nation’s highest unemployment rate (12 percent). To some extent, it explains Gibbs’s roundabout responses at yesterday’s press briefing. (Per a White House advisor quoted in the Politico article: “The politics of this are brutal… The president knew the Michigan delegation would be unhappy. But the politics of wasting hundreds of billions of dollars in a failed efforts to save this company are worse than the politics of allow[ing] them to die after taking real but not extreme measures.”)

Part of the problem with the HuffPo piece, in its railing against Gibbs’s hemming and hawing, is that it focuses on the official response, rather than taking the time to explain what was missing from Gibbs’s comments, and why. Any report that pits the two industries against each other—say, representatively, AIG vs. GM—also needs to debunk the fallacy that their bailout situations are parallel. Gibbs ultimately had it right when he declared the administration’s “hesitancy” to “look at every entity the same way”—he just didn’t outline exactly what he meant by it.

As The Wall Street Journal’s Laura Meckler put it in the middle of an exchange with Gibbs at yesterday’s briefing: “It’s our job to help people— to explain to people what it is that you’re saying, and so I’m trying to make sure I understand it.” That’s a great description of what a White House reporter is supposed to do; it’s also what Stein, preoccupied with noting reporters’ snickering at Gibbs’s answers, chose not to do. There can be a lot of information hiding between the lines of a press briefing; journalists should ferret it out.

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Jane Kim is a writer in New York.