Obama and his allies keep saying that the auto bailout “saved Detroit” — as if what is left of “The Big Three” would have vanished into thin air if the feds hadn’t bailed GM and Chrysler out. Not true, argue James Sherk and GMU law professor (and bankruptcy expert) Todd Zywicki in this paper. All that was “saved” was the inflated compensation for UAW workers.
There isn’t any authority under the Constitution for any branch of the federal government to give money (for bail-outs from financial distress or any other reason) to businesses. We would be so much better off if we could have stuck with that restriction on government power.
