Here's the NY Times story.
As part of the $700 billion Bailout, Citigroup received $25 billion in October. This money was direct re-capitalization of the sort that Sec. Paulson said he wouldn't do and then did. Does the fact they are in talks with the government mean that Citigroup is going to need more money? Is giving them more money a good idea? For who is actually more systemically important, Citigroup (who already got their $25 billion but look like they need more)? Or GM, who are right now effectively being denied their $25 billion? Which company affects more jobs, directly and indirectly?
Certainly, Citigroup affects the credit markets -- but Americans' (and America's) credit is being severely diminished as it is. Saving Citigroup won't exactly fix that situation. Though perhaps it will keep it from getting worse.
But shouldn't the focus be on making things good again, rather than simply keeping things from being really, really bad? Isn't letting things go from bad to worse acceptable if it is part of a smart plan to turn things around toward the good? If the tight purse that is being drudged up in the case of GM and Detroit is a case of a nation having to make hard choices about which companies to support and which to let whither away, how do we know we are making the right choices?
So far, the debate that is actually happening strikes me as being defined by ideology and personal interest more than by data and pragmatic decision-making. After years of incredible fiscal irresponsibility when they are in power, the Republicans are -- surprise -- returning to a mantra of no more spending when they aren't in power. And the Democrats continue to be hamstrung by associations with auto unions, whose own special interests drive Democratic support for some kind of a Detroit bailout. Perhaps a bailout is a good idea, but support for unions and their bloated contracts is not a good reason for it.
That said, America needs to create more jobs for its people. If we were to enact policies to initiate a better labor market, and were we to return to upwardly moving wages, credit and consumer problems could be relieved and Americans could save more.
My cautiously hard-core stance is this: Let troubled companies go bankrupt. Quit wasting money on organizations that have failed, including the car companies. And then as soon as January rolls around, put forth a $600 billion stimulus package aimed at creating jobs in the short-, medium-, and long-terms. This should include enhanced unemployment insurance, as well as money for re-training the former auto factory workers.