Politics: General Motors and General Welfare

Congress is currently embroiled in a debate over whether to bail out the Big Three U.S. automakers - Ford, Chrysler, and especially GM. Detroit's CEOs, as well as the president of the United Auto Workers, plead their case before the House Financial Services Committee today. That's a lot of political clout, but then, there's a lot of money on the line - either money from the 700 billion dollar financial sector bailout or money from an energy bill passed earlier this year.

Naive question: Where does Congress get the power to spend money in this fashion? Ever since the New Deal era, the Taxing and Spending clause in Article I has been interpreted to allow Congress nearly complete authority over what and how much to tax, and similarly, over what and how much to spend on items related to the "general welfare" of the country. The General Welfare clause, while a subject of some debate, at least minimally stands for the proposition that Congress can't play favorites by regulating or spending on specific states or regions at the expense of others. Other parts of Article I mirror this concern (the requirement that all duties be uniform throughout the country, for instance).

But how does bailing out specific companies in a specific industry square with improving the "general welfare" of the country? Well, I suppose the argument goes that this is a "bridge loan," not a handout. Like with the financial sector bailout, the government stands to get something for their money, as long as the debtors pay it back. Some commentators wonder, and rightfully so, whether the Big Three are good for it.