Political Football: Washington Runs the U.S. Auto Industry

(MoneyWatch)  All sides in Washington ?€" Republicans, Democrats, the Obama Administration, the House and the Senate ?€" agree without exception that they don't want to get involved in micromanaging the U.S. auto industry.

"I don't want to run auto companies," President Obama has said.

But inevitably, with U.S. taxpayers as major shareholders in Chrysler and GM, that's exactly what's happening. And it's not just the Obama Administration, Congress has gotten deeply into the act.

Politics have become inseparably linked to the nitty-gritty details of programs like "Cash for Clunkers," which ran out of money this week almost as soon as it got off the ground.

The political debate includes overall funding; the size of rebates; administrative details of how dealers submit the paperwork for "Cash for Clunkers" deals; whether the money is being spent properly; how many miles per gallon the cars being turned in achieve.

The details of running the auto industry don't get much more nitty or gritty.

Separately, Congress is debating which Chrysler and GM dealers should survive bankruptcy reorganization and which ones should go; whether the car companies acted fairly when they terminated dealers as part of bankruptcy reorganization; whether certain provisions of state franchise laws should apply.

It gets worse. The politics of running the U.S. auto industry are already spilling over into other political debates, like national healthcare. Critics of "Obamacare" have been quick to jump on the "Cash for Clunkers" situation as a cautionary tale for what they see as government over-regulation.

We all better get used to it. Inside-the-Beltway politics are going to have a greater say in auto industry boardrooms right up until the day Chrysler and GM pay back their loans and redeem their government stakes.