Ginsburg Stays the Chrysler Sale: Obama’s Sick Chicken?

If you recall, President Obama pre-packaged the Chrysler bankruptcy/sale to Fiat in such a way that he screwed the secured creditors (i.e., the bondholders) in favor of the unsecured creditors (i.e., the unions). Some Indiana pension funds challenged the deal on constitutional grounds (apparently at the behest of Indiana Governor Mitch Daniels).

Late this afternoon, Justice Ginsburg issued a “stay” of the Bankruptcy Court’s approval. In other words, she put the deal on hold pending “further order” of the Supreme Court.

This could mean lots of different things. I hope it means that a majority of the Supreme Court is ready to declare the deal unconstitutional. And that is a real possibility. But there are many other benign explanations. For example, the Court may have decided that it won’t hear the case, but one of the Justices is preparing a dissent from the denial of the writ of certiorari. In English, that would mean that one (or more) Justice(s) wants the case heard but the rest of the Court disagrees, and the loser wants to issue a written opinion explaining why he’s right and the others are wrong. Other equally benign scenarios are possible.

For now, wait and see what happens. The Court will explain itself in due time. If it does hear the case, it will be a major problem for the Obama Administration. If it declares the deal unconstitutional, it will be Obama’s biggest defeat to date.

If you’re a historian of the New Deal, and you like twisted analogies, Chrysler may have just become Obama’s “sick chicken.”

UPDATE: The Heritage Foundation has an “instant analysis” of the stay decision. They think this means that “one or more justices are inclined to grant a longer stay.” That’s probably true, but without more the Court will likely lift the stay within the next 24 hours, probably without further comment, and Obama will have the victory he craves.