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October 15, 2011 9:30 AM A victory lap in Michigan

By Steve Benen

There are a handful of issues in which President Obama, as part of his 2012 re-election bid, will be able to point to unqualified successes, while pointing to Mitt Romney’s failures at the same time. The rescue of the American auto industry is one of them, and it’s why the president took a victory lap in Michigan yesterday..

Speaking at a General Motors plant in Orion Township, Mich., a plant the president said would likely have shut down without government intervention, Obama said his plan to “retool and restructure” the auto companies was “an investment in American workers.”

“One of the first decisions I made as president was to save the U.S. auto industry from collapse,” Obama said to a standing ovation.

The president recounted the administration’s narrative about how the Orion plant, which produces the Chevrolet Sonic, was set to close before government loans helped the company restructure its debt — a move the White House said saved 1,750 jobs.

“Today, I can stand here and say the investment paid off,” Obama said. “The hundreds of thousands of jobs saved made it worth it … taxpayers are being repaid, and plants like this are churning out groundbreaking fuel-efficient cars like the Chevy Sonic.”

Obama added that some people condemned the rescue policy in 2009. “There were a lot of politicians who said it wasn’t worth the time and wasn’t worth the money…. Well, they should come tell that to the workers here at Orion,” he said. “Because two years ago it looked like this plant was going to have to shut its doors. All these jobs would have been lost. The entire community would have been devastated. And the same was true for communities all across the Midwest. And I refused to let that happen.”

The president didn’t mention Romney by name — at least not yesterday — but I suspect he was on Obama’s mind. It was, after all, the former Massachusetts governor who said we should “let Detroit go bankrupt” and we could “kiss the American automotive industry goodbye” if Obama’s policy moved forward in 2009. Indeed, at the time, Romney called the administration’s plan “tragic” and “a very sad circumstance for this country.” He wrote another piece in which he said Obama’s plan “would make GM the living dead.”

Romney was wrong; Obama was right. A Chrysler exec said over the summer Romney’s thinking reflected someone “smoking illegal material.”

It’s a history that lends itself to videos like this one, released by the DNC over the summer.

Steve Benen is a contributing writer to the Washington Monthly, joining the publication in August, 2008 as chief blogger for the Washington Monthly blog, Political Animal.

Comments

  • c u n d gulag on October 15, 2011 9:51 AM:

    We can make some ugly optics for Mitt either way on this subject:

    If he shows up to campaign events in a foreign car/SUV, we can ask why he hates the American auto industry so much that he opposed saving it, and still drives in a foreign-made car - even after Obama saved the industry?
    Why do you hate America, Mitt?

    And if he shows up in a car made in the US, we can ask, why, if he hated the American auto indeustry so much that he opposed saving it, how does he now have the cojones to drive in a car made by a company Obama saved, but that he'd have been glad to be allowed to go bankrupt?

    Win/win for us!
    Lose/lose for Mitt.

  • Danp on October 15, 2011 9:53 AM:

    Obama could have mentioned Romney, but were there any Republicans that favored a bailout? More interesting though is what would have happened if it hadn't been saved. In a free market economy, you would expect some entrepeneurs to fill the gap created by the fail of GM, Chrysler and Ford. But our tax code and its preferential treatment for capital gains would have discouraged it. The more likely outcome would have been that foreign automakers would have filled the gap with more foreign made parts.

  • sublime33 on October 15, 2011 10:38 AM:

    I wish Obama would use "Romney" instead of "some people". There are millions of low information voters out there who can't make the connection.

  • Anon on October 15, 2011 11:37 AM:

    How about "Some people, like Gov. Romney..."

  • Pat on October 15, 2011 1:47 PM:

    Christ, what a hack you are Benen. It's terrible to bail out the banks but okey dokey to bail out GM. Oh, and looking at the stock price trend, I wouldn't be so quick to take a "victory lap." But you keep flacking for Obama, there Stevie. Your team, right or wrong. Just like on Red State, just liberal.

  • Robert on October 15, 2011 2:05 PM:

    @Pat

    Your guy, W, bailed out the banks and mostly f... it up.

    Our guy, President Obama, saved the auto industry and mostly did it correctly.

    Ouccupy Wall Street isn't in Detroit Pat and there's a good reason for that.

    So "Buddha" Pat, you can't think straight and you will be stuck pimping for Romney or some less attractive corporate whore.

  • Cha on October 15, 2011 5:16 PM:

    You're the freaking Hack, Pat.

    You can't handle the facts..poor little hack. boo hoo.

  • James E. Powell on October 15, 2011 5:54 PM:

    A video 'released by the DNC over the summer' will have a hard time competing with 24/7 FOX, daily doses of right-wing radio, and a deluge of Koch-sponsored ads.

    If the DNC wants to get a message out, they ought to run that ad during sports programming.

  • uncle tupelo on October 16, 2011 5:23 PM:

    You have to be kidding me. There was no chance GM would have been shut down or gone out of business in a bankruptcy. What would have happened is that the stockholders would have been wiped out (which they were), the bondholders would have taken a serious hit (which they did), and the company would have been able to renegotiate with its creditors and other stakeholders such as the unions (which they weren't allowed to do). They would have emerged leaner, meaner and much more competitive. Since Obama decided to pander to the unions instead, the company remains an uncompetitive basket case, hamstrung by its union contracts. In addition to that, the government is out $20bb plus in bailout $, along with the fact gm will probably never pay federal income taxes again. If this is a success, I'm not sure we can take many more such "successes"

  • Bluffricky on October 16, 2011 5:33 PM:

    Facts? You can't handle the facts.

    Of every 25 Chrysler and GM dealerships closed by the government, 24 of 25 donated to Republican campaigns.

    Chrysler would not have been purchased by Fiat without the government forgiving billions in debt to contractors and sweetening the pot with an additional $4 billion in "investments". How did that "save" the U.S. automobile industry?

    GM used bailout money to relocate an engine plant in Mexico. Jobs went with them.

    The government subsidized the Volt with $7,000 in tax incentives per car. Still couldn't sell any.

    Cash for Clunkers was a massive waste of taxpayer money, and continues to skew the used car market to this day. It did nothing for sales on an annual basis.

    GM used bailout money to pay their debt in order to receive more bailout money. Success? The joke is on U.S. taxpayers.

    Even with the illegal redistribution of stock in GM to favor the unions over premium stockholders--many of them retired GM employees-- the massive amounts of debt forgiven, the highly partisan redistribution of dealerships across the country, and a stock price that virtually guarantees that the U.S. taxpayer will NEVER break even on this sorry affair, the chutzpah of this president calling the bailouts a success is rich.

  • djaymick on October 16, 2011 5:45 PM:

    Here are the facts. Obama bailed out two American automotive companies, GM and Chrysler. Ford opted not to take the money. Americans own 50 million shares of GM stock. ABC News projected in November 2010 that we will lose about $26.4B if and when GM does an IPO, which was projected at a $33/share price. Their shares are currently trading at $24.14 as of two days ago.
    If and when this becomes a election issue, Obama will have to answer this question and the media won't be able to cover for him any longer.

  • 30Moves on October 16, 2011 5:58 PM:

    The US taxpayers are slated to lose 30 Billion with the GM and Chrysler bailouts.

    Hardly a reason for a victory lap.

    It might be for the Auto Worker's Union - since they got put ahead of the bondholders some of whom lost their entire retirement funds.

    Whoopee! Hooray for Obama.

  • LydiaMae on October 16, 2011 6:10 PM:

    The auto bailout was a failure for taxpayers. It was crony capitalism at its apex. We sunk money into a losing proposition and there is some we will never get back. He far from "mostly" did it right. It helped the unions but kicked the investors and taxpayers in the chops.

  • PD Quig on October 16, 2011 6:12 PM:

    Uncle Tupelo got it exactly right. GM is still a basket case, giving away cars with 0% financing and stuffing dealer lots with unsold inventory. Had Big Brother just stayed the hell out of it, it might be closer to fogging a mirror, but as it is it is dead meat.

    Why don't you wait to see the next four quarters' worth of 10-Qs before you get too excited, Doofus.

  • DJS on October 16, 2011 6:41 PM:

    If it was lunchtime and Benen was hungry and proceeded to pay $500 for a ham-and-cheese sandwich, he would proudly claim victory because, after all, his belly is full, isn't it?

  • CebVA on October 16, 2011 6:44 PM:

    Don't count your chickens so fast. The Owebama "rescue" was nothing more than a sop thrown to the unions. It bought more time to delay the final reckoning. By stiffing the bondholders in favor of the unions, Owebama did great harm to investors (and investors include a lot of little guys with retirement plans as well as retirees living off their investments). Fearless leader proved there is no sanctity of law and contract - opting instead for crony capitalism and its kissing cousin: fascism.

    The auto industry will be on its rear again in a few years as the twin cancers of pension obligations and union demands continue to eat away the vital organs. Its the math stupid.

  • Angry jarhead on October 16, 2011 6:45 PM:

    Bailing out both the American atuo industry and the banks was a no win necessity. The outcome of either going down would have made things even worse than they are now. However both industries have to make major changes in the way they do business or they will be right back in the same place at some point. American auto makers have made some decent changes, not the least of which is a better ( more realistic) relationship with the unions and making higher quality cars. I'm afraid the banking industry hasn't changed much. Probably from the lack of accountability that was imposed on them after the melt down. Any president with half a brain would have done the same thing, regardless of party. Obama's problem with this (and it seems to be a common problem) is that he doesn't know how to get the credit he deserves and put the monkey on the right back for problems he didn't create. The GOP has been great at minimizing his achievements and maximizing his mistakes. This would never happen to Bush or Clinton, they knew how to spin the news, Obama and his team are awful at promotion and actually politics.

  • john werneken on October 16, 2011 6:50 PM:

    I'm on both sides on this one. Doing something we could survive the consequences of to put off further disruption was the right thing to do at the time and Obama like Bush before him, both with Congress, did just that. Unfortunately GM and Chrysler have no future nor do their stockholders workers or current and would-be future customers. No rational person would buy one of these cars. No person with any choice at all would chose either company as an employer, as a firm to own stock in, or as a local economic pillar.

    Creating more zombie institutions pursuing stupid social policy goals (like Fannie Mae Freddie Mac the Federal Reserve the Democratic Party as it has become) is NOT in the national interest, it is the national problem. I think 2013 will see the end of this baloney, or I certainly hope that it does.

  • john werneken on October 16, 2011 6:55 PM:

    Loved WaMo's captcha error message:

    incorrect-captcha-sol

  • Plutocrat03 on October 16, 2011 7:20 PM:

    No victory laps yet. Hundreds of millions of tax dollars spent and untold losses to supposedly secure bond and debt holders screwed by the Feds.

    You have two companies who the UAW cannot strike, but the one non-governmentally sponsored one is on the way to a strike. One of the two 'rescued' companies is now owned by a foreign concern.

    GM is bleeding money making a touted car (Volt) which relies on massive federal subsidies and still makes less than 50% of goal.

    Probably should have let Ford take over the shambles of GM and let the remnants of Chrysler get picked up by an investor group.

    Not a victory by a long shot.

  • gc on October 16, 2011 7:21 PM:

    victory lap? are you crazy? you think this plays with the electorate? we know it wiped out every investor. 401k funds lost millions on this deal.we know GM still owes a half billion they will never pay. we know all they saved were over paid union jobs. we know the jobs they saved are temporary because GM will fail again. you dems must be on LSD. what are you thinking? the country hates GM now. you people need to grow up.

  • The Obama Timeline author on October 16, 2011 7:40 PM:

    The Obama bailouts benefited many of the union workers, at the expense of the salaried non-union employees. For example, pensions of non-union employees at the GM spin-off Delphi were slashed—some as much as 70 percent—and their health insurance was eliminated.

    A March 16 Congressional Oversight report estimated that taxpayers will lose about $25 billion from the bailouts. In addition to the direct loss from giving cash to General Motors, the taxpayers are also out as much as $45 billion from a tax break granted the company during its bankruptcy. GM was then granted an additional $14 billion tax break. To get back its $25 billion “investment” in General Motors, the government will have to sell its stock in the company for about $54 per share—more than double the current price.

    In The Atlantic, Megan McArdle has noted that “…GM had about 75,000 hourly workers before the bankruptcy. We could have given each of them a cool $250,000 and still come out well ahead compared to the ultimate cost of the bailout including the tax breaks—and over $100,000 apiece if we just wanted to break even against our losses on the common stock.”

    Obama claims he “saved the U.S. auto industry,” but his Chrysler deal resulted in FIAT SpA owning 53.5 percent of the company—and collecting $1.3 billion in U.S. tax dollars. Chrysler is now an Italian company, thanks to Obama.

    According to Money.CNN.com, “In the year leading up to the Chrysler and General Motors’ bankruptcies, the auto industry lost 400,000 jobs. Since the bailout, about 113,000 of those jobs have been recovered.” Obama claims he “saved hundreds of thousands of jobs”—but most of those 113,000 jobs were created by foreign-owned automakers like Toyota and Nissan in non-union states.

    The electric Chevy Volt is to date the second worst-selling American car in modern history, with sales of only a few thousand vehicles since its introduction in 2010. Obama should be asked to explain why someone would buy a $41,000 Chevy Volt when it is outperformed by a $16,000 Toyota Corolla—and the $25,000 difference would pay for enough $5.00-per-gallon gas to drive more than 150,000 miles. As far as the Chevy Sonic, while it may be a decent, small economy car it is hardly “groundbreaking.” It may get close to 40 miles per gallon—for buyers willing to drive a small, light-weight car with a manual transmission.

  • Paul on October 16, 2011 8:45 PM:

    The 'unqualified success' of 'rescuing' America's auto-industry rings hollow. I guess its a 'victory' in the sense the companies technically exist still. But take a closer look:

    1. GM makes all its money on big phat honking SUV's. That was the profitable part of GM before its bankruptcy. Tiny cars that GM is 'supposed' to be competitive with in its re-invented self are money-losers for CAFE averages just like they were before going belly up. SUV sales tank, GM does too...again.

    2. Chrysler isn't even an American company technically. Its a division of FIAT of all things. Nobody outside of rental fleets even buys their cars. Quick question (no Googling): In the famous Eminem Superbowl ad pitching an 'Imported from Detroit' slogan, what car was actually being pitched? Exactly. Its just like with GM, but Chrysler makes what few profitable gas-guzzlers it peddles in Mexico and Canada.

    3. If you would've taken the union workers at both companies, and divvied up the billions and billions spent both in cash, screwing bondholders, and screwing tax-payers, you'd be able to buy the whole mess off for hundreds of thousands of dollars per employee. That would have been hella easier.

    4. The 'American' car industry from manufacturing POV is foreign owned because they are not stuck in the vortex of mandated union-feeding and politicization. Foreign companies own more plant, make more cars, and employ more 'blue-collar' Americans in good-paying jobs - jobs that actually pay their way making things people want to buy - than the 'domestics.' Number of laid-off Americans in Toyota's corporate history in USA = 0.

    5. Ford Motor Company - if it had the same latitude in deciding where its factories would be and who it could hire in USA as say, Toyota or Honda - would be a world-beating manufacturing company given they do quite well now with lead boots on.

  • Walter Leon on October 16, 2011 9:09 PM:

    Obambi, our deer in the headlights president bailed out the UAW. GM and Chrysler could have filed for bankruptcy and shed the union contracts that so burden them. Tax layers remain in the hole financially on the deal.

    The author of this article ignores the reality of self inflicted problems created by GM and Chrysler, along with greedy unions. The final quote by a Chrysler executive is priceless; he probably is the fool who helped burden the company with lousy cars and contracts.

    Walter

  • JAY on October 16, 2011 9:25 PM:

    GM got $50 billion in exclusive tax credits and the Federal Government stole $50 billion from GM's bond holders. GM benefitted from the tsunami that caused short term damage to their rivals. With all that GM's stock is tanking.
    GM will be bankrupt again within two years and there won't be another bailout.

  • Gary W on October 16, 2011 9:41 PM:

    To 30Moves: I challenge you to find any numbers that support your claim. I know you won't accept the challengs, because there's no evidence for fabricated facts.

  • Paul Revere on October 16, 2011 10:26 PM:

    Maybe for now but the sht is about the hit the fan because many of us have decided not to buy any more GovMotors products in the future. Buy the union label is now a curse.

  • Reality Check on October 16, 2011 10:31 PM:

    Are we forgetting the fact that the tax payers are out about 15 billion? If that's a success then what is a failure?

  • Dougie Fresh on October 16, 2011 10:38 PM:

    Wow @Gary W...you managed to do the impossible; find a comment that doesnt cite a figure and make some kind of inane blanket proofing of the bad position you, Obama, and the rest of the left cannot defend.

    But then again...as the left always does, you make accusations, ignore the REAL FACTS, then pretend those who disagree with you never made a case.

  • Anonymous on October 16, 2011 10:40 PM:

    Regarding the Obama Admin punishing GOP Car Dealers - sorry, no dice:

    http://www.snopes.com/politics/business/chrysler.asp

    The problem is that nearly all car dealers are Republicans so you can't say they are being disproportionately targeted.

    As far as bailing out car companies, it goes beyond just the car companies themselves - it impacts dealers, suppliers and numerous other small businesses that work with or for those companies. Finding the appropriate financing for a bankruptcy would have been very iffy at that point in the economy with the financial industry hanging by a government provided string. All the other car companies (Ford, Toyota, Honda, etc.) all supported bailing out their competitors because of the secondary and tertiary impacts to the industry and its suppliers.

    And, by the way, the Bush Administration deserves some of the credit, as well, for providing at least a band aid to the car companies to get them to the point where the Obama Admin could put together the full rescue package.

    If the Fed Government loses $20 billion on this, it is small change compared to the economic damage that would have been done to the upper Midwest by having GM and Chrysler go under. In ordinary times, I don't think this would have been appropriate.

  • David Kovar on October 16, 2011 10:40 PM:

    How about the narrative that when Obama "saved" the auto industry, he stole from all the widows in America who were holding GM and Chrysler bonds and the nonunion retirees of these companies. Neither of these groups got what they were entitled to in a normal bankruptcy. If the government wouldn't have interfered, the companies would have reorganized ( like just about every airline). But in a normal bankruptcy, the union wouldn't have been first in line.

    This bailout was not a success. The taxpayers aren't going to recover anything close to what we put in and GM and Chrysler haven't solved the structural problems (legacy costs in the union contracts) that would have addressed in a normal bankruptcy.

  • Dougie Fresh on October 16, 2011 10:42 PM:

    PS @Gary W...I agree with Paul Revere. I always 'Look for the union label' then buy something else when I find it.

  • I Think on October 16, 2011 11:23 PM:

    I might buy a Ford, but Never again, one of yours.

  • Geechee on October 16, 2011 11:50 PM:

    How conveniently (but not surprisingly) that you mentioned the Chevy Sonic but made nary a reference to the four-wheeled disaster that Obama has championed from Day One. In case you aren't familiar with it, it's the car that the NYTimes auto writer described as "the Electric Lemon" and which (I believe it was) Consumer Reports subsequently characterized as "a car that doesn't make sense." It only costs $41,000, (which, in this economy, makes about as much sense as Chrysler's stupid "Imported from Detroit" advertising campaign that we taxpayers also paid for) so you can imagine that those babies are flying off the shelves. It only sold 300 units last month (towards the laughable goal of 10,000 units this year), so I guess you might not want to chalk that one up to his "unqualified successes". Moreover, Chrysler is now owned by the Italians, who will be the ones calling the shots as to its future. All the bailout preserved was thousand of union jobs whose dues will go to Obama's election campaign. Surely you do not think the average American doesn't know this.

    BTW, even if domestic vehicles were the only ones available for sale in this country, I would keep continue repairing my reliable, non-union manufactured imports before I'd buy a new domestic car.

    One more thing. Hyndai's sales are up almost 30%, Audi's are up 20%, and BMW's are up 9%, so I wouldn't be too quick to applaud the domestic makes quite yet.

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