Political Animal


January 19, 2012 1:30 PM Auto-industry rescue paying dividends

By Steve Benen

One of the more clear-cut triumphs of President Obama’s first three years has been the success of his auto-industry rescue. Republicans predicted it would fail miserably. They were wrong and the White House was right.

Bloomberg reported this week that auto plants are operating at a capacity unseen in a long while, adding shifts and creating jobs. The Detroit Free Press reported today that GM has reclaimed the crown of world’s largest automaker. And perhaps best of all, Michigan’s unemployment rate has also dropped to its lowest levels since September 2008, buoyed by the auto industry.

It led Jonathan Cohn to report today that while Michigan is still struggling to get on its feet, “recovery clearly seems to be underway” in the state, “most likely because the auto industry is growing again.”

President Obama and his allies will claim credit for this resurgence. They should — and not just for the obvious reasons.

The decision to rescue the Chrysler and General Motors in early 2009 was not popular: The only way to save the industry was to put up federal dollars, something presumptive Republican nominee Mitt Romney now says he opposed. And that was not what the public, already suffering from “bailout fatigue,” wanted to hear. But the rescue also provoked ambivalence in Michigan. The administration was serious about using the structured bankruptcy to reorganize the companies into leaner, more competitive firms. That meant layoffs and, over the long-term, significantly lower pay for unionized auto workers.

A lot can still go wrong, with the industry and with the economy…. But positive job growth in Michigan is clearly good news — not just for Obama and his allies but also, and more important, for the people of the Midwest.

Remember, dozens of prominent Republican officials, including most of the GOP lawmakers in the House and Senate, as well as the party’s leading presidential candidates, were absolutely certain the rescue would be a disaster. In the midst of an economic crisis, Republicans saw the American automotive industry — one of the central backbones of the nation’s manufacturing sector — teetering on the brink of collapse. The GOP was prepared to simply let it fail, forcing hundreds of thousands of workers into unemployment during an already-severe jobs crisis. Mitt Romney’s infamous phrase was, “Let Detroit go bankrupt.”

What’s more, Republicans were equally certain that Obama’s rescue plan was hopeless. It was a foregone conclusion, they said, since government intervention in the marketplace is always a disaster. Romney called the administration’s plan “tragic” at the time.

Except they were wrong — about literally every aspect of the debate.

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.


Post a comment
  • stormskies on January 19, 2012 1:38 PM:

    Yep, and in the latest poll from Michigan ROMNEY LEADS OBAMA BY SEVEN POINTS .........

    and there you have it: the abject stupidity of a vast amount of our fellow citizens ..........

  • jpeckjr on January 19, 2012 1:52 PM:

    Romney favored bankruptcy because it is the Bain Capital business model -- let 'em go under, get rich doing it. It's the only way he knows how to solve a business problem.

  • MI resident on January 19, 2012 1:52 PM:

    Michigan voters will never be known for their intelligence.

    In the meantime our governor's state of the state address last night included the job growth numbers. The humble one and his fellow Republicans took credit for it.

  • Ron Byers on January 19, 2012 2:00 PM:

    Isn't now Romney sayinig that Obama adopted many aspects of the Romney approach to dealing with Detroit?

  • beep52 on January 19, 2012 2:00 PM:

    If memory serves, quite a few conservatives also saw a Detroit bankruptcy as their best chance to get rid of unions -- a theme they took up with some enthusiasm after the 2010 elections.

  • jonas on January 19, 2012 2:05 PM:

    @stormskies: pretty depressing, isn't it? But keep in mind that 1. Romney's a native son -- his dad was a much loved former governor of Michigan. and 2. Michigan's a labor state, but not one that has a particularly distinguished record in race relations. Detroit and Ann Arbor are Democratic strongholds, but the rest of the place is real redneck country.

  • sick-n-effn-tired. on January 19, 2012 2:06 PM:

    And if they were smart....(in our dreams)
    There would be a region ad with the video of Romney saying that... Mitt wanted to do a "Bain on Detroit"
    He'll try to do a "Bain" on the country

  • Ladyhawke on January 19, 2012 2:06 PM:

    President Obama is making government cool again and this is a horrifying thought for the GOP. The last thing they want is for the American people to see that there is such a thing as smart and efficient government that can have a positive impact on their lives.

  • Rod Hoffman on January 19, 2012 2:06 PM:

    I went back and read "Let Detroit Go Bankrupt". In it, Romney prescribes exactly the kind of managed bankruptcy that the Administration put in place. But, of course, Romney blasted his plan that the Administation was implementing.

    Sort of like Romneycare/Obamacare.

    The guy just won't take 'yes' for an answer.

  • sick-n-effn-tired. on January 19, 2012 2:08 PM:

  • T2 on January 19, 2012 2:32 PM:

    what "debate" haven't they been wrong on. I can't recall such a string of Very Bad decisions and policies foisted on the American Public by one Party. We've had 12 years of abysmal GOP mistakes and misjudgments, coming on the heels of 8 years of growth and prosperity under Clinton. The Republican Party is, seriously, a failure of major proportions. And now they want us to elect Newt Gingrich president.

  • tomb on January 19, 2012 2:47 PM:

    I suspect that Republicans actually feared the auto industry bailout would WORK. It would have made it a lot easier to criticize Obama for not getting the economy back on track.

  • jjm on January 19, 2012 3:40 PM:

    Well, I sure hope Obama takes note of the wild success of California Governor Jerry Brown's State of the State speech yesterday: the optimism, the laughing at naysayers (especially on big projects like high speed rail) and his underscoring that ONLY imagination, thinking and creativity made us great in the past and can do so again.

    A very stirring speech, and a model for Obama. (Of course Brown was addressing a Democratic majority legislature, but it has not been known for innovation or creative problem solving up to now.) Read it at gov.ca.gov

  • MichMan on January 19, 2012 8:03 PM:

    I just realized why the Mittster wanted to block the bailouts: So he could buy up the assets for a pittance, lay everyone off, cash out and buy the State of Michigan as a summer estate! Clever!

  • Cha on January 19, 2012 8:33 PM:

    Thanks Steve! Freaking Mitt the Liar's worst Nightmare..couldn't happen to a more deserving sociopath.

    DNC's "Bain vs Detroit" http://www.youtube.com/watch?v=pfNUlbgsmdo

  • Peter G on January 20, 2012 9:30 AM:

    I find it interesting that in the midst of discussion about how Romney made his millions and the function of companies like Bain Capital in the economic system that no one has really pointed out what Romney meant by suggesting that the domestic auto manufacturers be allowed to go broke. What he clearly wanted was for them to enter Chapter 11 so a vulture capital firm could do to them what was done to so many other companies: Strip out the assets for their shareholders and leave the carcass behind. Now we see the benefits of a less Darwinian strategy in saving companies and jobs and I'd be throwing this in Romney's face at every opportunity.

  • jhill on January 20, 2012 10:25 AM:

    It gets worse.

    Now the Governor of Michigan, Rick Snyder, is taking credit for the upturn in the Michigan economy, driven completely by Obama saving the auto industry, while never actually saying that's why. And the rubes are buying his version, that it's his leadership that did it.

  • Ed on February 03, 2012 3:41 PM:

    Unfortunately we have become such a divided nation many have chosen a side and defend it regardless. I am a firm believer in the truth and circumventing it does not make the truth go away. We bailed out the auto industry, primarily GM and Chrysler. That is the truth. The auto industry seems to be doing well, but we can not always trust what we are being told, nor should we. The unemployment rate went down today, but that does not take into consideration that approximately 5 million people (that we know of, probably much higher) were not counted because they did not look for work in the past four weeks. With that, many of these people did seek work prior to the four weeks. The unfortunate truth is that they are still unemployed and not collecting unemployment and should have been counted. Getting back to the auto industry we are seeing the same manipulation of information. We were told GM paid back their dept when in fact all they did was transfer TARP money from one account to another and paid off their dept using tax payer money. Of course for those who have chosen a side and stand firm, that behavior is probably acceptable. As for Chrysler, they just took money from one source at a lower rate and paid off the government. Which to me is a much better deal, but unfortunately they still owe the money. Most of the aforementioned was done to get the government of their back. Hard to do business I guess when you got someone watching you all the time. Are they out of the woods? I think it is a little too early to claim victory as they and the mortgage industry have been propped up with a significant amount of money, and we the tax payers have to pay back all the money spent by the last and current administration. I just wish people would get back to telling the truth and not padding things to make everything look good. Am I saying we should not have bailed them out? It�s a tough call, but at the time I believe someone would have bought them out. I can honestly say that I don�t believe I would have, and I could have been and probably would have been wrong.