President Obama stopped by the Washington Auto Show the other day, and seemed quite pleased to declare, "The U.S. auto industry is back." The president added, "[I]t's good to remember that the fact that there were some folks who were willing to let this industry die."
It's hard to blame Obama for boasting and needling his critics. When he launched an ambitious rescue of the auto industry in 2009, the president was taking a major gamble -- not only with the backbone of American manufacturing, but with his presidency and its ability to use the power of government to repair a private industry facing collapse.
That gamble now appears to have paid off beautifully. Andrew Leonard takes a look today at where things stand, both for the American auto industry and the politics surrounding the debate.
Dueling pundits, start your engines: The auto industry kicked off 2012 with a turbo-powered roar, and Democrats won't wait long to make hay out of the impressive numbers. The question of the day: How will the GOP respond to one of the most successful displays of forceful government intervention in the economy the U.S. has witnessed in decades?
The numbers are hard to argue with: After the major automakers released their January sales figures, Autodata Corp. estimated cars raced out of lots at an annualized sales rate of 14.18 million vehicles for 2012. That's the best month of sales -- excluding August 2009′s Cash-for-Clunkers -- since April 2008.
The good news is starting to pile up: Chrysler has posted its first profit in 15 years; GM is building new American facilities; and plants are operating at a capacity unseen in a long while.
The Wall Street Journal reported today, "The auto industry hasn't just turned the corner. It's starting to accelerate."
Had it not been for federal intervention and government action, these heartening headlines would have been impossible.
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, but 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. Consider these predictions made at the time:
Rep. John Boehner (R-OH): "Does anyone really believe that politicians and bureaucrats in Washington can successfully steer a multi-national corporation to economic viability?" [6/1/09]
Sen. Richard Shelby (R-AL): "It's basically going to be a government-owned, government-run company.... It's the road toward socialism." [5/29/09]
RNC Chairman Michael Steele: "No matter how much the President spins GM's bankruptcy as good for the economy, it is nothing more than another government grab of a private company and another handout to the union cronies who helped bankroll his presidential campaign." [6/1/2009]
Sen. Jim DeMint (R-SC): "Now the government has forced taxpayers to buy these failing companies without any plausible plan for profitability. Does anyone think the same government that plans to double the national debt in five years will turn GM around in the same time?" [6/2/09]
Rep. Tom Price (R-GA): "Unfortunately, this is just another sad chapter in President Obama's eager campaign to interject his administration in the private sector's business dealings." [6/2/09]
Rep. Lamar Smith (R-TX): The auto company rescues "have been the leading edge of the Obama administration's war on capitalism." [7/22/09]
Rep. Trent Franks (R-AZ): When government gets involved in a company, "the disaster that follows is predictable." [7/22/09]
On this, they were wrong -- about literally every aspect of the debate -- and Obama was right.
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The rebirth of the American auto industry is one of the greater success stories this country has ever seen. The decision to give strategic amounts of aid to an industry on the brink of disappearing ended up being a smart investment that saved literally millions of jobs. And Obama gets zero credit for it; not from the media, and certainly not from Mitt Romney. Romney is supposedly yhr investment whiz, yet he has repeatedly proclaimed that saving GM and Chrysler was a bad idea and a poor investment. Now we know how half of Mitt's Bain investments wen bust and cost 1 million jobs. http://www.sunstateactivist.org
The GM success story is successful because GM its self wanted to be successful. Imagine if Wall Street and the banks decided to hand out the trillions they are sitting on to the people they scammed.
GM could easily have Bained the government by accepting the loan, pay out their board, and file for bankruptcy all over again.
I'm not sure I follow you, Drew. Are you saying that because, in some hypothetical world that didn't happen, GM might have scammed the government out of the money, therefore this isn't a success that Obama can take credit for?
Thought that he was saying that it worked because GM didn't have the lousy ethics of Bain, that it was a company that intended to do business and make things, not just make money. I don't think this poster was really saying Obama couldn't get credit. After all, Obama would not have tried to save the company (which was really dragged down a lot by their financial arm, GMAC) if he thought it would result in a Bain style down-the-drain for the money.
The auto bailout was successful because there was accountability attached to it.
Before receiving the bailout money, each of the car industry were required to submit their plan for the restructuring. The administration also pushed for government oversight for the bailout to make sure that those money was being used wisely. The bill includes such thing like the companies were not to own any private jet or such, and it also require that the taxpayer money be returned first before any other creditors.
The Obama administration also attached the clean energy requirement to the bailout that pushed the auto industry to step on the gas with their manufacturing of the clean energy car that makes them so much more competitive now (you can actually find a 30MPG Chrysler now).
The bank bailout was a disaster because it was a blank check. The Republican in the Senate stripped all the clause that would have regulate the use of the money because they believed that those bankers knew best on how to "utilize" the bailout money. And they really do....just ask Romney....
Let's see. After giving foreign auto manufacturers everything they wanted, including forcing the locations to be union free, I wonder why Boehner (Honda), Shelby (Honda and Mercedes), and Demint (BMW) would be complaining?
Am I wrong that they also paid back the "bailout money"?
Yes. They also paid back the government or are in the process of paying off. This was good spending all around.
Not exactly true. Simple google search will prove that.
Much of the money in the auto industry rescue plan was given in exchange for stock, shares still held by the US Treasury as well as the governments of Canada and of Ontario. I think Washington has sold some of its shares - at a nice profit to taxpayers, thank you - and plans to sell the rest over the coming few years so as to avoid any kind of market disruption resulting from a single seller offering millions of shares at once.
Most of the direct loans have been repaid, and the Treasury - meaning all of us - made a nice profit on the loans, as well.
Isn't it remarkable how many times Mr. Obama has been willing to risk his presidency in order to do what was right for the country? The auto industry package, health care, going after bin Laden, rescuing the woman in Somalia - and how he's been correct every time!
Retort from the clown car. . . but, but . . . look at Ford. They didn't need no stinkin' bailout. Proves government intervention didn't do a thing.
Yah. I'll believe 25 clowns tumbling about in a VW bug when hell freezes over.
And they would be technically correct, yet factually wrong. Ford didn't need a bailout because Ford had already snuck in and received a couple billion in loan guarantees in the 6-10 months prior. Really, what ultimately prevented Ford from going down the same road was simply a fortunate matter of timing (not a criticism of Ford)
Submitted twice by mistake...
Sorry, Jeanne-Marie, that is just plain wrong. Ford's survival does not prove that the bailouts were unnecessary; quite the contrary.
Ford was effectivley bankrupt in 2006. They borrowed 12 billion dollars back in then, when credit was available. GM and Chrysler were in better shape. When the credit crisis hit in 2008, GM and Chrysler could not borrow money at all. There was none to borrow. Meanwhile, Ford was sitting on a mound of cash. Because they hit the wall before the crisis hit, they were ok.
Still Ford publically supported the bailouts, as did Toyota and other players. I think Honda did too. (BMW took bailout money, but people forget that little pearl). Had GM gone under, their suppliers who are also the suppliers of Ford, Honda, Nissan, etc would have gone under as well, stopping all automotive manufacturing in the US, and probably Europe, too (who do you think makes those automatic transmissions over there?)
The government bailout saved not only the US auto industry, but probably a manufacturing depression as severe as the banking collapse.
exactly. they were already in bad shape before the others and got loans prior to the others.
Ford's CEO lobbied for the bailout bill, as well as the Cash for Clunkers program. In December of 2009 he also asked Congress for a $9 billion credit line, as a safeguard against future worsening conditions. Ford actually received a $5.9 billion low-cost government loan, in 2009, so that it could re-tool its manufacturing plants, in order to produce more fuel-efficient cars (and thus become more competitive with foreign manufacturers).
She was being sarcastic. The 'clown car' thing was the tip-off.
Republican party decisions are being made from a standpoint of prejudice and emotion instead of considering cold hard facts.
That kind of reasoning causes you to choose the more popular but less intelligent option every time.
Bush had government intervention too!
Remember the "Cash for Gas Pigs" program he and Cheney masterminded?
It let businesses take a full deduction for vehicles, but ONLY for gas guzzlers.
Remember the surge in Hummers on the road?
I wonder how much $$$$ GM put into expanding the Hummer line, based on that Bush intervention? Money that was ultimately a waste, and effort that could have gone into designs of fuel efficient models people would soon want.
Ok, let's see... There were three men dying and two asked for help but the third decided to handle his own fate. The two that asked for help bounced back and prospered. The third, all of his own accord, bounced back as well. So because of the evidence of the third man's self sufficiency, the life sustaining help that the other two received doesn't count? Really?
One of the men gets sick, first, and then, the pharma plant burns down.....there is no medicine for the second two!
The governement supplies the medicine to the two others, and guarantees that the first, if he needs it, can get some medicine too, in the future....
It remains to be seen if Ford will be able to pay off the massive debt it took on in 2006..........
Where would Ford have been if all the down-the-line suppliers of parts to the whole industry went down, as they clearly would have? Obama didn't just save GM and Chrysler he saved thousands of jobs in the supply chain to the manufacturers.
Compare that policy with Mitt Romney's when speaking of the housing market:
"We just need to let it bottom out"
Mitt probably invested in the Japanese autoindustry when Detroit was going belly up.
I can almost hear the conversation,"To hell with American industry, there is money to be made here, Buy Japanese Auto Stocks"
That's why they cal lit "Vulture Capitalism"
That is Mitt Romenys vision for Americas future.
The blame shifters would have you believe that what they meant to say was that it is not the American way to have government pick winner s and losers. In the end it was all about defeating Obama from day one of his administration. I have never seen a more anti-American party than the Republican party
They do SUCK dont they....
Its good that Obama had the courage to approve of the endeavor before Bain Capitol could get it MITTS on a floundering GM and Chrysler
Steve, as you said previously, and something that should be the theme of Obama's re-election campaign, "Never in the course of human events have so many been so wrong, so frequently, and so loudly, about so many issues."
I'm proud that the Big 3 are alive and well. I think one of the things that didn't get enough attention when GM and Chrysler were loaned the money is that the Japanese government subsidizes their auto manufacturers. Our auto companies were never on an even playing field. All we heard from the right wing during the debate was "Let them die." That would've further supported the Japanese economy since more people would've been buying foreign cars made in the south. I would've switched to Ford, myself. However, it looks like the restructuring has worked out very well! Thank you President Obama!
The reason that these twits were so sure that bailing out the automotive companies was the wrong thing to do was that they knew that if they tried to do it, it would have been an absolute failure. It was just projection of their own incompetence. They aren't into any kind of business that actually produces anything, but rather their businesses push money around. They are no different than those guys playing shell and pea games at county fairs, just on a much larger scale.
Sometimes big ideas just work. Most fail because of the intent of the players involved. This is why the Bush bailouts ONLY WORKED FOR WALL STREET. They hedged against their losses and paid themselves handsomely, and then absorbed smaller competition (something they weren't supposed to do with this money, but did it anyway) to create an even greater monopoly amongst themselves. President Obama and the auto industry WANTED to work to succeed & their actions saved an entire industry on a global scale. The Repugnant Party CANNOT take that success away , no matter what they say.
I REALLY wonder, if they had been in power, if the Repubs would have REALLY let GM and Chrysler, and all the ancillary business that depends on them, go down the tubes... Curious this irrational hatred of Obama that makes them oppose their best interests.
So when do all the head auto industry honchos show up en mass at the whitehouse and give their official thanks to the president. Everything I needed to know I learned in kindergarten i.e. THANK YOU!
The auto industry rescue was the greatest accomplishment by Obama to date. Only someone who is not a patriot would criticize the president's actions. This country was built on autos and the rescue keeps our country No. 1 in the auto industry in the world.
I praise President Obama for his wise bailout: but, let's not forget the American union workers building those cars and the sacrifices they made.
I hope that all those guys working for the automakers, especially Chrysler and GM will remember who they owe for their jobs and vote for Obama in the fall. Obama should make a commercial standing outside one of the GM plants at shift change, shaking hands with the guys and gals coming and going off shift. The caption would be NOT ALLOWED TO FAIL! OBAMA HAS YOUR BACK!
I pray that come November America remembers these comments and the people who made them,however because there is the strong possibility that that may not happen I hope Ms. Maddow does us all a favor and not only repost them on this website but air them every other day or so on her television program.
cutting of their noses to continue to spite Obama... Do these people actually believe even 1/2 of the stuff they put in their spins? They all seem to drink the same Kool Aid.