GM’s return may aid Obama in Midwest
Associated Press
WASHINGTON
Playing defense on the economy, President Barack Obama may have found a potent “I told you so” argument in the rescue of General Motors. But will he get any credit for it?
Obama visits a Chrysler plant in Kokomo, Ind., today with Vice President Joe Biden, reprising similar trips he made last summer to GM, Ford and Chrysler plants in Michigan and Illinois. His stewardship of the auto bailout — begun under President George W. Bush in the waning days of his term — could weigh heavily on the minds of voters throughout the industrial Midwest. Obama picked up key electoral votes there in 2008 but recently watched states such as Michigan and Ohio elect Republican governors and members of Congress.
General Motors launched one of the largest initial public offerings in U.S. history last week, more than a year after it was pushed into bankruptcy by the Obama administration at a taxpayer cost of about $50 billion. The rescue of GM and Chrysler was roundly criticized by many Republicans and tea-party candidates who said the government should not have intervened to save the carmakers.
“Does anyone really believe that politicians and bureaucrats in Washington can successfully steer a multinational corporation to economic viability?” asked House Republican Leader John Boehner of Ohio when GM filed for bankruptcy in June 2009.
GM might prove Boehner wrong, giving Obama a stronger hand in the debate over how the government handled the auto meltdown. The bailout still remains unpopular with many Americans — and the futures of GM and Chrysler are far from certain — but GM’s return to the New York Stock Exchange and an expected IPO from Chrysler in 2011 could give Democrats a vivid example of economic recovery.
“The critics said this would never work. But the critics were wrong,” said Austan Goolsbee, Obama’s top economist, in a video released last week by the White House. Ron Bloom, one of the leaders of the auto task force, said in an interview that the rescue averted “a swath of economic devastation that would have remained as a scar on our nation for a long, long time if the president had not done what he did.”
Some of the tensions over the bailouts still simmer. Many car dealers protested efforts by GM and Chrysler to shutter dealerships and accused the auto task force of meddling in the closures, a charge the Treasury Department denies. Some conservatives saw it as a sellout to the United Auto Workers union, and bondholders and shareholders complained that the bankruptcy wiped out most of their investments.
No one can declare victory on the auto bailout yet. GM still faces massive unfunded pension obligations, and its European arm is losing money. Chrysler, which was placed under the control of Italian automaker Fiat, has narrowed its losses but must prove it can produce winning vehicles before its anticipated IPO in 2011.