Friday, July 30, 2010

The President's speech on the Auto Bailout: July 30, 2010 (VIDEO)

Steve Pearlstein, in a piece blasting the Chamber of Commerce over their opposition to the GM bailout:

The irony is that this set of bold government initiatives that saved the country from economic catastrophe remain as unpopular today as when they were introduced.

Perhaps none was more controversial than the decision to rescue Chrysler and General Motors, using $86 billion in taxpayer funds and an expedited bankruptcy process that wiped out shareholders, brought in new executives and directors, forced creditors to take a financial haircut, closed dealerships and factories and imposed painful cuts in wages and benefits on unionized workers. It was an extraordinary and heavy-handed government intervention into the market economy that left the Treasury owning a majority of both companies. As one participant recalls, public opinion was divided among those who believed that the companies should have been allowed to die, those who believed they would never survive bankruptcy and those who believed the government would inevitably screw things up. Among the most vocal skeptics: the Chamber's Donohue.

A year later, the auto bailout is an unqualified success. The government used its leverage to force the companies to make the painful changes they should have made years before, and then backed off and let the companies run themselves without any noticeable interference.

The results, which President Obama will tout on a visit to Michigan on Friday: For the first time since 2004, GM and Chrysler, along with Ford, all reported operating profits in their U.S. businesses last quarter. The domestic auto industry added 55,000 jobs last year, ending a decade-long string of declines. Auto sector exports are up 57 percent so far this year and, thanks largely to new government regulations, the industry is moving quickly to introduce more fuel-efficient vehicles. Most surprising of all, GM and Chrysler have already repaid more than $8 billion in government loans, while GM is preparing for an initial stock offering later this year that would allow the government to recoup most, if not all, of its investment.

Greg Sargent, also of the Washington Post:

President Obama just delivered a rousing speech at an auto plant in Detroit, and it gave us a glimpse of how the fall elections could go for Dems if things start trending their way.

The tanking economy has left the public highly skeptical of Obama's larger goal of restoring faith in government as an effective agent for reform and a necessary corrective to the excesses of free enterprise. Indeed, a CNN poll out today finds that a whopping 61% thinks the government is doing too much that should be left to private individuals and businesses.

But today, Obama gets to claim that on one front, at least, he was absolutely right about the need for government intervention in the economy -- and that his critics were absolutely wrong. Last year, Republicans derided Obama's auto industry bailout as a dire threat to capitalism as we know it, but today, the auto industry is once again turning a profit and adding jobs in key communities.

And finally, Ezra Klein (what a coincidence!) of the Washington Post:

President Obama's remarks at various Michigan automobile plants today get to the heart of the task facing the administration as we enter the 2010 election. The White House doesn't lack for accomplishments. What it lacks is popular accomplishments.

The auto bailout is a perfect example. By and large, it worked. The automobile sector stabilized. GM, Chrysler and Ford are all posting profits. Millions of workers who would've gone down with the car companies still have their jobs. America retains an automotive industry that's both competitive in developing markets like China and starting to scrap with the Japanese and German automakers in the high-tech, green-car market.

But the policy wasn't popular. Few liked it. Some thought it socialism. Some thought it cronyism. Which presents, of course, a difficulty for the White House: Saving millions of jobs and the American auto industry at an ultimately very small cost to the taxpayer is the sort of major policy accomplishment you should be able to run for reelection on. But what if people don't really understand that you did it, or that it worked, or that it didn't cost them much?

Obama doesn't have to invent accomplishments for Democrats to tout in the 2010 election. Rather, he has to convince the public to also consider those policies accomplishments. You can read his Chrysler speech, which gives this a shot, here.  (See above)