In the middle of his State of the Union speech on January 24, President Obama noted the remarkable comeback of the American auto industry: “Today, General Motors is back on top as the world’s number one automaker. Chrysler has grown faster in the U.S. than any major car company. Ford is investing billions in U.S. plants and factories. And together, the entire industry added nearly 160,000 jobs.”
The workers and management of GM led the world’s automakers in sales for 77 years, until 2007. But their inability to compete in the global market eventually caught up with Detroit’s Big Three. Then came the first depression of the 21st century, and demand for new cars disappeared.
When GM desperately needed capital in 2008, no private financial institution was able to take on the risk. That’s when the federal government implemented its last bipartisan economic venture. In December, President George Bush announced the Automotive Industry Financing Program, a government rescue of the entire industry with funds from the newly created TARP program.
After Obama became President, he refused to simply bail out GM, but demanded that they proceed with an orderly bankruptcy in 2009. The federal government then invested about $50 billion in GM stock, controlling over 60% of the firm.
The use of taxpayers’ money to save giant American corporations was not popular. In two December 2008 polls, 51% and 61% opposed giving financial help to the auto giants; by March 2009, 76% were against it. But economists, both Republican and Democratic, were very worried about the long-term effects of a crashing auto industry. Bush wrote in his memoir, “Decision Points”: “My economic advisers had warned me that the immediate bankruptcy of the Big Three could cost more than a million jobs, decrease tax revenues by $150 billion, and set back America's GDP by hundreds of billions of dollars.”
Public worries that government funds would be wasted turned out to be wrong. In November 2011 the Treasury Department sold $13.5 billion of GM shares, and now owns about one-third of the corporation. Unless GM stock reaches $55 per share before the government sells the rest of hits holdings (share price is $25 now), the government will take a loss, but a much smaller one than most people thought.
There continues to be considerable argument about whether the bipartisan bailout was necessary to save GM. But the return of GM to #1 in the world, the renewed success of Chrysler and Ford, and the saving of hundreds of thousands of jobs in a time of massive unemployment are certainly positive developments. So why did Speaker of the House John Boehner sit stony-faced when President Obama mentioned that GM was again #1? Why did Senate and House Republicans not applaud the recovery of one of our largest manufacturers and the recent gain in automotive jobs?
Mitt Romney offered one clue in the Republican debate on November 9, when he said, “They gave General Motors to the UAW.” He has repeated this line in subsequent debates.
In the first place, that’s a lie. A trust which funds the health care of retired UAW workers bought 17.5% of GM stock at the same time as the federal government bought 60%. The Canadian government bought 12.5%, but nobody would say that we gave GM to the Canadians. Rather than get some special benefits for participating in saving GM, the UAW agreed not to go on strike over wages in contract talks.
The truth, however, is not important to Romney. He and other Republican politicians have been doing everything in their power to destroy unions. Saving union jobs is worse than saving no jobs.
Another reason that Republican politicians disdain the auto industry bailout is that they appear to oppose using taxpayers’ money to interfere in the free market. But the presidential candidates have fallen all over themselves promoting ways to use taxpayers’ money to help American manufacturers. Romney, Gingrich, and Santorum all advocate setting the corporate tax rate lower than the tax rate for individuals, which means that we taxpayers would be subsidizing the corporate profits of the wealthy. Santorum wants to eliminate all corporate taxes for manufacturing companies, so that we would pay their entire share of funding our public obligations.
Their version of the free market would be no freer than the current version, just tilted in a different way, toward wealthy investors, the 1%.
I suspect the real reason that Boehner couldn’t bring himself to clap for GM, or for 22 months of job creation, or for the falling unemployment rate, is that these achievements might help Obama. That would go against the most important Republican goal for 2012, more important than helping unemployed Americans survive, more important than creating new jobs now – make Obama a one-term President.
The level of official Republican hatred for our President was on display this Sunday, when Republican National Committee chairman Reince Priebus compared President Obama to the man responsible for crashing a cruise ship on the Italian coast, abandoning it and his passengers: “we’re going to talk about our own little Captain Schettino, which is President Obama, who’s abandoning the ship here in the United States.”
Calling our President an incompetent coward, a traitor to his country, is the official Republican Party position. In a land of 139 million jobs, Republican politicians care about only one – his.
published in the Jacksonville Journal-Courier, January 31, 2012