GM Bailout Saved Millions of Jobs and Republicans Hate it
... is alive and well, thanks to the Democrats and President Obama. What industry, you ask? The American automobile industry:
Seventeen months after veering into bankruptcy, General Motors has become the unlikely darling of Wall Street, poised to complete an initial public offering Thursday that will fetch more than $20 billion and rank as one of the largest in history. [...]
The federal government seized the opportunity to recoup part of the bailout money it injected into the company in the spring of 2009. The Treasury agreed to sell at least $11.8 billion worth of stock, lowering its 61 percent stake in what has been disparagingly dubbed "Government Motors" to just under 37 percent, a senior administration official said. If underwriters take their over allotments, the Treasury will earn $13.6 billion and its stake will shrink to 33.3 percent. [...]
The administration noted Wednesday that the U.S. auto industry has added 77,300 jobs since GM and Chrysler emerged from bankruptcy, that vehicle exports are up more than 40 percent from 2009, and that the nation's Big Three car companies posted operating profits for the first three quarters of this year.
"Certainly this is a very attractive valuation compared to what most of us expected a year and a half ago," Rattner said. "When the dust settles, Treasury will be modestly out of pocket on GM, but in terms of the disaster averted, I think it was a very cheap form of stimulus. It helped the economy when the economy appeared to be in total free fall."
The investment in GM likely saved millions of jobs directly and indirectly, that would have been lost if the US government had allowed GM to die:
Should one or more of the Detroit Three fail in 2009, initially all U.S. automotive operations would be affected, including international producers and suppliers. In this scenario, the remaining Detroit Three and international producers recover in 2010. The first year total employment impact would be a loss of nearly 2.5 million jobs in the U.S. economy—comprised of 239,341 jobs at the Detroit Three, 795,371 indirect/supplier jobs and over 1.4 million spin-off (expenditure-induced) jobs.
Those millions of lost jobs would have been an significant number even in an economy as large as ours. The economic crisis we still face today would have been made much, much worse had the Federal Government led by Obama and the Democrats in Congress failed to act, and act promptly.
Amid the depth of fear and despair of early 2009, "there was no private capital available," Mr. Wilson says.
If General Motors had failed, its suppliers would have failed, and the failure of the suppliers could have taken Ford down, too, he says.
Yet, at the time Obama was planning and then implementing a government funded rescue of GM (that we now know has succeeded beyond all expectations), major Republican politicians and prominent conservatives were adamantly opposed to the deal which saved General Motors. Let me remind you the nasty things Republicans were saying about the rescue of GM over the the last two years ago:
Sen. Richard Shelby (R-Ala.):
"The financial straits that the Big Three find themselves is not the product of our current economic downturn, but instead is the legacy of the uncompetitive structure of its manufacturing and labor force." ... "I do not support the use of U.S. taxpayer dollars to reward the mismanagement of Detroit-based auto manufacturers in such a way that allows them to continue and compound their ongoing mistakes." [Nov. 2008]
[US automobile manufacturers made bad decisions that] "over the years that have led to this situation, but we have gone as far as we can with the authority Congress has given in order to help industries." [Nov. 2008]
“Just giving them $25 billion doesn’t change anything. It just puts off for six months or so the day of reckoning.” [Nov. 2008]
If you start [helping US auto manufacturers] where do you stop?”...“There’s a line of companies of industries waiting at Treasury just to see if they can get their hands on those $700 billion.” [Nov. 2008]
[The Obama] administration has decided they know better than our courts and our free market process how to deal with these companies….This is a major power grab.” [March 30, 2009]
”This is not the right direction: taxpayer money down the drain, and Washington politicians trying to run auto companies. The sooner the politicians get out of the way, the sooner auto jobs and taxpayer dollars will be secure.” [March 30, 2009]
“I know that I don’t want Speaker Pelosi and Harry Reid designing the car that I drive, and I don’t think any New Yorker — or any American — does, either.” ... “Washington, the president, Congress, none ... has any business running that car company. They’ll run it into the ground.”
[June 2009] Talk show host Rush Limbaugh:
“Nobody wants to support an Obama company.” [June 2009]
"Every dollar spent with GM is a dollar spent against free enterprise." [June 2009]
"No, I don’t think we ever should have bailed out Chrysler and General Motors. We should have let them go into bankruptcy, emerge and become viable corporations again. It was all about the unions. The unions didn’t want to have their very generous contracts renegotiated so we put $80 billion into both General Motors and Chrysler, and anybody believes that Chrysler is going to survive, I’d like to meet them." [Nov. 2009]
Quotes by other Republicans who publicly opposed the GM rescue, including Presumptive Speaker of the House, John Boehner, can be found here at this link.
Needless to say, these Republicans who thought to destroy our American automobile companies by letting them die without any help from the Federal Government, have now changed their tune and are more than willing to take credit for GM's success - now:
The same GOP lawmakers who opposed the bailout that saved GM were on hand to cheer when the automaker said it would rehire 483 laid-off workers at the Spring Hill, Tenn., plant, the daily auto website Jalopnik reports. [...]
U.S. Sen. Bob Corker —
“At the end of the day we all have to feel good about what we did,” said Corker, who did attempt to negotiate the failed 2008 aid package. “I contributed to strengthening the auto industry in this country.”
Like hell he did. Corker's own words in 2008 belie his false claim of being one of the heroes who saved GM's bacon. Yet, I suspect that Corker's lies will get more media distribution than the truth that the Obama administration had to fight Republican opposition and criticism tooth and nail to save America's automobile industry for a catastrophic collapse.
I hope I'm wrong.