General Motors is alive

When drawing up a list of President Obama’s accomplishments, I tend to think the rescue of the American auto industry – the backbone of the nation’s manufacturing sector – is too easily forgotten.

 

As Obama himself said in a statement yesterday, “When I took office, the American auto industry … was on the verge of collapse. Two of the Big Three – GM and Chrysler – were on the brink of failure, threatening to take suppliers, distributors and entire communities down with them. In the midst of what was already the worst recession since the Great Depression, another one million Americans were in danger of losing their jobs.”

 

But the administration intervened and the results continue to be impressive.

The government bailout of General Motors ended on Monday with the Treasury Department’s announcement that it had sold its final shares of G.M. stock.

 

The sale closes a tumultuous chapter in the history of the American auto industry, and allows the nation’s largest automaker to continue its comeback free from the stigma of being known as “Government Motors.”

 

Treasury Secretary Jacob J. Lew said the government sold the last of what was once a 60 percent stake in G.M. Taxpayers lost about $10 billion on their $49.5 billion investment in the Detroit automaker. “With the final sale of G.M. stock, this important chapter in our nation’s history is now closed,” Mr. Lew said. In all, taxpayers have ended up in the black on the crisis-related bailouts, Treasury officials said. It has recovered $433 billion from the Troubled Asset Relief Program after initially investing about $422 billion.

In July 2010, NBC News’ First Read said, “As the GM bailout goes, so goes the Obama presidency.” More than three years later, the White House probably thinks that sounds pretty good.

 

With the benefit of hindsight, Obama’s rescue of the industry may seem like a no-brainer – of course intervention was the smart move; of course the rescue prevented an even more severe crisis; of course the president couldn’t allow another million job losses with the economy already teetering on the edge of collapse.

 

But in 2009, this seemed a lot less obvious. Indeed, this was a real policy gamble, which the public didn’t necessarily like, and which Republicans insisted would be a complete disaster. At the time, among conservatives, failure was a foregone conclusion – government intervention in the marketplace always fails, they said, and Obama big-government solution to the auto industry’s crisis simply couldn’t work.

 

Consider the predictions made at the time, as pulled together by ThinkProgress.

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]

A guy by the name of Mitt Romney said we could “kiss the American automotive industry goodbye” if the administration’s policy was implemented.

 

Republicans were completely, unambiguously wrong. The U.S. auto industry has been a bright spot on the economic landscape in recent years, and hasn’t been this strong in recent memory.

 

It’s likely pointless to expect accountability for those whose predictions failed miserably, but when it comes to credibility on the economy, folks should keep this story in mind.