Commentary: What was wrong with auto bailout? Nothing
Among the mysteries of public opinion, this one most strains the brain: Why do so many Americans think the government rescue of Detroit automakers was a bad -- nay, an evil -- thing? The bailout has been a rousing success, and that's the business press talking.
The Economist magazine opposed the bailout. Now it writes, "An apology is due to Barack Obama: His takeover of GM could have gone horribly wrong, but it hasn't."
As Obama "car czar" Steven Rattner told Bloomberg BusinessWeek, "I find it mind-boggling that these companies have come out of bankruptcy, yet a plurality of the country still thinks it was a bad idea for the government to get involved."
Perhaps Comedy Central's Stephen Colbert best explained the public's lack of gratitude: "This was a success for the Obama administration, taking over these companies, and so like most Americans, I've forgotten it."
Two years ago, General Motors and Chrysler were headed for oblivion. Letting these companies reorganize under normal Chapter 11 bankruptcies, as many free-marketeers advocated, would have ended in failure.
Recall how the financial markets, in full panic mode, froze credit. "It is more likely," The Economist writes, "that GM would have been liquidated, sending a cascade of destruction through the supply chain on which its rivals, too, depended." An additional 1 million jobs would have gone poof.
The industrial Midwest could have utterly collapsed. The psychological blow of seeing GM -- the symbol of American manufacturing might -- go down amid a terrifying Wall Street meltdown would have spread economic disaster coast to coast.
Thanks to the government intervention, General Motors is out of bankruptcy and again turning profits. Chrysler is stabilized. Last April, GM paid back its loan in full and with interest years ahead of schedule. Next month, the Treasury will begin selling off its ownership of GM through an initial public offering of stock.
Yet many tea party/Republican politicians persist in portraying this story as one of government overreach forced on good Americans by Washington socialists. They totally forget the economic mayhem that was gripping the country.
Back in the scary days, Sen. Jim DeMint, the South Carolina Republican, rejected extending taxpayer support to the flailing auto companies. He said that "we're not going to do it with the barnacles of unionism wrapped around their necks." (Never mind that the administration's restructuring plan hit workers with sharp cuts in pay and benefits. Never mind that it forced many more plant closings.)
Most inexplicably, these "anti-government" candidates are gaining ground with blue-collar voters, including in the Midwest. These are the very workers they were ready to sacrifice on the altar of an extreme free-market god.
The $86-billion bailout was a gamble, all right, but it was a bet that America won. And it was won not through dumb luck but the administration's skilled management of the bankruptcy. And the good news keeps coming. At the last count, the bailout's actual cost to taxpayers has fallen to $17 billion, according to the Detroit News.
Meanwhile, revived consumer faith in a restructured Detroit has sparked new life in the automotive heartland. Recent growing demand prompted nine GM plants -- four in Michigan and one in Indiana -- to skip their usual summer shutdowns. GM and Chrysler have added shifts. Ford, which didn't need government help, continues to go great guns.
Yes, the Midwest is still suffering economically. And "it would have been worse without us" does not make a spiffy Democratic campaign slogan. But have Midwesterners so forgotten how their region was saved that they would elect those who wouldn't lift a finger to help them?
Froma Harrop's e-mail address is email@example.com.