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Obama takes Romney to task over Let Detroit Go Bankrupt

As the Republican primary was unfolding in Michigan, home state of the Big Three, President Barack Obama criticized Mitt Romney for his opposition to the government bailout of GM and Chrysler.
Posted: February 29, 2012 - 2:32AM
Author: Don Bain

Interestingly, Romney was named winner of the popular vote in the home state of Motor City, but due to the way delegates are designated there, it remains to be seen who the real winner is.

According to ABC News as reported on last night’s Nightline program, when asked if he was a fan of NASCAR, Romney replied, he was not an average enthusiast, “But I have several friends who own NASCAR teams.” The report concluded he may be winning the race, but may be perceived, as out of touch with the average voters he needs to win the election.

President Obama was addressing an assembly of autoworkers in Washington. He did not mention Romney by name, but criticized the 2008 opinion piece Romney authored – Let Detroit Go Bankrupt. In the Reuters article posted today, Obama stated if he had followed Romney’s suggestion American workers would have been “hung out to dry.”

Romney reportedly stated on Fox News Sunday that he favored a “managed bankruptcy,” criticizing the funds going to the United Auto Workers (UAW). Since when are bankruptcies unmanaged, especially the successful ones?

"You've got folks saying. `Well, the real problem is, what we really disagreed with was the workers, they all made out like bandits; that saving the American auto industry was just about paying back unions," the President is quoted as stating. "Really? Even by the standards of this town, that's a load of you-know-what."

To this correspondent’s observation, the point of view one takes on the GM and Chrysler bailout is directly related to one’s political values. Those who opposed the bailout essentially wanted to see the end of the UAW, citing all the money lost by third party suppliers to justify their position.

Those in favor of the bailout did not want to see thousands of American workers idled due to the inefficiency and ineptitude of giant corporations. They didn’t wish to see America’s former manufacturing glory to fade forever from our land.

Obama, in his speech today, seemed to be playing to such Populist values – expected to play well in the anticipated battleground states. The workers he addressed showed their support and approval with a chant of, “Four more years!”

The Big Three have all moved out of financial jeopardy in the last few years. GM has returned to the largest selling manufacturer in the world, reporting a $7.6 billion profit last year. Despite that, its stock is still selling at about $6 under its initial issue price and roughly one quarter of the company is still owned by the U.S. Treasury.

Chrysler finally got out of trouble when Fiat took majority ownership last year, posting a profit of $183 million. Notably a three-way agreement has just been reached to build 120,000 Jeeps and other of the brand's vehicles annually in Russia with Sberbank.

Ford avoided participating in the $80 billion government bailout by borrowing heavily before the crash. It stayed out of trouble during the credit freeze thanks to low interest loans from the Department of Energy.

Manufacturing is returning to the Americas and it is a likely result of the bailout – to some extent. It avoided not only the collapse of two major players in the automotive industry, but also a subsequent chain reaction of bankruptcies through the ranks of automotive suppliers.

Thousands and thousands of livelihoods were saved and the groundwork for recovery was formed when coupled with the revision of CAFE standards. These make even more sense with gas at $5 a gallon in California. The New York Stock Exchange today finally returned to the level it was at in May of 2008, when the Lehman Shock impacted the markets.

Asian and European makes are building more and more cars in the Americas from Mexico to Canada with no end in sight.

Detroit has solved many of its problems and is moving forward again, but what can we say of Wall Street? They were bailed out too and what have they done with the help? The mortgage industry has done little to straighten out its failures, and though credit companies are showing greater sense when it comes to car loans, they are nearing sheer usury when it comes to banking and credit cards.

That has a lot to do with car sales too. If you were one of the millions who lost your home to foreclosure, good luck with that. The banks and credit companies may not look kindly upon you.

Image - President Barack Obama delivers remarks at the United Auto Workers Conference at the Marriott Wardman Park in Washington, D.C., White House Photo, Pete Souza, 2/28/12