Joe Biden is right about the auto bailout. There was a President who bucked a public outraged about the Wall Street bailout, and loud criticisms from within his own party, to make an unpopular decision that ended up saving tens of thousand of jobs and putting Detroit on the road to recovery. Biden, in his rousing campaign speech in Toledo, Ohio, on Thursday, was also right about Mitt Romney, Rick Santorum, and Newt Gingrich when he criticized them for refusing to support the auto bailout back in 2008 and 2009. In putting dogma and electoral calculus before the national interest, the Republican candidates acted like craven politicians rather than national leaders.
At the end of 2008, General Motors and Chrysler were bleeding billions of dollars a month, and nobody in the private sector wanted to lend to them. Even the supposedly liberal Brookings Institution put out a report saying they should be allowed to go bust, with their factories and machinery being sold off to the highest bidder. Today, things look very different. A few weeks ago, General Motors reported that it made $7.6 billion in profit last year. Even Chrysler, which is now controlled by Fiat, made money in 2011. So Biden was telling the truth when he said, in reference to the Republican candidates, that the President “made the tough call… [he] was right, and they were dead wrong.”
The only problem with Biden’s history lesson is that the “man with steel in his spine” he referred to should have been George W. Bush, not Barack Obama. Lest we forget, it was Bush rather than Obama who initiated the government rescue of the auto companies.
On December 19, 2008, a week after Republicans in the Senate had killed a bailout bill proposed by Democrats, saying it didn’t impose big enough wage cuts on the U.A.W., Bush unilaterally agreed to lend $17.4 billion of taxpayers’ money to General Motors and Chrysler, of which $13.4 billion was to be extended immediately. He had to twist the law to get the money. Deprived of congressional funding, he diverted cash from the loathed TARP program, which Congress had already passed, but which was supposed to be restricted to rescuing the banks. “I didn’t want there to twenty-one-per-cent unemployment,” he said to a meeting of the National Automobile Dealers Association in Las Vegas last month, explaining why he acted as he did. “I didn’t want history to look back and say, ‘Bush could have done something but chose not to do it.’”
Obama, who in December, 2008, was the President-elect, publicly supported Bush’s move, saying it was a “necessary step to avoid a collapse in our auto industry that would have devastating consequences for our economy and our workers.” After taking office six weeks later, Obama put together an auto task force that extended tens of billions more in emergency financing to Detroit over the ensuing months, and also did what appears to have been a pretty good job in restructuring G.M. and selling Chrysler to Fiat.
Obama deserves a lot of credit for finishing the job that Bush and his Treasury Secretary, Hank Paulson, had started. He stood with the auto companies, which were victims of extraordinary circ*mstances beyond their control. As the price of the bailout, he also insisted on some changes at G.M., including the installation of new leadership and the elimination of several brands.
But that hardly justifies writing Bush and Paulson out of history, which is what the Obama campaign appears to be doing—in Biden’s speech and in “The Road We’ve Traveled,” a glossy new documentary about Obama’s tenure by Davis Guggenheim, the maker of “An Inconvenient Truth,” which the campaign released on Thursday. Biden didn’t mention Bush’s role at all, and Guggenheim’s film reduced it to one sentence: “The Bush Administration had given the car companies thirteen billion dollars, and the money was now gone.”
Speaking on Lawrence O’Donnell’s MSNBC show, Guggenheim explained that in making his documentary about Obama he said to himself, “Let’s look [at] this term. Let’s look at the really tough choices he made…. Time and again, you see him looking beyond the short-term political exigencies.” Maybe you do. But does bailing out the auto companies really qualify as one of these occasions? Given that Bush had already extended billions of dollars of taxpayers’ money to G.M. and Chrysler; given the residual influence of the U.A.W. and other unions inside the Democratic Party; and given the fact that Obama had supported the highly unpopular bailout of Wall Street banks, how could he have turned around and argued that the auto industry, still the biggest manufacturing industry in the country by far, didn’t deserve rescuing? Politically speaking, ponying up more money was the least uncomfortable option for the new President to choose. As it happened, it was also the right thing to do, and we should be all grateful that he did it.
Bush, of course, was a lame-duck President by the time he decided to rescue G.M. and Chrysler. With Texas and retirement beckoning, he had the freedom to act as he thought best. But when Paulson and Ben Bernanke urged him to use money from the TARP program he still had to overcome his own free-market instincts. “Sometimes circ*mstances get in the way of philosophy,” he said in Las Vegas. “I would make the same decision again.”
In bailing out the auto companies, Bush earned the lasting enmity of many on the Tea Party/crackpot right, who regard him as a traitorous big-government Republican. And given the anger felt toward him by many liberals and progressives, the decision to intervene didn’t earn him much credit on the left, either.
That, perhaps, was inevitable. But let’s at least acknowledge what he did.
Photograph by Madalyn Ruggiero/AP Photo.
