WP's EJ Dionne: The auto industry lives. Can we admit that government intervention worked?

[Pirate Smile]

The auto industry lives. Can we admit that government intervention worked?

By E.J. Dionne Jr.
Monday, August 2, 2010

Who could have imagined that the bailout of the auto industry, one of the single most unpopular moves by the Obama administration, would become one of its best talking points?
But don't for an instant imagine that the comeback of the nation's rescued car companies, particularly General Motors, will change the way we debate government's role in the economy. When it comes to almost anything the government does, ideology trumps facts, slogans trump reality, and loaded words ("socialism") trump data.

Let there be no mistake: Rescuing GM and Chrysler took political courage, and I want to put in a good word not only for President Obama but also for George W. Bush.
True, Bush's electoral career was over in December 2008 when he extended $17.4 billion of Troubled Assets Relief Program money to keep the companies alive long enough to give Obama a chance to act. Still, it took guts for Bush to decide not to "leave the next president to confront the demise of a major American industry in his first days of office." Yet it was Obama who put in the bulk of the cash -- in all, Bush's input had grown to $25 billion before he left office, while Obama put up an additional $60 billion -- and created the tough restructuring plan.

Both presidents faced broad public resistance. A CNN poll in December 2008 found that 61 percent of Americans opposed the bailout; only 36 percent supported it. When Obama acted two months later, a Gallup poll found 72 percent opposing the additional money for the auto companies and only 25 percent in favor.
At the time, I was in the bailout-supporting minority because a collapse of the car industry would have devastated an already ailing Midwest. Enterprises dependent on the auto companies would have come crashing down. A White House report last week concluded that one million jobs would have been lost if the government had not intervened, and some estimates last year went much higher.

-snip-
Might practical-minded business people now admit that there are occasions when government intervention can be good for capitalism by saving it from some of the very forces it unleashes?
Okay, Wall Street is full of whining ingrates who would have been wiped out absent government help. Many business folks ignore how much they depend on effective government so they can keep complaining about taxes and regulations.
But honestly: without government, we would have lost large parts of our auto industry. Doesn't this matter to anybody?


http://www.washingtonpost.com/wp-dyn/content/article/2010/08/01/AR2010080103286.html?hpid=opinionsbox1

[Tarheel_Dem]

1. Nope. Not gonna admit it, and you can't make me. I'm invested in my...

anti-government intervention mindset. For the record, this comes as welcome news for me & many others. Thanks for posting.

[lynne]

2. Except that Ford wasn't included in the bailout and has since turned a tidy profit -

- Had the other companies employed the same methods as Ford, could the total bailout have been avoided?

[BluegrassDem]

3. Ford borrowed $23 billion just before the financial collapse

Had they not have had the luck of timing, they would've been in worse shape than GM or Chrysler.

[scheming daemons]

12. The other companies had ALREADY FAILED to do what Ford did... it was too late

They would've gone under.

[golfguru]

4. Not until auto industry pays back every dollar

subsidized by the US Treasury / US tax payer. The feds own a huge
chunk of GM for example. That ownership comes via funding by US
Treasury.

[scheming daemons]

11. The stock has gone up.... the govt will turn a profit when they sell

[golfguru]

19. which is great for the tax payers

but the fact remains that tax payers propped up GM and
the stocks owned by the government have not been sold.
There is no profit until stocks are sold. You can't buy
anything with unrealized gains.

[Yupster]

5. No because if the government would not have intervened

then they would have declared bankrupcy anyway, like they did, but they would have done it legally.

And I wouldn't have had my bonds stolen from me and the companies would be operating pretty much the way they are now except the law would have been followed.

[dsc]

7. that is just plain, baldly false

In point of fact Ford might well have gone under too, since the parts manufacturers would have gone bancrupt right with GM and Chrysler. Without the intervention our entire car industry would have disappeared.

[Name removed]

8. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Yupster]

17. GM went bankrupt

They could have gone bankrupt without the government too.

Just becauise a company goes bankrupt it doesn't mean it disappears.

It can restructure itself in an orderly manner.

The only difference is it would have had to follow the bankrupcy laws without government pressure to bend them to some groups' advantage and other groups' disadvantage.

[amborin]

6. Wall Street is HAPPY b/c GM is now opening NON-UNION plants in the US & Busting the remaining UAW

but not making much of a profit and still owes taxpayers BILLIONS

[scheming daemons]

10. There wouldn't be ANY GM plants.. union or otherwise... without the bailouts

And GM has paid back its loans... the rest is the government owning stock in GM.

The stock has gone up... so the govt can sell, at a profit, at any time they please.


You're just plain wrong.

[Llewlladdwr]

20. Then why don't they do so?

I think you're the one that has it wrong.

[JoePhilly]

15. Really?

Because I watched Obama speak at the new plant last week ... it was filled with Union workers ... cheering him.

[impik]

9. Auto-bailout saved more than a million jobs. Teabaggers from both side can say what they want

It won't matter.

[Radical Activist]

13. Government intervention would have worked even better 20 years ago.

GM would not have been so close to collapse if the government had passed better fuel economy standards. They became their own worst enemy by stubbornly refusing to offer the kind of fuel efficient cars that the public wanted.

We were told for decades that environmental regulations would kill jobs in the auto-industry, but just the opposite was true. Fuel economy standards could have saved GM, and the people going back to work are building more modern cars, like the Volt.

[Yavin4]

16. +1000000

In the 2000 election, Fox news mocked Al Gore because he wanted higher fuel standards.

[DCBob]

14. The GOPers will say the money was wasted and the auto industry would have recovered on its own..

fools never learn.

[dem mba]

18. the marketplace favored honda and toyota

and even Ford over GM products, by and large. Our govt has backed a loser and we are kicking the can down the road for the next big GM failure.

Did we save tons of jobs? Yes, we certainly did. But make no mistake, those jobs are still in jeopardy. All we did was buy GM some time to turn themselves around. Hell, Apple did it ten years ago, maybe GM can do it too. But this company's lack of vision, innovation and style will be a major impediment towards keeping those jobs here for decades to come.

It was a tough call to bail them out and maybe I'm wrong, but it feels like we threw good money after bad.

[BluegrassDem]

22. Yet, GM still sells more cars than anyone else...lol

For all of your doom and gloom, GM is still the marketplace leader and sells more cars and trucks than anyone else. They have downsized a great deal and has new management that seems to be working wonders so far. So not sure how you're saying the company is doomed and worth the investment. Also, we'll likely get our money back.

[dem mba]

23. I read a few gloomy articles on GM months ago

but today I had read an article about the top 10 selling models (cars and trucks) in America, and GM had only 2 of the top 10. Seemed like a poor showing for such a large car maker.

But thats a poor argument anyway.

Regardless, it's like you say, if we get our money back no harm no foul.

[SpartanDem]

21. We have plenty on "our" side that won't admit it worked

why would the anti-government teabag crowd?