How about a little credit where it's due? General Motors is a profitable carmaker again, with investors clamoring to scoop up stock during its recent initial public offering, and Chrysler is resurgent. Today's U.S. auto industry is doing well against its foreign competitors because the federal government came to its rescue with $85 billion in bailouts. The moves were unpopular at the time, but it turns out that Presidents George W. Bush and Barack Obama made the right calls, saving more than a million jobs and salvaging car manufacturing in America.
There was great public skepticism when Bush and then Obama tossed GM and Chrysler financial lifelines. Critics said the bailouts were like throwing taxpayer money down a rat hole. But, as Bush describes in his new memoir, the downside of not acting was unthinkable, particularly as the economy was shedding jobs at a harrowing clip.
Bush's advisers warned that the bankruptcies could cost more than a million jobs and set back America's gross domestic product by hundreds of billions of dollars. This jibes with the latest figures by the nonprofit Center for Automotive Research, which say that government help for GM and Chrysler saved more than 1.1 million jobs in 2009 and 314,000 jobs this year.
Ford famously declined government assistance, but even that company could have been put at risk had its rival automakers not survived. Ford's parts suppliers may not have remained solvent had their other customers disappeared.
Those who think government can never run a business should consider the expert hand of the Obama administration as it helped to shepherd GM and Chrysler through a bankruptcy process from which they emerged leaner, more nimble companies. And now that GM is profitable again, the government is extricating itself. The IPO reduced the government's stake from nearly 61 percent to 26 percent, with billions of dollars from the stock sale flowing back into the U.S. Treasury.
This success is changing public perception about the bailouts, with polls suggesting that a majority of Americans now favor them. But Bush and Obama acted when the polls said otherwise. The nation still has an auto industry and the jobs that flow from it because of their resolve.