Auto bailout: Were Republicans wrong?

“Politicians don’t like to admit they were wrong,” said USA Today in an editorial. But it’s time for Mitt Romney and Rick Santorum to concede the obvious: The bailout of the auto industry—which began under President Bush and was extended by President Obama—was a spectacular success. GM just had its most profitable year in history, and is once again the world’s largest automaker. Yet while campaigning in Michigan in recent weeks, the leading GOP contenders refused to admit they were mistaken when they denounced Obama’s $81 billion bailout of GM and Chrysler in 2009. They continued to insist it was a terrible idea—even though the government has gotten most of its money back. The bailout not only saved “a signature American industry,” said The New York Times. It saved the whole country from an even deeper recession, by preventing the loss of 1.3 million jobs.

Romney and Santorum are right, said James Gattuso in USA Today. The bailout left a dangerous “legacy of government interference with private business” that is sure to be repeated. Not surprisingly, Obama protected the United Auto Workers, requiring only modest concessions while investors took the brunt of the losses. The White House also insisted on “green” retooling, when it’s clear that consumers still want pickups, minivans, SUVs, and cars with lots of horsepower. “Taxpayers will be paying for the auto bailouts for decades to come,” said The Wall Street Journal. The government still owns 26 percent of GM, which is in decent financial shape now, but may be vulnerable again down the road. The bailout enabled the company to evade the major restructuring that would have come with Chapter 11 reorganization.

Without a bailout, there would have been no restructuring, said Steven Rattner in The New York Times. As head of Obama’s auto task force, I can assure you that the companies were broke, and that all private lenders refused to touch GM or Chrysler at that time. The companies’ only alternative to the bailout was closing their factories and laying off everyone. Most Americans understand that, said Michael Tomasky in TheDailyBeast.com, just as they understand what Republicans are now saying: We’d rather see hundreds of thousands of families “lose their breadwinner” than see Obama get any credit for helping to revive the American auto industry. Good luck selling that position in November.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up