President Obama is in Motor City today to focus attention on what he feels is an untold success story: the improving fortunes of American automakers thanks to the administration's decision to use TARP funds to bailout General Motors and Chrysler.
DETROIT — President Barack Obama is in the heart of the U.S. auto industry Friday pushing an important election-year claim: that his administration's unpopular auto industry bailout has turned into an economic good-news story.
Speaking at a Chrysler plant in Detroit that recently hired more than 1,000 people, Obama said his administration's bailout out of U.S. car companies saved more than 1 million jobs and kept communities that depend on the auto industry afloat.
Obama said progress in the auto industry is one of the bright spots in the nation's economic recovery. He said that while the auto bailout may not have been popular, the recent growth of car companies is proving critics wrong.
Since the administration took action, the auto industry has added 55,000 jobs -- the best growth since 1999 -- and the administration says 1.1 million jobs have been saved in the economy at large. Unfortunately, the President's visit to Detroit coincides with today's less-than-stellar GDP report which showed continuing anemic growth in the economy.
Against the backdrop of the disappointing GDP report, it strikes me that one of the challenges the administration has in selling the good news out of Detroit is that it doesn't seem to be embracing similar programs for other parts of the economy. Remember, the stimulus only funded about $250 billion in contracts, and that was spread out over three years and the entire economy. The auto bailout cost $60 billion. That imbalance raises a question: if the intervention to help Detroit was successful, then why not do it on a broader scale?
Similarly, even though most economists agree that the spending portion of the stimulus provided a valuable boost to the economy, it's reasonable to ask why there isn't a push to spend more? In other words, given that we know the economy is still weak, if we believe that things like the auto bailout and the stimulus were effective -- but not sufficient -- then shouldn't it stand to reason that we need more of the same?
Instead, we are hearing more from policymakers about reducing deficits and belt-tightening than we are about additional jobs programs. Even if the reason they aren't talking about such programs is recognition that Republicans would block any new initiatives, it seems as if the failure to embrace more stimulus sends the signal that they actually don't believe the original stimulus was effective in the first place, even though that obviously isn't what they really believe.
I guess what I'm saying comes down to this: given that the administration (correctly) believes that the auto industry bailout and the stimulus programs helped the economy, and given that the economy is not yet fully recovered, wouldn't the best way to demonstrate their belief in the value of stimulus be for them to propose more of it, perhaps in the form of a $250 billion per year plan to rebuild our energy transmission grid? And on the flip side, doesn't backing off proposing additional stimulus effectively send a message that they don't believe it works, even if the opposite is actually true?
Update: DarkSyde points to local reaction to President Obama's visit:
Visiting Obama deserves credit for saving GM, Chrysler
President Barack Obama comes to Detroit today, looking for love in the factories of America's hardest-hit big city.
Beset by a sputtering jobless economic recovery, Obama will tout the federal rescues of General Motors and Chrysler as bold moves that staved off another Great Depression and saved thousands of jobs.
While the revivals of GM and Chrysler are still works in progress, at least the automakers are still alive to launch the Chevrolet Volt and the new Jeep Grand Cherokee from the Detroit plants Obama will visit. And that's about as big a triumph as the president can claim from his first 18 months on the job.
Yes, there are still partisan critics sniping about bailouts and "Government Motors." But make no mistake about the Detroit rescue.
The fact that GM and Chrysler are not only alive but modestly profitable in a weak market, after years of losing billions of dollars when car and truck sales were 50% higher, looks like more than just a successful government intervention.
It looks like a flat-out miracle.
That's excellent stuff. Now, let's see more of it. Go national! $250 billion per year in clean energy investments -- it will change America and change the world. And it will be a political success beyond belief.