The Republican and Romney campaign mantra about the government’s bailout of the auto industry is that it would have been better — i.e. more in keeping with American capitalism — if we had let nature take its course and let GM and Chrysler go bankrupt. Regardless of what it would have done to the millions of people who are tied directly or indirectly to the industry — out-of-work auto workers don’t buy groceries or send their kids to karate class — giving a hand-out to a dying industry only enabled it to keep doing what it was doing: building crappy cars for a non-existent market.
Except, as Brian Beutler and Carl Franzen at TPM detail, the government’s helping hand in 2009 gave the companies the assistance they needed to retool and redirect themselves, and they did it when no one in the private sector, supposedly the engine of capitalism, would — or could — step up.
The government stepped in at a time when it was the only actor willing to or capable of financing the companies’ operations, and took equity in the hopes of receiving at least some of that money back. But it didn’t stipulate what types of cars GM and Chrysler should make.
Steven Rattner, the so-called “car czar” of the Obama administration who oversaw the bailout, told TPM that: “We certainly did not try to influence the designs of the cars. Those were all management decisions.”
The main function of the bailout, Rattner said, was to give the automakers “the financial tools to implement their business plan.”
“I think in fairness to GM it made better cars leading up to the bankruptcy and worked hard to improve quality,” Rattner said. “During the bankruptcy, they had better cars in the pipeline.”
The Republican response to the booming recovery in Detroit has been to begrudgingly acknowledge that yeah, it worked, but they would have recovered anyway, and all the government did was sort of stand there and stabilize things while the private sector did its thing. That points out the tough sell the GOP has: at one point they were claiming that the bailout was frantically trying to breathe life into a rotting and rusting corpse. Then the government was forcing the companies to build cars like the Volt that nobody wanted. Now the line is that the companies could have made it on their own and they would be doing even better if Obama hadn’t come in and saved them.
That may work in the Etch-A-Sketch world of political spin, but it runs a little flat when it’s obvious that the bailout did basically what it was supposed to do. And it’s especially ironic to hear Republicans get worked up about subsidizing private industry through a rough patch when the oil companies and other favorite industries of the party (agriculture and Big Sugar come to mind) are on permanent welfare via subsidies, tax credits, and any number of other props supplied by the taxpayers, including incentives to keep labor markets overseas.