WASHINGTON (AP) — Taxpayers will lose about $14 billion in the government's $80 billion bailout of Chrysler and GM, the White House said Wednesday, portraying the outcome as good news since the losses are far lower than originally anticipated.
Seizing on the figures, the Obama administration
took credit for the resurgence of the U.S. auto industry, assuring taxpayers
that the government's bailout of Chrysler and GM was an investment worth
making.
A report by the president's National Economic
Council noted that as Detroit automakers rebound, the taxpayers' loss from the
bailout will be about $14 billion, or less than 20 percent of the $80 billion
that the Bush and Obama administration used to prop up the companies in 2008. The
Treasury Department had expected losses closer to 60 percent.
The report was part of a carefully devised strategy
by the White House to draw attention to an industry that's on the mend and
whose footprint is most noticeable in key presidential battleground states. In
recent days, Vice President Joe Biden and Treasury Secretary Timothy Geithner
have both promoted the government's GM and Chrysler interventions as risky
moves by President Barack Obama that paid off.
Obama is making the most out of Chrysler's
announcement last week that it is repaying $5.9 billion in U.S. loans and a
$1.7 billion loan from the Canadian government ahead of schedule. Those
payments cover most of the federal bailout money that saved the company after
it nearly ran out of cash and went through a government-led bankruptcy.
General Motors Co., which also went through
bankruptcy, received $49.5 billion in the U.S. bailout. The federal government
has lowered its equity stake in the company from 61 percent to 26.5 percent of
GM after selling part of the stake in November. Ford did not seek federal
government assistance.
The National Economic Council report said that
since GM and Chrysler emerged from bankruptcy last year, the industry as a
whole has created 115,000 jobs.
The White House is reveling in an
"I-told-you-so" moment and Obama himself will take that message
Friday to a Chrysler plant in Toledo, Ohio.
Ron Bloom, the president's top manufacturing
adviser, summed up the White House point of view Wednesday: "At the time
the president chose to help Chrysler, at the time he chose to help General
Motors, a lot of people said you're throwing good money after bad, you'll never
get out, these companies are not savable."
The auto industry success is a potentially powerful
political story for the president. With Washington focused now on budget
cutting, the administration does not have the political leverage to spend money
on jobs initiatives, let alone a new economic stimulus.
Still, any claim that the administration can make
that it saved or restored jobs is a plus in an environment where unemployment
hovers around 9 percent.
What's more, the auto industry is prominent in
states like Michigan, Ohio, Indiana and Missouri, all of them important for
Obama's re-election prospects.
"We believe the steps we took and the steps
they took in partnership with us have positioned these companies to where they
have a real chance of success," Bloom said.
Republicans had proposed an alternative that relied
on private sector investment. It included government-provided insurance to
cover half of investor losses.
"The administration's auto bailout is nothing
to celebrate; there were better options that could have saved jobs for these
workers," Brendan Buck, a spokesman for House Speaker John Boehner, said
Bloom declined to say when the government would
sell its remaining stake in GM. The company's stock price fluctuated between
$29 and $39 over the last two months. It was selling at just over $30 per share
on Wednesday. "We're not going sell at a fire sale the first day we can,
on the other hand we're not holding, waiting for a target price," Bloom
said.
The administration's decision to promote the
industry and the role of the bailouts came on the same day the industry
reported a falloff in May sales after their aggressive performance earlier this
year. General Motors' sales fell 1.2 percent as it offered fewer deals to
customers and cut sales to rental car companies. Ford sales fell 2.4 percent as
strong sales of small cars were weighed down by lower sales of pickup trucks.
The White House economic report sounded one word of
warning for Chrysler, saying it continues to face challenges. It cited a
product line that still relies heavily on large vehicles and light trucks. The
report added: "It must prove its ability to overcome past skepticism about
its brand and attract and retain customers over the long term."
Still, in an opinion piece in Wednesday's edition
of The Washington Post, Geithner said U.S. auto companies are now at the
forefront of a comeback in American manufacturing.
"We cannot guarantee their success, and at
some point they may stumble. But we've given them a better shot," Geithner
wrote. "While we will not get back all of our investments in the industry,
we will recover much more than most predicted, and far sooner."
GM and Chrysler were on the verge of collapse in
the final days of the Bush administration after Congress failed to approve an
emergency loan package. The Bush administration gave the companies $17.4
billion in loans and required them to develop a restructuring plan by
mid-February 2009.
Obama's administration pumped billions more into
the carmakers later that spring but won concessions from industry stakeholders,
allowing it to push GM and Chrysler through bankruptcy court in the summer of
2009.
Associated Press writer Julie Pace contributed to
this report.
Copyright
2011 The Associated Press.
(AP
Photo/Carlos Osorio)
