Missing Obama's Chrysler visit? You may see it in 2012

McClatchy NewspapersJune 2, 2011 

WASHINGTON — Want to know what the 2012 presidential campaign will look like? Tune in Friday as President Barack Obama travels to Toledo, Ohio, to visit a Chrysler plant.

With Chrysler's recent announcement that it's repaying a federal loan six years ahead of schedule, Obama is going to brag about how his controversial policies saved the U.S. auto industry from collapse and with it hundreds of thousands of jobs, if not the entire economy.

He'll go armed with plenty of bragging points — a rebounding U.S. auto industry hiring back 115,000 workers, factories adding shifts in such states as Indiana, Kansas, Michigan and Ohio, and a vast network of suppliers across the industrial Midwest who stayed in business. Even sales to China are increasing.

And since the visit has all trappings of a campaign commercial, don't be surprised if footage ends up in an actual ad later. This is going to be one of the top issues in the campaign, played out in key battleground states.

Obama will be running straight at one of the Republicans' chief complaints about him — his vast federal spending and the federal bailout and takeover of two huge auto companies at the height of the Great Recession. They called it government run amok, socialism, even fascism, when he did it. Now he'll call it a success, as he tries to frame a fundamental debate about the role of government heading into next year's elections for control of the White House and Congress.

"A lot of people said you're throwing good money after bad; you'll never get out; these companies are not savable," said Ron Bloom, the assistant to the president for manufacturing policy.

"But I think the president demonstrated both great political courage as well as great faith in the men and women who work at these companies and their stakeholders, and so far at least I think we're seeing very good signs of progress."

No stranger to bailing out the auto industry — Chrysler itself was saved by federal loan guarantees in 1979 — the U.S. auto industry by 2008 was losing 120,000 jobs a month and was on the ropes.

President George W. Bush dispatched a quick $17.4 billion in loans. The automakers sought more help shortly after Obama took office. After demanding structural changes and cost savings, Obama lent more money, forced Chrysler into a partnership with Fiat, and essentially took control of General Motors.

Republicans and conservatives ripped Obama.

"The leading edge of the Obama administration's war on capitalism," said Rep. Lamar Smith, R-Texas.

"It's the road toward socialism," said Sen. Richard Shelby, R-Ala.

"We have tried the concept of fascism in a sense here, with the government owning, operating and advising the means of production in the case of the United Auto Workers, General Motors, Chrysler," said conservative icon Rush Limbaugh.

The debate will carry into the contest for the 2012 Republican presidential nomination.

Former Gov. Mitt Romney, who launched his campaign on Thursday, also opposed Obama's federal takeover. "The last thing America needs is to have one of our major car companies, actually two, for that matter, being run by the government," he said in 2009.

Former Gov. Tim Pawlenty of Minnesota, a rival candidate, also opposed the federal role. "This is sadly reminiscent of the kinds of things we would expect from South America some decades ago. We're seeing the nationalization of the auto industry," he said at the time.

Conservatives insist that conventional bankruptcy would have forced the needed changes and saved the auto industry without Uncle Sam getting involved. Obama on Friday likely will assert anew that he never wanted to take such a bold step into the private sector, but that frozen credit markets left no private-sector alternative to save the industry.

Either way, the results show a rebound at Chrysler, GM and Ford — which didn't seek federal help but endorsed it to keep the industry's vast network of suppliers running.

Results highlights since GM and Chrysler emerged from bankruptcy in 2009:

  • 115,000 new jobs at the so-called Detroit Three
  • A gain in market share against foreign-based automakers for the first time since 1995
  • A 57 percent increase in exports of U.S. cars and trucks to foreign markets
  • A 283 percent increase in sales of vehicles and parts to China, to $1.85 billion in the first five months of 2010
With Chrysler's repayment of its loans, taxpayers have recovered or been repaid $40 billion of the $80 billion they lent or invested in Chrysler and GM. More will be recovered when the Treasury sells its remaining stock in GM, but administration officials said they didn't know when that will be or how much it will raise.

Perhaps the biggest beneficiary of the auto bailout wasn't the two struggling carmakers but the supply chain that provides parts and materials for them and the rest of the industry.

"Trying to differentiate between who won, or who gained the most, it's tough, because it really had a very positive effect on many parts of the supply chain, all the way down to people who work in restaurants around the manufacturers, people who work in dealerships, the waitress who never stepped foot in the plant but worked nearby," said Rebecca Lindland, an automotive industry analyst for researcher IHS Global Insight.

Overlaying the entire story is the political map, with auto plants and suppliers spread throughout the Midwest, many in critical swing election states such as Ohio, and auto dealers in every community in the country.

Obama will meet Friday, for example, with owners of small businesses from around Toledo who would have suffered had the plant closed.

White House aides pointed to the success of a Chrysler transmission plant in Kokomo, Ind., where the jobless rate has dropped from 20.1 percent in 2009 to 9.3 percent in April. Indiana is a state that Obama won away from the Republicans in 2008, and one he hopes to win again in 2012.

(Kevin G. Hall contributed to this story.)

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McClatchy Newspapers 2011

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