Friday, June 03, 2011

Campaigning on financial - not auto - bailout makes more sense

U.S. Representative Marcy Kaptur (OH-9) is in Toledo today with President Barack Obama celebrating the 'success' of the auto bailout by touring the local Chrysler Group Llc plant.

First, repaying one loan with the proceeds of another one isn't really that much of an accomplishment, though some might say that being able to obtain private loans to pay back the public - taxpayer-sponsored - ones might be a step in the right direction.

In fact, Chrysler CEO Sergio Marchionne called the trip 'tacky':

"It's incredibly tacky stuff. I'm being brash. You pay them back and you shouldn't be celebrating. Cut them a check and send them home. And say thank you."

And the sentiment at General Motors is similar:

“No one at GM is happy” that it is “going to be used as one of President Obama’s success stories,” a source familiar with the internal dynamics of GM’s business told The Daily Caller, adding that the car company is not exactly on the same page as the White House in terms of declaring victory.

GM’s “not hanging a ‘Mission Accomplished’ banner and they shouldn’t either,” the source told TheDC, citing current economic and industry woes.

“GM is not in a position to declare victory,” the source added.

And they have a valid point. By the President's own admission, the auto bailout is going to cost taxpayers $14 billion. The spin, though, is that since this is less than expected, it's a good thing.

Think about it - the government decided to bailout two companies expecting to lose more than $14 billion in the process. There's a reason no private investors wanted a part of that!

Instead of touting the bailout, why aren't Obama and Kaptur touting the success of Ford which didn't need a bailout and in April reported their largest first quarter profit since 1998??? Perhaps because there is no political gain to celebrating the success of a company that isn't dependent upon government largess? But I digress....

If the 'success' of the auto bailout is worth campaigning on, will Kaptur and Obama campaign on the actual success of the bank bailouts?

According to this article in The Atlantic,

In fact, taxpayers fared far better through their "investment" in the banking industry than they did in the auto industry. As of the Treasury's March bailout program update, the auto bailout is expected to cost taxpayers $15 billion. Meanwhile, the non-housing-related financial industry bailout is expected to provide the government with a net gain of $157 billion. Obviously, the taxpayers were far better off rescuing the banks than they were rescuing out the auto companies.

Wow! The bailout of the financial industry is going to result in taxpayers having a PROFIT of $157 billion. From both a jobs and company profits standpoint, the financial industry has performed much better since its bailout than the two auto companies.

Isn't that something to celebrate? Isn't that a 'success'? Isn't that worthy of bragging and use on the campaign trail? Especially since the President's number 1 concern is jobs?

Apparently not.

You see, these two auto companies failed because of "flawed business and strategy decisions that had built up over decades" - but they employ union workers - a key constituency of Democrats.

Compare that to the image of 'fat-cat' bankers, as Kaptur and the Dems so demonize, and it's no wonder the average American might react better to the ploy of claiming success on the auto, rather than the bank, bailouts. But as The Atlantic article points out:

If the U.S. suffered the collapse of its financial infrastructure, the economic damage would have been far more catastrophic than if a few large auto manufacturing firms had failed. Moreover, it wasn't just the Wall Street high rollers who were rescued: hundreds of thousands of employees working at small banks and at big bank regional branches across Main Street America were spared.

The article says the proper response to the campaign claim of success in the bailout is to ask how success is defined:

The fact is, you can save just about any company if you throw enough money at it. In the case of most banks, this money really just served to provide funding until the panic subsided, after which time many banks promptly repaid the government, with interest. Ultimately, the bank bailout will turn a profit for taxpayers. If there is any sort of bailout that could be called a success, it's that sort.

Meanwhile, the auto bailout is expected to cost taxpayers $15 billion. The auto companies were not on the verge of collapse due to anything having to do with the financial panic or the housing bubble. Instead, they failed due to flawed business and strategy decisions that had built up over decades. So the government threw a huge wad of cash at some companies with fundamental problems. They recovered after revamping their operations and using that cash to plug some holes. Is that really so impressive?

It's not. But since Rep. Kaptur has made a point over the past several years of painting banks and Wall Street as the enemy, she certainly can't let facts get in her way.

And we cannot expect the local daily newspaper to question her on this. Can you imagine Blade Politics Writer Tom Troy asking Marcy to explain why a program that lost $14 billion of taxpayer dollars is good while a program that made taxpayers a profit of $157 billion - and saved more jobs - is bad? I didn't think so.

But at least Kaptur's position is consistent in her hypocrisy. She - correctly, in my opinion - voted against the bailout of the financial industry. Yet she - incorrectly and inconsistently - voted in favor of the auto bailout. As far as I can tell, she's never been asked by any main stream media outlet to explain her contradiction in principle.

So I suppose her celebration of her special interest today should come as no surprise - while I expect she will continue to smear, malign and insult the industry that is actually making money on behalf of all Americans.

She is NOT representing us. A true 'representative' would share with us the cost consequences of the bailouts and stand firm, based upon the evidence, that one (financial) was clearly better for the nation than the other (auto). But Kaptur is acting contrary to what the facts of the issues are and only acting on behalf of the minority of her constituency who benefit from her types of decisions. That's what gets her elected.

It's a shame that it's come to this - our founding fathers would be appalled.

***Side Note: Also today, they'll be celebrating the fact that Fiat, an Italian company, is purchasing the government's share of stock in the company. From politicians and a political party that routinely focus on American companies and how foreign companies are stealing all our jobs - doesn't that strike you as more than 'a bit' hypocritical as well?

Think the media will ask them to reconcile this particular aspect with their previous positions? Or will they go along with the spin about how this is really good for America - and Obama, Kaptur and the Democrats in particular?

And what in the world will all those union members do with their "Out of a job yet? Keep buying foreign" bumper stickers???

1 comment:

Timothy W Higgins said...


I'm sure that Rep Kaptur would have been more forthcoming with support for bank bailouts had more of the 'hard-working people' been unionized. At the very least, it would have allowed her a consistent process.

As for the Chrysler part of the auto bailout, when was the last time that this company wasn't in part owned by foreign interests.

If the president wanted to be accurate about today's event, he would have taken a check out of one pocket and put it in the other, then shake his left hand with his right.

(Of course, this might not have been possible since neither knows what the other is doing ...)

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