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The Auto Bailout Bust
The Free Beacon ^ | 4/30/12 | McMorris

Posted on 04/30/2012 1:00:44 PM PDT by pabianice

Obama’s rescue of Chrysler and General Motors unpopular with voters, creditors, and GM management

President Barack Obama has made the auto bailout a centerpiece of his reelection campaign, using it to bash Republican nominee Mitt Romney. But the tactic may backfire as the general election heats up, public opinion surveys suggest.

Recent polling from Rasmussen indicates that 59 percent view the bailouts as a “failure” and only 44 percent think the bailouts were “good for America.”

The administration has already written off $7 billion in taxpayer losses in the American takeover of Chrysler and General Motors; those losses are expected to climb as high as $23 billion—27 percent of the $85 billion spent on the bailout.

While the bailout is widely credited with saving the two companies, increasing taxpayer losses have made it nearly as unpopular in 2012 as it was when Obama was elected. More than half of Americans still disapprove of the auto bailout compared with 61 percent in 2008.

That has not stopped Obama from using the bailout as a bludgeon against Romney, who backed bankruptcy measures, in a number of campaign speeches.

“We could have just kicked the problem down the road. The other option was to do absolutely nothing and let these companies fail,” Obama told the United Automobile Workers union in February. “And you will recall there were some politicians who said we should do that. Some even said we should ‘let Detroit go bankrupt.’”

The line drew a chorus of boos from the crowd and Obama has used the talking point often in his recent campaign addresses. He has deployed the line in a number of speeches in front of friendly crowds, despite the surprising lack of enthusiasm among Democrats for the bailout.

Obama’s job approval ratings among Democrats remain at nearly 85 percent, according to RealClearPolitics.

That is 20 points higher than the 63 percent of Democrats who support the auto bailout.

Obama is using the talking point as a targeted message to interest groups, rather than a broad appeal to his overall base, bailout experts say.

“The reason Obama likes it is because labor likes it,” one bankruptcy expert said. “The administration went in and took UAW and pulled them up.”

The administration handed $85 billion to GM and Chrysler and guided them through reorganization. Obama took on the role of bankruptcy court and bumped the unions to the front of the line, handing them control of Chrysler, while preserving pay and benefits at General Motors.

“They came in and forced these companies into pre-packaged bankruptcy where unions were made whole and creditors were squeezed out,” the expert said. “In normal bankruptcy they don’t rearrange stakeholders rights willy-nilly…there’s no way those union contracts would have been untouched.”

Labor is not the only constituency to which Obama has tried to appeal by championing the bailout. “After three decades of inaction, we’re gradually putting in place the toughest fuel economy standards in history for our cars and pickups,” Obama said in the same February speech. “That means the cars you build will average nearly 55 miles per gallon by the middle of the next decade—almost double what they get today.”

Obama tied the bailouts to strict environmental standards that have led to increasingly efficient cars, an achievement he has used to woo green advocates. The move has affected more than just the environment, establishing “dangerous” legal precedents, according to some legal experts.

The fuel-mileage regulations are expected to drive up vehicle prices by $3,200 and keep consumers out of car lots, according to the National Auto Dealers Association, which sued to block the regulations. A Washington D.C. Appeals Court tossed the suit, ruling that only manufacturers could sue for damages associated with the expensive rules.

“This is a great incentive for cronyism,” an attorney familiar with the regulations said. “The manufacturers colluded with the feds and they pushed these costs onto car dealers and consumers; the government had its first taste of cronyism and learned that if they can bully enough stakeholders and companies, they can get away with it.”

Auto executives hailed the bailout as a lifesaver in 2008, but are increasingly uneasy about the government’s ownership in the two companies. While the government liquidated a number of its shares in GM during its record-setting stock offering in 2010, it has retained partial control of the company.

“GM’s executives have wanted the government out for a while now … it’s a huge PR liability for them—they hate the ‘Government Motors’ stigma,” said Edward Niedermeyer, editor-at-large of TheTruthAboutCars.com. “The government can’t get out now, they don’t want to take an even bigger loss on the bailout.”

GM’s stock price has dropped about $10 per share since its IPO, meaning any sale would increase the taxpayer’s multi-billion dollar losses in the bailout.

Niedermeyer said the administration might wind up its involvement in GM even if it means higher losses. Timing, he added, will play a key role in that decision.

“They’ll wait until after the election before they act,” he said.


TOPICS: Business/Economy; Government; News/Current Events; Politics/Elections
KEYWORDS:

1 posted on 04/30/2012 1:00:47 PM PDT by pabianice
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To: pabianice
Obama’s rescue of Chrysler and General Motors unpopular with voters, creditors, and GM management

Not to mention stockholders..............

2 posted on 04/30/2012 1:05:26 PM PDT by Red Badger (Think logically. Act normally.................)
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To: pabianice
Now, former GM exec Bob Lutz is lobbying for higher gas taxes to promote electric cars.
3 posted on 04/30/2012 1:06:00 PM PDT by Paladin2
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To: pabianice

I am a Chrysler brand loyalist

At least I was. I will no longer buy Chrysler products made after the govt takeover and will remain as such until union ownership has been sold back to Capitalists.


4 posted on 04/30/2012 1:07:22 PM PDT by Vaquero (Don't pick a fight with an old guy. If he is too old to fight, he'll just kill you.)
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To: pabianice
Recent polling from Rasmussen indicates that 59 percent view the bailouts as a “failure” and only 44 percent think the bailouts were “good for America.”

That's only 103%. Maybe there was some overlap of those who thought that the bailout's failure was good for America.

5 posted on 04/30/2012 1:13:06 PM PDT by KarlInOhio (You only have three billion heartbeats in a lifetime.How many does the government claim as its own?)
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To: Paladin2

He’s actually saying that higher gas taxes would be better (or, at least less bad) than CAFE. He’s right about that. The Corporate Average Fleet Economy rules are just about the worst way to accomplish their purported goals. They distort the market, they remove most consumer choice, and they will cost you a lot more than higher gas taxes would have.

If you had a choice, would you rather have CAFE, or higher gas taxes? If you were the head of an auto company, would your answer be any different?

Don’t get me wrong. The best thing for government to do would be to get out of the way of the free market. That includes letting the energy market be free. The rationale for this interference — global warming — is a giant scam.


6 posted on 04/30/2012 1:19:28 PM PDT by USFRIENDINVICTORIA
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To: USFRIENDINVICTORIA
Higher gas taxes are way worse.

I don't have to buy a new vehicle produced under a revised CAFE standard. I do have to pay more in gas taxes if they are raised. Lutz is now a government wacko shill. Drive the price of petroleum down through gov't actions. Don't raise the taxes. Starve the beast.

7 posted on 04/30/2012 1:24:02 PM PDT by Paladin2
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To: pabianice

“We could have just kicked the problem down the road.”... Obama told the United Automobile Workers union in February

Um....you DID kick the problem down the road.


8 posted on 04/30/2012 1:27:11 PM PDT by Psycho_Bunny (Burning the Quran is a waste of perfectly good fire.)
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To: pabianice
...they hate the ‘Government Motors’ stigma...

Sorry, they will be known as "Government Motors" forever.

9 posted on 04/30/2012 1:38:46 PM PDT by CMAC51
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To: Vaquero
I am a Chrysler brand loyalist

Just to illustrate the incompetence, Fiat outmaneuvered the Obama Administration in the negotiations in every way possible.

They are going to be able to buy the VEBA shares for pennies because liberals know nothing about business.

It is also why taxpayers lost money. Part of the debt was left with the old Chrysler that is bankrupt.

10 posted on 04/30/2012 1:40:31 PM PDT by Erik Latranyi (When religions have to beg the gov't for a waiver, we are already under socialism.)
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To: Impala64ssa; bajabaja; carriage_hill; AFreeBird; rightly_dividing; Charles Martel; Clay Moore; ...
Motorhead, Collector Car Junkie, Speed Freak, Automotive Related Ping List.

Freepmail "Lazlo in PA" to be added or removed.

11 posted on 04/30/2012 1:43:18 PM PDT by Lazlo in PA (Now living in a newly minted Red State.)
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To: Red Badger

Obamaumau is EPIC FAIL personified.


12 posted on 04/30/2012 1:55:31 PM PDT by wetgundog (" Extremism in the Defense of Liberty is no Vice")
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To: pabianice
Obama’s rescue of Chrysler and General Motors unpopular with voters, creditors, and GM management

It was not a rescue.

It was Grand Larceny !

GM's & Chrysler's assets were STOLEN
from the owners
and given to 0bama's Brown Shirts.


13 posted on 04/30/2012 2:12:15 PM PDT by Uri’el-2012 (Psalm 119:174 I long for Your salvation, YHvH, Your law is my delight.)
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To: pabianice
59% + 44% = 103%

Where did they take this poll, Philadelphia?

14 posted on 04/30/2012 2:14:22 PM PDT by anoldafvet
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To: Vaquero

I’ve owned Jeep Grand Cherokees since 1987; but no more. I really did want a GM Chevy Suburban or GMC Acadia (or similar model) for my replacement for my current ‘02 Jeep GC. No frigging way. I’m now looking seriously at Toyota’s SUV line-up.


15 posted on 04/30/2012 2:56:53 PM PDT by carriage_hill (I'd vote for a "orange juice can", before 0bummer&HisRegimeFromHell, gets another 4yrs. Can-> later.)
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To: carriage_hill

I will buy Ford
If I buy new


16 posted on 04/30/2012 4:17:29 PM PDT by Vaquero (Don't pick a fight with an old guy. If he is too old to fight, he'll just kill you.)
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To: Vaquero

I’m going to look hard at FoMoCo, too, V. Thanks for the reminder. They didn’t take the Govt’s Socialist Cheese; they well-deserve a closer look and the business.


17 posted on 04/30/2012 4:34:15 PM PDT by carriage_hill
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To: USFRIENDINVICTORIA

I’ll take CAFE or better yet nothing.

The newest vehicle we own is over 30 years old. The oldest is a ‘55.

Let the free market decide who survives and who is relegated to the ash heap of history.


18 posted on 04/30/2012 5:26:25 PM PDT by Clay Moore (The heart of the wise inclines to the right, but the heart of a fool to the left. Ecclesiastes 10:2)
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To: Clay Moore

We’re in agreement about the main part — let the free market decide.

What Lutz is saying — and where I agree with him — is that CAFE is a very bad way to interfere in the market (if interfere, you must). With CAFE, there is no “free” market. Even higher gas taxes (bad as they are) are less bad than CAFE.

You are probably right that CAFE won’t affect you personally. However, it is hurting the auto industry a lot & that affects a lot of people. It makes sense for an auto company head to oppose CAFE.


19 posted on 05/01/2012 10:52:46 AM PDT by USFRIENDINVICTORIA
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