Is The Auto Industry Out Of The Woods?
MICHELE NORRIS, host:
With a new jobs report showing that hiring has slowed significantly, the White House went on the offensive today. President Obama was in Ohio arguing that the bailout of Chrysler and General Motors saved thousands of jobs that otherwise would have disappeared.
The president visited a Chrysler plant in Toledo, where he announced the government's sale of its final 6-percent stake in Chrysler to Italian automaker Fiat.
President BARACK OBAMA: So this industry is back on its feet, repaying its debts, gaining ground. Because of you, we can once again say that the best cars in the world are built right here in the U.S. of A...
(Soundbite of applause)
Pres. OBAMA: ...right here in Ohio, right here in the Midwest.
NORRIS: The resurrection of the auto industry is emerging as a theme in President Obama's re-election campaign, and so we called on someone to help us look deeper into this claim that the White House has helped saved Detroit.
David Shepardson is the Washington bureau chief for The Detroit News.
Welcome back to the program.
Mr. DAVID SHEPARDSON (Reporter, The Detroit News): Thanks, Michele.
NORRIS: Now, is this a fair claim? Is the auto industry indeed out of the woods?
Mr. SHEPARDSON: It's certainly out of the woods in the sense that it's going to be around for a while, but no, certainly long term, five, 10, 15 years from now, the companies are going to have to continue to build products that people want to buy. But these are companies that can now make profits, selling far fewer cars. They're leaner, and they're just in a position to be profitable even if, you know, sales aren't what they were five or 10 years ago.
NORRIS: So they're in a position to be profitable, but what we're hearing here is this sort of slowly emerging theme that the White House saved Detroit, saved the auto industry, true?
Mr. SHEPARDSON: Both President Bush and President Obama did save the auto industry, no question about it. Remember, in 2008, GM and Chrysler were out of money. They were going to collapse, and Congress didn't act. President Bush opted to use $17 billion of TARP money to save General Motors and Chrysler. He basically threw the ball into the president's lap in January, and President Obama opted to put both GM and Chrysler through bankruptcy, add another $60 billion to that bailout and then restructured those companies in a very quick fashion.
NORRIS: How much did the bailouts and the loan guarantees cost taxpayers? How big a stake does the U.S. still have in these companies, and has that money or will that money be recouped?
Mr. SHEPARDSON: In the case of Chrysler, government has agreed to sell its remaining stake in the company. As a result, the taxpayers will lose about 1.3 billion of the 12.5 billion invested in Chrysler. At current stock prices, the government would likely lose about $10 billion on the bailout of General Motors, so somewhere in the $14 billion range is what taxpayers ultimately will probably be on the hook for.
NORRIS: Did the bailout actually save jobs and create new ones? Because we heard President Obama today tick through a lot of numbers and a lot of statistics, claiming that these are jobs that might have been lost if they had not showed up with these guaranteed loans. Did they actually create new jobs as well?
Mr. SHEPARDSON: Absolutely. March 2009, even the Obama administration is divided. Do we save Chrysler? There was never an argument whether General Motors was going to survive, but Chrysler was in a far weaker position. There's no question that Chrysler would have collapsed. There were no other buyers for the company, and it would have resulted in the loss of tens of thousands of jobs.
NORRIS: So you hail from Detroit. You cover Washington. You - it sounds like in listening to you that the White House is standing on firm ground when they make this claim that they've helped resurrect Detroit. And yet, there are a lot of people who do not agree, who think that the bailouts were a bad idea. They thought it then. They still think it now. And they think what actually saved Detroit was bankruptcy, not bailouts.
Mr. SHEPARDSON: Well, right. Well, in fact, of course, GM and Chrysler did ultimately go through bankruptcy. The argument here from Republicans is one that no public money should have been used, that the company should have gone to the private sector. The reality was in December 2008, no one was going to bailout Detroit, except the U.S. government.
If this was just about the free market, GM and Chrysler wouldn't exist. The impact to workers to these struggling states it meant literally overnight hundreds of thousands of people losing their jobs, not just at Chrysler, at the dealers in every state across the country, at the suppliers...
NORRIS: And the president talked about that today.
Mr. SHEPARDSON: Right. And the president - and I think the president made an interesting point. He went to this plant in Toledo, which is where they make the Jeep Wrangler, where they employ 2,000 people. There's also 3,000 other people at suppliers that are producing parts for that vehicle. So the impact of autos on the economy and the number of jobs is very significant, and it was just too great a risk.
NORRIS: David Shepardson, thanks so much for coming into the studio.
Mr. SHEPARDSON: Thanks, Michele.
NORRIS: That's David Shepardson. He's the Washington bureau chief for The Detroit News.
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