Obama Team's Car-Dealer Closings Cost Jobs: Watchdog : The Two-Way An Obama Administration watchdog said its push to close car dealerships boosted jobless rate.
NPR logo Obama Team's Car-Dealer Closings Cost Jobs: Watchdog

Obama Team's Car-Dealer Closings Cost Jobs: Watchdog

Marks left by the removal of a "Dodge" sign are shown on the building of a closed Dodge car and truck dealer, Friday, May 29, 2009, in Burien, Wash. Ted S. Warren/AP hide caption

toggle caption
Ted S. Warren/AP

Critics of Big Government interference in the workings of the free market have some extra ammo Monday, courtesy of a report by the Treasury Department's inspector general.

Neil Barofsky, the Treasury IG, said the department arguably contributed, ifonly unintentionally, to higher overall unemployment by ordering auto makers to close car dealerships much more quickly than the manufacturers had planned.

For years, auto industry experts had criticized Detroit's Big 3 for keeping bloated dealership networks which reduced profits for the companies.

The Obama Administration's position was that to keep the automakers from wasting taxpayer-bailout money, the domestic auto makers had to significantly pare back their number of dealerships.

But Barofsky said the Obama Administration may have moved too hastily, causing the loss of numerous jobs in the larger economy.

This audit concludes that before the Auto Team rejected GM's original, more gradual termination plan as an obstacle to its continued viability and then encouraged the companies to accelerate their planned dealership closures in order to take advantage of bankruptcy proceedings, Treasure (a) should have taken every reasonable step to ensure that accelerating the dealership terminations was truly necessary for the long-term viability of the companies and (b) should have ar least considered whether the benefits to the companies from the accelerated terminations outweighed the costs to the economy that would result from potentially tens of thousands of accelerated job losses.

NPR's All Things Considered reports that a jobless man at the White House Monday to be in a photo op with President Barack Obama who bashed Republicans for thwarting new jobless benefits, was himself a car dealership worker until last year.

And in a report, NPR's Scott Horsley quotes a Russell Whatley, a third-generation Chrysler dealer in Mineral Wells, Texas who says:

"We were given three weeks to shut down operations. And it pretty much threw everybody for a loop."

White House press secretary Robert Gibbs defended the decision, saying that the decision to close auto dealerships helped keep the wider car industry afloat, saving even more jobs.

I will point out that since 2007 -- since mid-2007, the decline in auto dealership employment is about half the decline in auto manufacturing employment.

So what has taken a greater hit in that supply structure are the manufacturers and the parts suppliers.