When it comes to the facts about the bailout and its aftermath, it’s actually Soledad O’Brien and other biased or ignorant reporter who are standing on the wrong side, and conservatives need to call them on it.
As I have noted, the bulk of the resurgence of the American auto industry has occurred not in the Motor City, but in the right-to-work red states where automakers such as Hyundai, BMW, and Toyota have set up shop. As of June 2011, according to the Cleveland Plain Dealer, GM and Chrysler employed 16,500 fewer people than in 2009. When President Obama and his supporters speak of the more than 100,000 new jobs the auto industry has added in the past two years, their statistics consist largely of jobs created by foreign-owned automakers in nonunion states far away from the plants of the bailed out companies.
It is of course very good news, as well as a tribute to the quality of America’s labor force, that foreign auto and auto-parts makers want to hire here. But it is very difficult to attribute this new hiring by foreign automakers to the U.S. government’s bailout and takeover of our domestic dinosaurs.
It’s also worth noting that the bailout/takeovers themselves caused thousands of job losses, both directly and indirectly. Take the jobs that were shed in the hyper-quick dealership closings. Some dealers would have and should have been closed in normal bankruptcies, but the Obama administration whiz kids who designed the auto restructurings forced 25 percent of GM and Chrysler dealers to close in less than four months. The National Auto Dealers Association estimated that 110,000 jobs would be axed. The automakers challenged these figures as too high, but the respected special inspector general for TARP, Neil Barofsky, agreed that “tens of thousands of dealership jobs were immediately put in jeopardy” by the “rapid pace” of dealer closings. In his report, Barofsky also faulted the administration for not preparing a formal “cost savings estimate” before closing the dealers. Jobs were put at risk, Barofsky wrote, without “any explicit cost savings to the manufacturers in mind.”
And then there are the jobs not created and businesses not opened because of the likely increase in the cost of capital from the shabby treatment of GM bondholders and Chrysler’s secured lenders. The Obama administration designed a restructuring that disregarded two centuries of bankruptcy precedent to give disproportionate ownership stakes to the UAW and, in Chrysler’s case, Fiat. This abrogation of contracts, prominent scholars say, could discourage lenders from financing businesses due to fear of future politicized bankruptcies. As Todd Zywicki, professor of law at George Mason University, eloquently put it in a Wall Street Journal op-ed: “By stepping over the bright line between the rule of law and the arbitrary behavior of men, President Obama may have created a thousand new failing businesses. That is, businesses that might have received financing before but that now will not, since lenders face the potential of future government confiscation.”
So the real question of the auto bailout/takeovers should be how many future jobs did we sacrifice though the disregard of the rule of law? The still sky-high unemployment rate may be giving us some clue.