Dems wield auto bailouts as issue against GOP hopefuls

Chad Livengood
Detroit News Lansing Bureau

Seven years after a Republican president initiated taxpayer-funded rescues of General Motors and Chrysler, Michigan Democrats still see the issue as a political trump card they can use in 2016 against Republican presidential hopefuls who opposed the bailouts.

The Michigan Democratic Party last week highlighted U.S. Sen. Marco Rubio’s opposition to the 2008-2009 auto bailout while the Florida Republican campaigned in the state. The issue may arise in Tuesday’s Republican presidential debates in Las Vegas.

“If they’re going to campaign in Michigan and talk about their vision for the country, people in Michigan need to understand where they stood when our future hung in the balance and who’s side they were on,” state Democratic Party chairman Brandon Dillon said.

With the 2016 primaries less than two months away, Democratic groups are going after Rubio, former Florida Gov. Jeb Bush, Ohio Gov. John Kasich and other Republicans running for president for their opposition or non-support of the bailout that began under Bush’s brother, former President George W. Bush, and was continued by President Barack Obama.

“It’s safe to say we will certainly highlight the differences between Hillary Clinton and the Republican nominee on the economy, and the auto rescue will be one of those things,” said Justin Barasky, communications director at Priorities USA, the super political action committee supporting Clinton’s candidacy.

Democrats argue the survival and comeback of the two automakers is definitive proof the bailout worked; they view it as their defining issue for carrying Michigan next year for the seventh consecutive presidential election since 1992.

GOP strategist Greg McNeilly said using the auto bailout against Republicans shows Democrats are “desperate for a working-class issue” to fire up their base next year.

“It’s never showed up in any polling that it’s a top issue of concern to voters, that voters made their decision based upon that,” McNeilly said. “This is just a shopworn idea because the Democrats don’t have an agenda for the middle class.”

George W. Bush initiated the bailouts on Dec. 19, 2008, with $25 billion in aid for General Motors., Chrysler Group and their lending arms, Ally Financial Inc. and Chrysler Financial.

In 2009, Obama loaned the automakers another $55 billion as his new Democratic administration took shares in both GM and Chrysler and expedited their bankruptcies through actions that largely aided unionized workers at the expense of bondholders.

Obama subsequently hailed the auto rescue as a success in his 2012 re-election, though taxpayers lost $9.26 billion in loans the automakers did not repay.

Bailout opponents

Bush, Rubio, former Hewlett-Packard CEO Carly Fiorina and U.S. Sens. Ted Cruz of Texas and Rand Paul of Kentucky have taken firm stands against the auto bailout. Fiorina has contended auto suppliers were sacrificed in the GM and Chrysler managed bankruptcies, at the expense of protecting “big business and big labor.”

Other candidates have sidestepped questions about whether it was the right thing to do.

“I don’t know if it does any good to rehash things that have already been done. It doesn’t really matter what I think,” retired neurosurgeon Ben Carson said in an interview with The Detroit News before a campaign rally Wednesday in Ypsilanti. “I will say that Ford didn’t participate in that. It seems like they are doing OK.”

New Jersey Gov. Chris Christie has refused to respond to hypothetical questions about whether he would have supported the auto rescue. Christie was a federal prosecutor in 2008, not a member of Congress, which supplied the funding source for the loans to GM and Chrysler through the $700 billion Troubled Asset Relief Program. TARP was initially set up to rescue Wall Street banks from the subprime mortgage crisis.

Kasich has taken more of a middle ground by saying had he been in Congress he might have found a different solution.

But during a campaign stop in Lansing in June, Kasich also did not want to be pinned down by a reporter’s hypothetical question.

“I don’t know what I would have done, just like I don’t know what I would have done had I landed on the moon. Pick up a rock? I don’t know,” Kasich said.

Kasich later added: “I’m pleased the way it came out.”

Trump’s shifting stance

GOP presidential frontrunner Donald Trump has shifted his stance after initially voicing support for the bailout in 2008.

“I think the government should stand behind them 100 percent,” Trump said on Fox News. “You cannot lose the auto companies. They’re great. They make wonderful products.”

But in an August interview with The News, Trump suggested GM and Chrysler could have survived without the assistance of the federal government serving as the lender of last resort.

“It would have worked out the other way, too,” Trump told The News. “It would have been a free-market deal.”

During an Aug. 12 campaign stop in Birch Run, the business tycoon repeated his belief that the automakers could have rebuilt themselves in bankruptcy without the federal government’s assistance.

“You would’ve ended up ultimately in the same place,” Trump told reporters.

The conservative Club for Growth has criticized Trump’s past support for the auto rescue.

“In typical Trump fashion, he uses selective memory, ignoring the fact that he was for the bailout, and wanted taxpayers to finance the auto companies and be their cosigners through any restructuring,” said Doug Sachtleben, communications director at Club for Growth, a free-market advocacy group.

Despite Trump’s supportive 2008 statements, Democrats say they plan to use Trump’s latest comments against him if he prevails in the GOP primaries.

“He’s doing what he can to be difficult to pin down, but he’s also said you would have wound up in the same place with or without the auto rescue,” said Ben Ray, communications director of American Bridge 21st Century, a Democratic-aligned group that gathers opposition research on Republicans. “For folks who lived through the auto rescue, I think they know that that’s not true.”

David Cole, chairman emeritus at the Center for Automotive Research in Ann Arbor, said the country’s domestic and foreign-owned auto sector was “at the edge of a mega catastrophe” when Bush authorized the first $13.4 billion in loans to GM and Chrysler.

“It’s easy for the politicians to talk about these things in a kind of loose way,” Cole said. “I’m a pretty conservative guy, but one of my criticisms of Trump is he seems to talk first and think second.”

GOP positions

on auto bailouts

Where some major Republican presidential hopefuls stand on the 2008-09 federal bailouts of General Motors and Chrysler:

■New York billionaire Donald Trump: Supported bailouts in 2008. This year: “I think it would have worked out the other way, too,” if the two firms had gone through normal bankruptcies.

■Retired pediatric neurosurgeon Ben Carson: “Ford didn’t participate in that. It seems like they are doing OK.”

Texas U.S. Sen. Ted Cruz: “I don’t think the federal government should be engaged in bailouts. Those industries would have (survived) and thrived.”

■Florida U.S. Sen. Marco Rubio: “I don't think that was the right way to handle it, but certainly our auto industry is important.”

■Former Florida Gov. Jeb Bush: “That is the form of capitalism when the government intervenes in a very muscular kind of way. And I don’t believe that that is appropriate.”

■Ohio Gov. John Kasich: “I don’t know what I would have done,” but “I’m pleased the way it came out.”

■New Jersey Gov. Chris Christie: No position. He was a federal prosecutor at the time.

■Ex-Hewlett-Packard CEO Carly Fiorina: “More jobs were destroyed out in America than all of the union jobs saved combined (during the auto bailouts), and no one in Washington said a word. ... We’ve had entire industries go through bankruptcy proceedings.”

■Kentucky U.S. Sen. Rand Paul: Ran for the Senate by opposing the December 2008 Troubled Assets Relief Program (TARP) from which President Geroge Bush gave loans GM and Chrysler.