Amid sluggish recovery, Obama touts auto rebound

President Barack Obama speaks at the Pritzker Architecture Prize Even at Andrew Mellon Auditorium, June 2, 2011, in Washington. / AP Photo

WASHINGTON - President Barack Obama is drawing attention to the auto industry's rebound, visiting a Chrysler plant in politically important Ohio as he seeks to highlight a rare bright spot in the sluggish economic recovery.

Mr. Obama was to travel to Toledo on Friday, making the latest in a string of domestic trips to promote his economic agenda and defend the much maligned government bailouts to Chrysler and General Motors. The president planned to speak to plant workers and local business owners about the significance of the industry's turnaround.

With a national unemployment rate hovering around 9 percent and signs indicating hiring may be slowing, Mr. Obama has to look hard for examples that his economic policies have had a positive impact, reports CBS News correspondent Dean Reynolds.

And as the Republican presidential field begins to take shape, the White House is keenly aware that Mr. Obama's handling of the economy generates some of his highest public disapproval ratings.

"We have said from the beginning that the road out of the dark place we were in when this president took office in terms of the economic recession, the depths of the recession we were in, was not going to be smooth every step of the way," White House spokesman Jay Carney said.

The Bush and Obama administrations spent $80 billion to bail out General Motors and Chrysler and help guide them through bankruptcy. The Obama administration says it will recoup more than 80 percent of that and Mr. Obama intends to defend the bailouts as money well spent.

A report by the president's National Economic Council this week said the taxpayers' loss from the bailout will be about $14 billion. The Treasury Department initially had expected losses closer to 60 percent.

Chrysler last week announced it would be paying off its remaining loans to the U.S. and Canadian governments ahead of schedule. And late Thursday, Treasury announced a deal to sell its remaining stake in Chrysler for $560 million to Italian automaker Fiat. That still means that of the $12.5 billion Treasury used to bail out Chrysler, about $1.3 billion will not be recouped, Treasury said.

GM received $49.5 billion in the U.S. bailout, and the federal government has recovered about half of that by selling a portion of its ownership stake in the company. It intends to sell its remaining 26.5 percent share of the company at a later time.

GM, Chrysler and Ford had been reporting significant increases in sales, but the industry this week reported a falloff in May.

Apart from sales number, the auto industry's rebound has saved jobs for Americans in an otherwise tough economy.

James Fayson assembles Jeeps in Toledo and was laid off in 2009 only to be called back to work late last year.

"I wonder where I would be at in life right now had not the president been able to help the American people in the auto industry," he told CBS News.

Sheila Holmes and her sister Beverly also endured tough times at Chrysler.

"I have four children. ... It was financially very difficult. And then it was more difficult just not knowing if you were gonna even have a job period," said Beverly, a single mother who eventually filed for bankruptcy.

"I cried a lot of days. I'd go into my room and just ball up and cry, like 'What am I going to do?'"

Sheila nearly lost her home.

"We were hurting pretty bad. Hurting pretty bad," she said.

Now with Chrysler back on its feet, the sisters take issue with critics who say the government's bailout of the auto company was misguided.

"I don't look at it as a bailout," Beverly said. "It was a loan to Chrysler, that is currently paid in full, thank God, with interest ... in less than two years!"

[jgg000101]

geez, cbs, could you jettison this story any quicker? Even you must realize it's a load of crap.

[cbsnacilbuper]

indicating hiring may be slowing, Mr. Obama

Oooo, Mr. Obama that's not good.

[credibility2]

What's dangerous folks is that the president actually believes his own spin and actually believes that folks are lapping it up like mother's milk.

[cbsnacilbuper]

American taxpayers have already spent more than $13 billion bailing out Chrysler. The Obama administration already forgave more than $4 billion of that debt when the company filed for bankruptcy in 2009. Taxpayers are never getting that money back. But how is Chrysler now paying off the rest of the $7.6 billion they owe the Treasury Department?
The Obama administration's bailout agreement with Fiat gave the Italian car company a "Incremental Call Option" that allows it to buy up to 16% of Chrysler stock at a reduced price. But in order to exercise the option, Fiat had to first pay back at least $3.5 billion of its loan to the Treasury Department. But Fiat was having trouble getting private banks to lend it the money. Enter Obama Energy Secretary Steven Chu who has signaled that he will approve a fuel-efficient vehicle loan to Chrysler for...wait for it...$3.5 billion.


Furthermore, Exhibit 99.1 of the Form 8K filed by GM with the SEC on November 16, 2009, seems to confirm that the source of funds for GM's debt repayments was a multi-billion dollar escrow account at Treasury-not from earnings. In the 8K filing GM acknowledged:
"Of the $42.6 billion in cash and marketable securities available to GM as of September, 30, 2009, $17.4 billion came from an escrow account with Treasury,
"$6.7 billion of the escrow account available to GM was allocable to the repayment of loans to Treasury,
"$5.6 billion in cash would remain in the Treasury escrow account following the repayment by GM of their loans, and
"Upon repaying Treasury, any balance of escrow funds would be released to GM.
Therefore, it is unclear how GM and the Administration could have accurately announced yesterday that GM repaid its TARP loans in any meaningful way. In reality, it looks like GM merely used one source of TARP funds to repay another. The taxpayers are still on the hook, and whether TARP funds are ultimately recovered depends entirely on the government's ability to sell GM stock in the future. Treasury has merely exchanged a legal right to repayment for an uncertain hope of sharing in the future growth of GM. A debt-for-equity swap is not a repayment


Does anyone else see a pattern here?

[meboard]

by endurorob_5 June 3, 2011 10:45 AM EDT
"The jobs being added don't even cover the increase in population every month."
____
Another strong argument for planned parenthood folks. Good point Endopeo_5!!!!

[RET-ABNRGR-CSM]

Hi Sweetie

:)

-- Damn girl -- you had me and Ms Zann thinking one of the bully gang thugs went squalling to their CBS Dabby to get you banned -

Go see the article about Palin not upstaging Romney

Man It's great to see you're still here cupcake!

XOXO

[RET-ABNRGR-CSM]

Well, I do have another PTSD appt at Montgomery VA 21 Jun if it's any of you business "paid4"

[jgg000101]

would somebody please tell obama - and cbs - that there is no "recovery" and that there is no "auto rebound". Unemployment hasn't budged - and is in fact higher with more companies talking about another round of layoffs. There are record numbers on welfare and foodstamps, a double dip in housing, a steadily devaluing dollar, a decrease in manufacturing, rising debt, rising gas and food prices, and inflation is set to kick-in big time. Every economic metric is disasterous. As for the "auto rebound" it is a load of crap. Yes, the taxpayers gave these companies billions to hire more people. However, nobody is buying these cars. The chevy volt is a disaster. GM's sales figures are still abysmal, and GM stock is a lox. GM has been inflating their sales figures by selling cars between dealerships and pocketing the tax advantages provided by the government as profit. In the meantime, the bondholders, preferred stock shareholders are getting screwed, and taxpayers are out $14B which they will never get back.

[meboard]

At least now we are adding jobs as oppose to losing jobs for most of the later half of loser W's term!

[endurorob_5]

The jobs being added don't even cover the increase in population every month.

[meboard]

You're advocating child labor now????

[sdemaggie]

Just a quick reminder that Obama but the automakers into a psuedo recievership rather than give the automakers bridge loans. The result of the bankruptcies wiped out the bond holders which were held by nearly every retiree. The end result is: A loss to the treasury, significant decrease in income to a huge swath of retirees, wiped out bondholders, significant job loss. The forced bankruptcies of these manufacturering titans once post mortems are performed on the impact to the economy will show this was a major disaster not only to the individuals impacted but the loss in revenue to the treasury in income taxes. Obama is an idiot.

[endurorob_5]

But is was a damn good deal for the unions and that is what is important to Obama.

[Forbus56]

The Obama Presidency is shovel-ready.

[Libertarian_1776]

$1.3 billion unpaid, labeled a "success"
Who got the 1.3 billion, were was it spent?
Taxation without representation!