Auto Bailout May Still Define 2012 Election
TOLEDO (WWJ) A fiery appearance by Vice President Joe Biden in front of a UAW audience in Toledo gave a preview of how aid to General Motors and Chrysler is going to remain a big issue in the 2012 presidential campaign.
Biden took issue with Republican front-runner Mitt Romney, who has criticized the bailout, and said that President Barack Obama turned GM and Chrysler over to the UAW.
The vice president told about 500 cheering union members that Obama's actions saved a million jobs.
Analysts expect the bailout to be a big issue during the campaign, with the Democrats touting it as a major success, and Republicans portraying it as big government's intrusion into the private sector.
"For a lot of people their view on the auto bailouts really depends on what side of the political divide they happen to be on," said Jeremy Anwyl, CEO of Edmunds.com.
These arguments, Anwyl says, tend to inflame passions on both sides, but they also tend to distort what really happened.
"This is actually a pretty complex issue," he said. "When it becomes political, we get a lot of sound bites. Basically what I'm saying is there's a lot of misstatements on both sides."
It's easy to make arguments now, Anwyl says, because there's no way to tell whether a different course of action would have worked.
Romney has said the automakers should have gone through traditional bankruptcy. But those involved in the process have said there was no financing available.
Anwyl also says while government aid allowed GM to rid itself of a lot of expenses and clean up its balance sheet, there are also other reasons for the company's strong sales and record profits in 2011.
"A lot of what's driving GM's success today were actually things that were put into place several years ago," he said. "They are very successful in Asia. Very successful in South America. That's the legacy of Rick Wagoner."
Rick Wagoner was the GM CEO fired by the administration's auto task force, blamed for billions in losses. But Anwyl also points out that the products that have been doing well in the marketplace were designed under the leadership of Wagoner and vice chair Bob Lutz.
"It's going to take a while to see if the new management is going to be able to build on those advantages," said Anwyl.
The success at Chrysler has surprised a lot of people, Anwyl says, and is due mostly to the driving force of CEO Sergio Marchionne.
Both Obama and Biden have been trumpeting the resurgence of GM and Chrysler as major successes, and are expected to continue to do so.
But, Anwyl says we are still very early in both companies' turnaround.
"The problems that lead both Chrysler and General Motors to the situation where they needed government support built up over decades," he said. "I think demonstrating that they learned from those, and are going to be healthy going forward is going to take a few years to tell as well."
