America has been blessed with a new success story. With rising unemployment threatening to stall a feeble recovery, the president needs a victory very badly. The GM and Chrysler bailouts are all he has. In a bid to make the history books, the Obama administration has created “The Resurgence of the American Automotive Industry.” The report is available at Whitehouse.gov. We finally have proof that billions of dollars can fix almost anything.
The president confuses buying his way out of a problem with solving a problem. Administration predictions of GM and Chrysler’s success are premature, at best. Like lottery winners living big before they end up filing for bankruptcy, we are in the heady time now. Billions of taxpayer dollars saved the automakers, but the resurgence is PR hype spawned by the White House’s desperation over its failure to stimulate a viable recovery.
Rising unemployment will end Mr. Obama’s automaker resurgence just as surely as the recession destroyed private sector businesses not on the federal dole. Jobless Americans, and those of us who shudder at the mere thought of unemployment, may not feel like buying trucks, especially when gas prices are high. Trucks are vital to GM and Chrysler’s profits.1
The White House chose the Jeep Wrangler to highlight the rescue of the auto parts supply chain.2 Mr. Obama talked about the Wrangler in last week’s speech at a Toledo assembly plant. With the May unemployment report predicted to be a loser well before its release, his damage control staff may have run out of time to find a success story about a hybrid. The president is big on fuel efficiency. He might want to have his media people research the vehicle he is showcasing.
Labor costs are still a problem for GM and Chrysler, and these costs conflict with administration policy that the unions come first. Automaker contracts with the UAW are due to be renegotiated this year, and the union may show up with its hand out, looking to regain ground lost during the bankruptcies:
Industry experts we spoke with noted that the UAW could attempt to regain some of these concessions in the 2011 negotiations, and the UAW’s president has issued press releases stating that UAW members should share in the companies’ newfound financial improvements.3
GM stepped up to the plate last year, tossing union workers $4,300 profit sharing payments.4
The hype about jobs created by propping up the auto industry ignores the businesses put under by the decisions of the president’s Auto Team. Dealerships were closed, jobs lost, and futures ruined (see: The Small Business Shutdown Obama Doesn’t Discuss). The White House PR machine doesn’t say much about the losses to retirement funds caused by the bankruptcies, either, or how preference was shown to the pensions and benefits of union employees (see: Special Interests: Are Obama’s Bigger?).
The White House report on the resurgence of the auto industry concludes with the usual list of ways to spend more of our money, including infrastructure, clean energy, and education. Mr. Obama’s Toledo speech ended on the same note. The president will never figure out why the economy is slowing, despite his commitment to lots of new spending to get things going again. He can talk all he wants about the success of the automakers, but the fact that GM and Chrysler are still in business proves only one thing. If you have enough money, bailouts can fix just about anything. Until you run out of money.