However, Obama’s grasp for credit was undermined by news from a Congressional Budget Office report on the Troubled Asset Relief Program. The CBO report out Tuesday showed that the program would cost an additional $61 billion during fiscal year 2012.
The CBO found that the government lost $23 billion in the year that ended Sept. 30, with a decline in the stock values of General Motors and insurance giant American International Group, a reversal in fortunes after a $37 billion gain the year before.
The federal government owns 32 percent of GM, whose stock fell from $40 last year to below $25 this year because investors see long-term problems at the company. To break even, GM must improve its performance until investors double its stock price to $53.98, said the report.
The company’s U.S. sales fell from 4.5 million units in 2005 to only 2 million units in 2009. But 2011 sale climbed up to 2.5 million units.
GM’s overseas sales and tsunami-related problems at Japanese auto companies also helped the company reclaim its status as the world’s largest auto-maker. Obama is using the upward sales trend to tout his $85 billion intervention in GM and Chrysler in 2009.
“The U.S. auto industry is back,” he declared while visiting the Washington Auto Show, which was held in Washington, D.C. “The fact that GM is back, number one, I think shows the kind of turnaround that’s possible when it comes to American manufacturing,” Obama declared at the show.
No auto show was held in Washington during 2010 or 2011. (RELATED: Full coverage of Barack Obama)
Administration officials also claim credit for saving jobs at other U.S. auto companies.
The U.S. auto industry is much larger than GM, which has roughly 200,000 employees. But Ford and foreign-owned auto factories in the United States were not aided by the federal government. The “motor vehicles and parts sector” employs 724,000 people, according to the Bureau of Labor Statistics.
“What our action was designed to do and did do was prevent the elimination of up to a million jobs in the automobile industry and create a situation where that industry is now creating jobs again,” White House spokesman Jay Carney said Jan. 12.
“The fact of the matter is… that the automobile industry in this country was heading over a cliff and would likely not have survived were it not for — certainly not at its size and competitiveness — were it not for the decision this president made,” Carney claimed.
Obama also used the Washington Auto Show to slam Romney, who argued in 2008 that the government should let the company go through a traditional managed bankruptcy process, rather than the White House-managed bailout preferred by Obama.
A normal process would have allowed top managers more freedom to renegotiate contracts with unions and to redesign company operations to improve profitably.
Obama’s pitch Tuesday is part of his 2012 election strategy, which “will be that he passed the health care law, single-handedly saved the car industry, ended the wars and has had 22 months of job growth,” Minneapolis Mayor Ryamond Rybak, who is the vice chairman of the Democratic National Committee, told a reporter for TownHall.com in January.
The full cost of Obama’s GM bailout is difficult to calculate because of the deals’ complexity. For example, GM was also allowed to use past losses to offset future tax bills. That special provision is worth up to $45 billion for GM, according to the Wall Street Journal.