KausFiles

Obama’s bailout boast

Mission accomplished: I wanted to hate Obama’s UAW speech, but it’s undeniably powerful–aided by the White House policy of not dropping “g”s in the transcript, thereby eliminating one of the President’s most annoying, condescending tics.  Note, however, Obama explicitly boasts that he’s helped fix Chrysler and GM “in the long term,” so they won’t “run out of money” in the future. Doesn’t that mean we can’t judge whether his bailout is a success based on current short-term appearances? You’d be successful in the short run too if the government gave you $80 billion.

Toyota and Honda are coming back online after the tsunami and Southeast Asia floods crippled production. VW is building roomy American-style cars in Tennessee using $14.50/hour non-union workers instead of $28/hour UAW workers. Hyundai is expanding rapidly. Competition is going to be vicious–it’s widely believed there’s still overcapacity in the industry. A new oil price spike could crimp sales of high-profit trucks. Will GM still be making money in 5 years? Or, I should say, will GM still be making money building cars in the U.S. (as opposed to importing them from China) in 5 years? I’m skeptical. I don’t think deficient corporate cultures change that easily. Normally we rely on the market to simply kill them off.

Even if GM and Chrysler crash again, the President could take credit for having “kicked the problem down the road” away from the recession of 2009, when the two firms’ disappearance could have magnified the misery and taken down much of the U.S. auto supply chain. But that’s not the bar he’s set for himself. …

P.S.: Obama boasted about having gotten workers their jobs back building “the Chevy Cobalt.” Mistake. The Cobalt was a dreary, uncompetitive compact that represented a lot of what’s wrong with GM. It has been replaced by the Chevy Cruze, which is not nearly as bad (though it was initially plagued with quality problems). If the White House speechwriters were clueless about this, what else …

P.P.S.: Why does Obama still embrace the Volt–even pledging to buy one “five years from now when I’m not President anymore”? I don’t mind the Volt, but it’s failed miserably to meet GM’s–and the administration’s–sales goals. The association can’t help Obama. He should let the Volt be GM’s problem, not his. …

Update: Voters seem to be resisting the new bailout-is-a-success narrative. A new National Journal poll has Americans 55-36% against. Someone tell cheerleading Journal reporter George E. Condon Jr. (“That the rescue of a great American industry is a success story is barely challenged today”). …