When Chrysler announced at the end of April that it repaid most of its $10.5 billion loan from the federal government, Democrats seized on the opportunity to declare the unpopular bailout a success story. The Chrysler announcement, combined with General Motors’ (GM) previous claim that it had already paid back half of its $50 billion bailout, has put the auto companies in a unique position for the 2012 election cycle.
In other words, all signs point toward GM becoming a major talking point in the 2012 election cycle. But don’t expect the GM leadership to be particularly enthusiastic about being a poster child of a Democratic agenda — even though that particular party is the one that saved them from further financial disaster.
“No one at GM is happy” that it is “going to be used as one of President Obama’s success stories,” a source familiar with the internal dynamics of GM’s business told The Daily Caller, adding that the car company is not exactly on the same page as the White House in terms of declaring victory.
GM’s “not hanging a ‘Mission Accomplished’ banner and they shouldn’t either,” the source told TheDC, citing current economic and industry woes.
“GM is not in a position to declare victory,” the source added.
The Detroit-based auto company, however, may not have a choice in the matter.
On the same day Chrysler made its announcement, the Democratic National Committee (DNC) released an ad defending the bailouts, and attacking three Republican presidential candidates for opposing them two years ago: former Minnesota Gov. Tim Pawlenty, former Massachusetts Gov. Mitt Romney, and House Speaker Newt Gingrich.
“While Republicans and pundits disagreed,” reads the ad, “President Obama made the tough choice to grant American automakers a lifesaving loan.”
As Obama was touring Great Britain at the end of May, he also took the time to release a statement praising the decision to bailout the auto companies.
“Supporting the American auto industry required making some tough decisions, but I was not willing to walk away from the workers at Chrysler and the communities that rely on this iconic American company,” said Obama in his statement. “I said if Chrysler and all its stakeholders were willing to take the difficult steps necessary to become more competitive, America would stand by them, and we did.”
Other members of the Obama administration are also publicly praising the auto bailouts.
“Auto czar” Ron Bloom made an appearance at the White House press briefing Wednesday and said, “[W]e believe that the steps we took and the steps they took in partnership with us have positioned these companies to where they have a real chance of success.”
Also on Wednesday, Treasury Secretary Tim Geithner wrote an op-ed for the Washington Post and argued that America’s auto industry “is mounting one of the most improbably turnarounds in recent history.”
“Nothing about the president’s call was popular,” Geithner continued. “It may have been more politically expedient to let Chrysler fail. But the president knew that if Chrysler collapsed, tens of thousands of jobs would have been shed in the near term — a body blow to an economy already on the ropes.”
But the strategy of using the auto bailouts as a policy achievement could backfire. Brian Lunde, a former campaign manager and executive, told TheDC that bringing up the auto bailouts won’t help at the polls.
“I don’t think Democrats should want to talk about what voters perceive as unpopular,” said Lunde, who became a George W. Bush supporter later in his career. “The preconceived belief [of the bailout] is negative.”
Moreover, said Lunde, the “fine print of the bailout is a can of worms. The more you know, the worse it looks.”
According to the GM source, who did not want to be named because of the difficult situation GM is in, the company’s leadership believes that because its bailout is a “polarizing” topic, a continual spotlight on the 2009 bailout will not only hurt business, but also the government’s return on the investment.
That return is already lower than expected. In a report issued Wednesday by the president’s National Economic Council, the government is slated to lose $14 billion in taxpayer money from the $80 billion auto bailout given to Chrysler and GM.