Can The GM Bailout Save Obama?

The Democrats change campaign strategies like most people change their socks. Obama is doing that too. His latest strategy calls for using the GM bailout to sway us all over to his side -- especially those of us living in rustbelt states. Good luck with that! Here's why this is one of his stupider ideas:

Point 1: Obama Didn’t Do It: Right out of the gates, this one is a bit of a laugher. The auto bailouts began under George W. Bush. Sure, Obama finished it, but this is a bit like crediting Truman for his decision to take on the Nazis. And how ironic is it that Obama, who loves to blame Bush for all of his own failures, should not be planning to steal Bush’s “achievements.”

Point 2: Americans Hate The Auto Bailout: Obama really thinks the public will respond to his claiming credit for the GM bailout. Yet, polls show the public hates the auto bailout. They have from the very beginning and they continue to do so today. Indeed, as recently as one month ago, Rasmussen found that 57% of Americans continue to say the bailout was a mistake and another 44% of Americans said they are less likely to buy a car from GM because of the bailout. But then, the percentage of Americans who oppose the bailout is down a full 7% in three years. . . maybe Obama thinks that’s a “trend”?

More importantly, this bailout was in place before the November 2010 elections and the Democrats got massacred in the rustbelt states. What’s changed since then to make Obama think this will be a better selling point now?

Point 3: The Bailout Didn’t Really Work: It’s hard to see how the bailout worked. Sure, GM is still there, but (1) 334,000 manufacturing jobs vanished despite the bailout, (2) 10,000 dealerships were closed, dealerships that employed 500,000 people, and (3) one quarter of US factory capacity to build automobiles was lost. . . i.e. rustbelt factories closed.

At least GM has been profitable for a year now. Of course, that happened because of dealer incentives -- the same tactic that ruined the big three in the first place. Also, the reason GM is profitable has nothing to do with the bailout, it has to do with GM filing bankruptcy and getting billions of dollars in debt discharged. In fact, GM could have gone straight into bankruptcy without the bailout funds and things would have turned out identically for GM. . . though the UAW wouldn’t have gotten taxpayer funds to cover their health and pension plans.

But what about the bailout money? When it was given to GM, we were told that it would all be paid back. . . every cent. Then we were told that GM had in fact paid it all back, only that wasn’t quite true because GM paid it back with TARP money. Basically, they borrowed taxpayer money to pay back debts to the taxpayers and then they acted like we should be happy.

In exchange for the TARP money, we got an ownership interest. And right before the election, Little Timmy Geithner and Joey "the liar" Biden announced to the world that we would indeed be making a profit on our “investment” in GM! Hurray! Vote Democratic! Of course, that wasn’t true either. GM stock has hovered near its IPO price since it went public again. GM’s stock price must get above $40 a share before we break even. It closed at $31 on Friday. . . 25% below the price we need. If the Treasury sells today, they would lose $17 billion to $20 billion of the $86 billion “invested”. . . and keep in mind that right now the market is likely at a multi-year high and will head south.

So what exactly can Obama trumpet here? What you’re going to hear are fantasy numbers. There are leftwing economists who have already speculated that the bailout saved millions of jobs and will make all of America’s kids 5% smarter and 2.4% more attractive. But this is bunk. These numbers, like the $3.5 million jobs "created, saved or made up," are just mindless applications of discredited Keynesian formulas that bear no relationship to what actually happened.

The real story of the bailout is the one above, and people get that. So good luck selling this one Mr. President.


BONUS ROUND: What do you think should be Obama's next sales pitch? He kept us out of war with Mexico? He didn't try to save the Yen? New York hasn't been blown up yet? Come on, let's give the guy a little help. . .