The Revival of GM
Jon Cohn turns his attention to Detroit:
Will the voters will ever give President Obama credit for rescuing the American auto industry? I have no idea. But it looks more and more like they should. On Thursday General Motors announced that, for the fifth consecutive quarter, it had made a profit. And not just a measly one, either. The $3.2 billion was higher than experts had predicted and more than three times the profit of the same quarter in 2010, when the company was still struggling to emerge from its bankruptcy.
...."Reducing excess capacity" is a Wall Street euphemism for eliminating jobs. A lot of people suffered, and still are suffering, because they lost their livelihoods. Still, if not for the Obama Administration's intervention, the entire American auto industry might very well have collapsed and taken the Midwest with it. Instead, the industry is on the rebound, at least for now.
Back in 2009, when the rescue of GM and Chrysler was up in the air, I remember that my main thought was, "I'm sure glad I don't have to make this decision." Philosophically, after all, a bankrupt company ought to be allowed to die. The government just shouldn't be in the business of rescuing badly run industrial behemoths, especially in an industry with the kind of massive global excess capacity that the auto industry has.
At the same time, would you want to be the guy who lets GM shut down at the height of the biggest recession in 50 years, potentially losing a million jobs and sending the economy into an even bigger tailspin? Not really. It was just a classic rock and a hard place.
In the end, though, Obama almost certainly made the right call. We don't know for sure what the impact of letting GM and Chrysler fail would have been, but it quite likely would have been grim. And in the end, despite the endless yowling about "Government Motors" and Obama's "secret socialist agenda," the fact is that his team rammed through a pretty good deal, GM has recovered, Obama was fastidious about letting GM's managers run the company,1 and taxpayers will likely take only a modest loss. It's not something anyone wants to repeat — and GM's board better understand that it's unlikely it ever will be — but under the circumstances it was the best we could do. And Jon is right: voters ought to give Obama more credit for it than they have.
1Why? Because Barack Obama is actually a boring, gray-flannel-suit, garden variety American capitalist pig. Like just about everyone else in the country, he has no interest in controlling the means of production and wants only to regulate capitalism's excesses, not replace it with socialism. But you knew that already.