Car Czar Looks Back at The Bailout

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Welcome to Politics Bites, where every afternoon at It's A Free Country we bring you the unmissable quotes from political conversations on WNYC. On today's Brian Lehrer Show segment, "30 Issues in 30 Days," Steven Rattner, President Obama's former car czar and author of Overhaul: An Insider’s Account of the Obama Administration’s Emergency Rescue of the Auto Industry in America, discussed his new book and whether the bailout of the auto industry was good for America.

Few regrets here.

Even though he pummels General Motors for mismanagement and bad business policies in his new book, Steven Rattner called the bailout of the auto industry an "unqualified success" and defended the Obama administration's decision to keep the car company afloat. A year and half later, after signficant restructuring, GM and Chrysler are actually making money again, he said, even though U.S. car sales are down to 11-12 million a year.

Yet the auto industry bailout, coupled with the Wall Street bailout, dug under the skin of many Americans, and continues to be a major political issue in election season.

But Rattner believes the bailout was a crucial economic decision made by the president because it was the right policy. Without it, Rattner said at least one million jobs would have been lost.

It would have been the economic equivalent of an atomic bomb on the Midwest. 

The former car czar said the biggest economic question facing America now is the question of whether a lower wage, less expensive economy is better than a higher wage, higher cost economy. He acknowledged that the bailout didn't solve the fundamental problem that GM's base wage in the U.S. is $33/hour and in Mexico it's $7 an hour--yet the factories have the same productivity. "We have to recognize where we can compete and where we can't," he said. 

He suggested the U.S. move towards more a sophisticated manufacturing industry, the way Germany has.

I don't believe in government directed industrial policy but I believe that a government that tries to preserve old inefficient jobs is not helping this economy at all.

Rattner was sympathetic to an angry public, and agreed with the growing public perception that the American political system is broken.

The Senate is virtually disfunctional with the 60 votes that is required to do anything. Jefferson described the Senate as 'the saucer in which the hot coffee cools,' meaning that it would moderate the temptation of the House to do things. Well, it suceeded beyond his wildest dreams in that the Senate has almost stopped doing things.

What do you think about the auto industry bailout? Post your comments here on It's A Free Country.