Award–winning journalist Andrea Bernstein is Senior Editor for Politics & Policy for WNYC News. She has previously served as Metro Editor, Political Director, Director of Transportation Nation, and Senior Reporter.
What Happens When Government Bailouts Work?
Tuesday, October 19, 2010
Let's do a thought experiment. Let's say that one of the last governors of New York — David Paterson, Eliot Spitzer, George Pataki, or Mario Cuomo — actually had saved an industry. Let's say they'd used the power of the state's purse to keep a company from failing, turned it around, and could reasonably have claimed to have saved a million jobs. Would that have helped either party in upstate New York, where jobs have been hemmoraging for decades? A look at Michigan's electoral situation shows just how hard it is to make that argument, particularly for Democrats.
None of the bailouts have made Americans particularly happy. The bank bailout known as TARP was a Bush administration initiative — supported by Obama, but not of his making.
The stimulus was a series of internal compromises which gave a huge part of the spending control to Congress.
But the GM bailout was an Obama plan, and one the White House considers a nearly unqualified success. "The contrast between where these companies" — Chrysler and GM — "and the American auto industry are today, and the situation President Obama faced when he took office are stark," the White House wrote in a report of April of this year.
In careful language, the analysis says some 1.1 million jobs had been at risk, and the bailout had enabled the car companies to stay afloat, restructure, and, in GM's case, repay their loan five years ahead of schedule. Obama called the bailout a "success," and analysts agreed.
Writing in Bloomberg Business Week, David Welch noted:
So far, it is tough to argue that the bailout hasn’t worked. GM is in the black, having reported an $865 million profit in the first quarter with black ink looking likely for the rest of the year....Chrysler is at least making an operating profit, which puts the company in much better shape than most analysts thought it would be a year ago.
So, you'd think this would be a big selling point for the White House, right? A political plus? Dems should be cruising in Michigan—if nowhere else? You'd be wrong.
Because it turns out in Michigan, as in the rest of the country, a job saved is invisible, when unemployment is already in the double digits and headed north.
“I don’t know,” bank teller Luz Guardarrama tells me as she tries to keep her small children from wandering off into the Walmart SuperCenter parking lot in Jackson, Michigan. “It’s just — I’m getting tired of just, politics not being so good and honest.” She voted for Obama in 2008, and says she’ll stay home. She liked what he promised in 2008, but doesn’t think he’s accomplished much, though she doesn’t entirely blame him alone. But as for the President’s bailout of the auto industry, the one that saved 1.1 million jobs?
“I don’t think it was a good idea. It has good stuff because it brought out more jobs, but at the same time it was a lot of money, that — I don’t know. Where is it?”