President Barack Obama tried out a sales pitch that might have been at home in a car lot as he made his announcement of the government’s 60 percent ownership share of the once-mighty General Motors.
“And I want to remind everyone that if you are considering buying a GM car during this period of restructuring, your warranties will be safe and government-backed,” Obama said, heralding a “new GM” that “can produce the high-quality, safe, and fuel-efficient cars of tomorrow.”
But the bigger sales job for the president was to convince American taxpayers that his decision to make them “reluctant shareholders” of GM was the best option available.
“We’re making these investments not because I want to spend the American people’s tax dollars, but because I want to protect them,” Obama said.
The federal government will give the troubled automaker $30 billion in loans, on top of the $20 billion in loans that GM already received, as part of a massive overhaul aimed at saving the company.
General Motors filed for bankruptcy protection from creditors, ahead of a large-scale and a revamping of operations and production. The “leaner” GM also will mean more factory and dealership closings and job losses, Obama said.
Obama has repeatedly said he does not want to be in the automakers’ business, but the latest move puts the administration deeper inside the industry and at greater political risk, on the heels of an earlier deal for Chrysler.
Public opinion strongly opposes the financial and auto industry bailouts that started under President George W. Bush and continue with Obama. A recent Rasmussen Reports poll found 67 percent opposed a public bailout for GM, and 76 percent said they believed the economy would do fine if the automaker failed.
Just 18 percent said they believed the federal government would do a good job running the auto industry.
The administration took pains to describe the bailout as a tough decision, and partnered the announcement with upbeat news that Chrysler, an earlier beneficiary of bailout funds, had finalized a partnership with the Italian automaker Fiat.
“The [GM] agreement may buy some time, but does nothing to ensure GM’s success,” said House Republican leader John Boehner of Ohio. “The only thing it makes clear is that the government is firmly in the business of running companies using taxpayer dollars.”
The economically devastated Midwest, where the auto industry is headquartered, is key political real estate for Obama, who won the region in 2008 and is looking ahead to 2012.
The industrial states also are a prime economic engine for the nation, and improving circumstances there could have a strong, positive effect on the success of Obama’s economic agenda.
“GM isn’t an anachronism,” said Rep. Sander Levin, a Michigan Democrat. “It was once the titan and I think it’s fallen, but it’s going to rise again as the president said, and it’s important for America that it rise again.”
