U.S. President Barack Obama hailed the resurgence of the U.S. auto industry as well as Detroit’s emergence from bankruptcy today at Ford’s assembly plant in Wayne, where he was applauded by hundreds of Ford workers and elected officials.
“Today I wanted to come here to Michigan because this state proves that no matter how tough times get, Americans are tougher,” Obama said as part of a series of speeches leading up to the State of the Union speech on Jan. 20.
Obama said the federal government could have provided the auto industry money without any strings attached or could have done nothing. It instead chose to lend money in a program designed to encourage restructuring.
“Now this is the heartbeat of American manufacturing. Right here. And it was flat-lining,” Obama said of the industry in 2009 when the federal government decided to provide emergency loans to help General Motors and Chrysler emerge from bankruptcy.
“It was not popular. Even in Michigan it wasn’t popular,” Obama said. “But that bet has paid off…because the American auto industry is back.”
U.S. automakers sold 16.5 million cars and trucks in 2014, the most since 2006. GM, Ford and Chrysler are all now earning profits - a steep contrast to the losses that forced all three companies to go to Washington to ask for loans in 2008.
Portions of Obama’s speech sounded much like many of his campaign speeches in 2012, when Obama was running for a second term.
Now, Obama is trying to gain momentum for the remainder of his second term where he will be challenged by a Republican controlled Congress.
“I’ve only got two years left in office — I didn’t want to wait for the State of the Union to talk about all the things that make this country great,” he said.
Obama said he also wanted to highlight the success of the automotive rescue program because it has come to an end. Last month, the U.S. Treasury sold its last remaining shares that it held in Ally Financial, which previously was GM’s auto lending arm.
In total, taxpayers lost $9.26 billion on the U.S. government’s automotive industry rescue program, according to a final tally released by U.S. Treasury on Monday.
The government recovered $70.42 billion of the $79.68 billion it gave to General Motors, Chrysler, Ally Financial Inc., Chrysler Financial and automotive suppliers through the federal Auto Industry Financing Program. The program was part of the larger Troubled Asset Relief Program, or TARP.
However, the automotive rescue program was never designed to earn a profit for the government. Instead, it was designed to prevent the nation from sinking into a depression.
“The bankruptcy of either GM or Chrysler or both would have been extremely devastating, particularly in this region of the country,” said Kristin Dziczek, director of the labor and industry group for the Center for Automotive Research. “Not acting would’ve cost the federal government much more than $9.3 billion in terms of lost tax revenues and increased social safety net costs.”
While Ford was the only one of Detroit’s three automakers not to receive government assistance as part of the 2009 rescue effort, Ford executives have frequently said the Dearborn automaker and its own supplier base would have been decimated if GM and Chrysler had gone under.
“Bill (Ford) and others are the first to admit that you could have a cascading effect …Ford could have gone under too,” Obama said. “Plants would have shuttered, and we would have lost this iconic industry.”