Biden Falsely Touts Auto Bailout Success

Posted: May 28, 2011 4:11 PM
There he goes again. Joe Biden was tooting his own Administration's horn in claiming their actions saved a "resurgent" US auto industry.

Biden, who provided the weekly address because President Barack Obama was traveling in Europe, credited the efforts of the Obama administration for the resurgence of the auto industry through its assistance.

"Because of what we did, the auto industry is rising again," Biden said. "Manufacturing is coming back. And our economy is recovering and it's gaining traction."

A few things wrong with the Veep's narrative here. Yes, the auto bailout "saved" two US car manufacturing giants, Chrysler and GM, from complete disaster. But at what price? And at what moral hazard? The US auto industry seems to need "saving" once every couple of years. Why keep sinking money into a giant, useless money pit?

Ah but, the Administration says, the taxpayers are making money on this! It's like one of those Obama "investments"!

False. Taxpayers sunk around $80 billion combined into the two companies, through outright loans and purchase of equity. Yes, the companies have paid some of that money back, but there's a snowball's chance in hell we ever see all of it, much less that taxpayers can claim a profit on it. The "paid-back loans" are merely an accounting gimmick and outright denial that a lot of what the bailouts consisted of were loans.

In Chrysler's case alone, the Treasury Department just straight-out forgave $4 billion in debt.

The case can be made that taxpayers made out better than expected in the auto bailouts. After all, us pessimistic conservatives probably thought it was such a bad idea that we'd never see a dime of the money back. It worked out great compared to that - we got a few billion!

The US auto industry seemingly requires these bailouts all the time. One of these days we're going to need to just let them fail. They're consistently outperformed by foreign competitors (who also employ a great many Americans) and come running to Uncle Sam every time trouble hits. But the UAW is part of the giant Democratic Party machine, and what's good for Detroit is good for the UAW!*

*George W. Bush has some culpability for the auto bailouts too, so let's not pretend it's just Democrats that love the UAW machine. It just feels that way sometimes.