In his formal acceptance of the Democratic presidential nomination last night, President Barack Obama celebrated his administration’s efforts to get the U.S. auto industry “back on top of the world," echoing remarks he made in a campaign stop earlier this month.
“The American auto industry has come roaring back,” Obama said then, nearly five years after the onset of an economic downturn that threatened to sink the nation’s largest carmakers.
But there’s one small problem with those assertions. The federal government's $80 billion bailout of General Motors and Chrysler, started under President George W. Bush and continued under Obama, hasn’t returned the sector to the top of the world. And that supposed roaring has fallen on deaf ears among taxpayers who are still owed billions by the car companies and autoworkers who are still out of a job.
GM, the country's largest carmaker and the recipient of $50 billion in government funds, has slipped to No. 2 and is headed for third place in global sales this year, behind Toyota and Volkswagen. And despite last year being the most profitable year in GM’s 103-year history, the automaker still owes taxpayers a whopping $25 billion. Chrysler, for its part, has repaid most of its federal loans.
Employment in the auto industry remains 12 percent below what it was before the recession started in December 2007, the Washington Post recently noted. In contrast, overall private employment is only four percent below what it was before the recession began.
To be sure, U.S. auto jobs and sales have seen a resurgence, and economists agree that a bailout was vital to keep the industry afloat. “Without financial help from the federal government, all three vehicle producers and many of their suppliers might have had to liquidate many operations, with devastating effects on the broader economy,” economists Mark Zandi, of Moody’s Analytics, and Alan Blinder, of Princeton University, wrote in a report cited by Bloomberg.
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