Obama to tout Detroit prospects, payback

Jul 29, 2010 — Detroit Free Press

Justin Hyde

Jul. 29, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- WASHINGTON -- President Barack Obama will tout on Friday the prospects of General Motors and Chrysler adding jobs and repaying much of the aid they received last year during his first visit to Detroit since taking office.

The visit, along with a stop at a Ford plant in Chicago next week, represents a large wager by his administration that the unpopular $86-billion salvage of Detroit's auto industry can be turned into a political profile in courage ahead of tough mid-term elections. In a new report today, the White House contended the U.S. auto industry as a whole had added 55,000 jobs since June 2009, the largest employment growth since 1999.

"The president didn't think that walking away from a million jobs and people in these communities made a lot of sense," said White House spokesman Robert Gibbs. Noting that radio host Rush Limbaugh and other critics had called for letting GM and Chrysler collapse, Gibbs added: "I'll let those that sat in the cheap seats a year ago and wanted to walk away from a million explain to every one of those workers why they made that decision."

Obama said in an interview on ABC's "The View" that he expected GM and Chrysler to pay back the roughly $60 billion that his administration had put into their bankruptcies. The government's most recent official estimate of its return on the rescues forecast a loss of $24.3 billion; a Free Press analysis suggested it could be half that given the improvement in the U.S. auto industry.

Obama said before his administration shepherded GM and Chrysler through bankruptcy in 2009, the government "had been bailing them out for years before that, just asking nothing in return."

"You now have all those U.S auto companies showing a profit," Obama said on "The View," in an interview taped Wednesday. "They've rehired 55,000 workers. We are going to get all of the money back that we invested in those car companies."

"And the best thing is we're now creating an entirely new clean energy, clean car technology around advanced batteries and whatnot that will make us a world leader," he added.

The Bush administration lent GM $13.4 billion and Chrysler $4 billion in December 2008, money Obama auto task force officials have maintained was unlikely to ever be recovered.

Obama will stop at Jefferson North first, followed by a quick tour around GM's Detroit-Hamtramck plant where the automaker will assemble the Chevrolet Volt. He will be accompanied by top officials from both automakers and the UAW.

Ron Bloom, head of the administration's auto task force, declined to provide more specific estimates of the government's return on its spending or divulge details of GM's upcoming public stock offering.

"Right now the trajectory is positive," he said.

GM is expected to launch a public stock offering later this year, the first step towards unwinding the government's 60.8% stake. Chrysler has said it would not consider a stock sale until 2011; the U.S. government owns 9.9% of its equity.

GM has paid back $7.7 billion in loans and interest on the $50.7 billion spent in its rescue, while Chrysler has paid back $2.5 billion of the $12.5 billion it received. The U.S. Treasury also spent $16.3 billion stabilizing Ally Financial, formerly GMAC.

Contact Justin Hyde: 202-906-8204 or

Newstex ID: KRTB-0048-47446663