Obama to tout Chrysler, GM repaying aid, adding jobs

Jul 30, 2010 — Detroit Free Press

Justin Hyde

Jul. 30, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- WASHINGTON -- President Barack Obama will tout today 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 midterm 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, and that Detroit's three automakers could add 11,000 jobs by the end of this year.

"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 bankruptcy reorganizations. 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 Chrysler's Jefferson North first, followed by a quick tour around GM's Detroit-Hamtramck plant where the automaker will make the Chevrolet Volt. He will be joined by top officials, including the CEOs of GM and Chrysler, Gov. Jennifer Granholm 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 this year, the first step toward 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.

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Talking points on auto industry progress

Highlights of the auto industry's progress the Obama administration is promoting ahead of his trip today:

--In the year before GM and Chrysler emerged from bankruptcy, the auto industry shed 334,000 jobs. In the year since, auto industry employment has increased by 55,000 jobs. This is the fastest year-over-year growth in auto employment since 1999.

--Nine of GM's 11 factories, including Hamtramck, skipped summer shutdowns to meet growing consumer demand. Chrysler's Jefferson North also remained open.

--Thanks to growing demand, the Detroit Three will have added as many as 11,000 jobs before the end of 2010.

--Exports of vehicles and parts from January to May 2010 increased by 57% over the same period one year ago.

Newstex ID: KRTB-0048-47465467