News Column

Auto Bailout Prompts Sharp Dispute at Debate

October 12, 2012

Nathan Bomey

Auto INdustry

Vice President Joe Biden and GOP contender Paul Ryan sparred Thursday over which presidential candidate is more committed to the U.S. auto industry during their only scheduled debate.

As it has been on several other occasions during the campaign, the U.S. government's bailout of General Motors and Chrysler was among the topics. Democrats repeatedly have pounced on Republican presidential candidate Mitt Romney's November 2008 op-ed in the New York Times titled "Let Detroit Go Bankrupt." In the article, Romney spelled out a nuanced argument calling for a managed bankruptcy without government funds.

Biden stated: "We immediately went out and rescued General Motors. Romney said, 'No, let Detroit go bankrupt.' "

Ryan replied: "Mitt Romney's a car guy. They keep misquoting him."

The facts: Neither candidate pointed out that the bailouts began under Republican President George W. Bush in late 2008. He provided $17.4 billion in emergency loans to the automakers.

Biden also said that the government's bailout of the two Detroit automakers "saved 2 million jobs" before adding, in a confusing moment, that "200,000 people are working today." Ryan didn't challenge Biden's numbers.

The facts: The Ann Arbor-based nonpartisan Center for Automotive Research released a study in November 2010 estimating the bailouts preserved between 364,291 and 1.82 million jobs. The number is difficult to quantify because analysts don't agree on what would have happened if GM and Chrysler were denied government funds and had to liquidate.

In a worst-case scenario, automotive analysts have said that a collapse of GM and Chrysler could have triggered the liquidation of numerous automotive suppliers and wiped out millions of jobs. Even with the government help, the companies and their suppliers eliminated thousands of jobs. Under the managed bankruptcies spelled out as part of the bailouts, GM and Chrysler shed their debt and today are profitable and stable.

Source: (c) 2012 Detroit Free Press. Distributed by MCT Information Services