Obama Rails Against Bailouts in Speech Defending Auto Bailout

In last night’s State of the Union address, President Obama declared that the United States “we will not go back to an economy weakened by outsourcing, bad debt, and phony financial profits.” He railed against a system that isn’t fair to the “millions of Americans who work hard and play by the rules every day,” positioning himself against special treatment for a favored few: “No bailouts, no handouts, and no copouts,” he said. The address, he explained, was intended to move past all that, and “lay out a blueprint” for America’s economy—a blueprint that “begins with American manufacturing.”

What might this blueprint hold for all of us? If Obama’s top example of successful policy is any example, more bailouts, more handouts, more special treatment for favored companies and industries, and more phony profits. We're not going back to an economy weakened by all these things; we're just going to keep the one we have. Here's how Obama touted the first item on his economic brag sheet last night: 

On the day I took office, our auto industry was on the verge of collapse.  Some even said we should let it die.  With a million jobs at stake, I refused to let that happen.  In exchange for help, we demanded responsibility.  We got workers and automakers to settle their differences.  We got the industry to retool and restructure.  Today, General Motors is back on top as the world’s number-one automaker.  (Applause.)  Chrysler has grown faster in the U.S. than any major car company.  Ford is investing billions in U.S. plants and factories.  And together, the entire industry added nearly 160,000 jobs.   We bet on American workers.  We bet on American ingenuity.  And tonight, the American auto industry is back.

Sure, it’s back in the sense that General Motors is finally beating Toyota, a Japanese car maker that just saw its supply chain decimated by a Tsunami and a nuclear disaster. And you know what? In a boxing match pitting a lower ranked fighter who's been given brass knuckles by the ref against a higher-ranked fighter who just broke his ankle, I'll probably bet on the one with the brass knuckles. But it's not much of a victory. 

And sure, it’s back in the sense that GM is no longer on the precipice of complete fiscal meltdown; all it took was a $50 billion handout bailout copout gift from taxpayers, and a $20 billion tax break. Also: continued public losses as the company under performs. When GM went public, taxpayers bought up a 61 percent stake in its operations at about $33 a share. So I suppose Obama was right about one thing: The auto bailout was a bet of sorts; in order for the public to simply break even, GM's share prices would have to rise to roughly $51. As of yesterday evening, shares are trading at $24.75. The company’s investors—that would be everyone who pays taxes—are losing money on this deal. This is straightforward industry favoritism, and it's not particularly fair to the millions of American workers and taxpayers who play by the rules, but weren't bailed out, and are now having to foot a giant-sized bill for a company that was. 

Yet this is apparently the kind of success that Obama would like to see replicated across the country. "What’s happening in Detroit can happen in other industries," he said. So taxpayers can take tens of billions in avoidable losses in order to bail out other failing industries too? Not exactly a blueprint for success, but it certainly tells you where the Obama administration would like to take the country. 

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  • Tony||

    It's not like you'd be blaming Obama personally if the auto industry and satellite industries had tanked.

    There's a Krauthammeresque pissiness to these SOTU posts. Might I suggest Metamucil?

  • Auric Demonocles||

    Before? No. Now that he's the head of GM? Yes.

  • Tony||

    It's understandable that you'd be bent out of shape because a government intervention saved an industry, yet the sky remains in place. It's not like it's a secret that you care less about the welfare of American workers than being proved right on your silly little dogma.

  • poetry||

    a government intervention saved an industry

    Nevermind that the industry wasn't worth saving..

  • Kwanzaa Cake||

    The auto industry is not GM and Chrysler, you know. Ford did not take a bailout, and neither did any of the many foriegn manufacturers who make and sell cars in this country. This was about "saving" two companies -- actually, their pensioners and current unionized emoployees -- that had been badly mismanaged and make sub-standard products. The notion that the country is better off for having "saved" GM and Chrysler, or that those two companies constitute the "industry," is ridiculous.

  • Tony||

    How is it worse off?

  • Kwanzaa Cake||

    Is that a serious question, especially in light of the rundown of billions down the drain itemized in the above article?

  • Tony||

    Kind of a drop in the bucket compared to the Bush tax cuts, which accomplished nothing but increasing debt. Are you in favor of letting those finally expire?

  • fish||

    Are you in favor of letting those finally expire?

    If you can get TEAM BLUE to stop spending.

  • poetry||

    ...and TEAM RED, while we're at it... but i guess Tony has more clout in blue circles, as he's been sucking their clue cocks with such gusto

  • poetry||

    *blue cocks

  • ||

    Hey shit for brains: The Democrats had control of both houses and Obama signed the extension so sit down and shut the fuck up about the Bush Obama tax cuts.

    Oh, and nevermind the fact that those tax cuts you keep talking about mostly went to middle class people like me, not those evil one percenters.

  • Mr. FIFY||

    I had a vicious hangnail the other day. Must've been because of the Bush tax cuts.

  • ||

    Kind of a drop in the bucket compared to the Bush tax cuts, which accomplished nothing

    To Tony, letting people keep what they earn is "nothing."

  • Amakudari||

    Well, it's not letting people keep what they've earned if you just break out the national credit card afterward.

  • ||

    It wasn't even about the pensions. The pensions would have come through bankruptcy. It was about saving the union pay and dues.

  • mr simple||

    Uh, they still went bankrupt. Obama just stole money from the legitimate debt holders and gave it to his masters in the union.

  • GM investors||

    what?

  • The Question of Auban||

    You do realize there were bankruptcy laws already on the books don't you? Just because a company would go bankrupt does not mean it would go "out of business".

  • The Question of Auban||

    And as Mr. Simple points out they still went bankrupt!

  • fish||

    Yeah...and if I'm not mistaken the senior bondholders took an assfucking so Black Kennedy could buy the union vote. But other than that everything was completely above board!

  • ||

    Bing.

  • ||

    because a government intervention saved an industry

    Is that like when the doctors saved Terri Schiavo?

  • ||

    Tony, the auto bailouts didn't save an industry. They saved a couple of companies.

    Except at the very margins, the closing of two auto companies would not affect demand for cars. Thus, just as many cars would be sold, and thus built, without the bailout. That means the auto industry would be just as big, without the bailout. It would, however, be noticeably short of companies pouring money into the UAW, and thus the Democratic Party.

  • tarran||

    No Tony is right! Because if a car company goes out of business, nobody can start a new business to replace it!

    Without the bailouts we'd be reduced to walking to work! Or taking public transportation!

  • H man||

    Nobody can start a new business to replace it in today's regulatory envrionment. O.k. a bit hyperbolic but not by much.

  • protefeed||

    Nobody can start a new business to replace it in today's regulatory envrionment.

    The regulatory environment foisted upon us by the federal government does not apply to those starting new companies elsewhere in the world.

  • Tony||

    I realize your silly little dogma doesn't permit you to concern yourself with whether the demand is on American companies or foreign, but that was the point. Any thoughts on the lack of sky falling?

  • ||

    You are aware, of course, that them damned dirty furrin' car makers build most the cars they sell in the US, in the US?

  • Juice||

    Many "foreign" car companies manufacture cars in America. Many "American" companies manufacture their cars in Canada and Mexico. They are all pretty much multinational, publicly traded corporations.

  • ||

    Who said the sky was gonna fall? I believe the biggest problems people had with the bailouts were the continued misallocation of resources by a seriously skewed (by the gov) market and the precedent set of bailing out "too large to fail" companies. BTW, foreign companies employ Americans, too. There is a Toyota plant near me that employs thousands, and the jobs there are coveted by many blue-collar workers.

  • Kwanzaa Cake||

    One of GM's major problems was that demand was already turning away from their cars because they sucked compared to Toyota, Honda, et al. That plus their outrageous pension liabilities and uncompetitive cost structure are kind of why they needed the bailout in the first place.

  • fish||

    Any thoughts on the lack of sky falling?

    What is it with you and your painfully short attention span?

  • poetry||

    tony is hilarious!

  • fish||

    Yes. If didn't exist we would have to invent him!

    (get to it spoofers)

  • ||

    And yet Ford didn't take a bailout, retooled and redirected themselves and started doing quite well. Fuck GM and Chrysler that they couldn't do the same thing.

  • adam||

    In what sense is GM an American company and Toyota is not? Is that because it's incorporated in Delaware? Because I don't see any other difference.

  • Brandon||

    And Chrysler is a French company now, right?

  • ||

    If you're referring to Fiat's stake in Chrysler, it would make them an Italian company.

  • ||

    Daimler is what he was referring to.

  • ||

    Well said, RC.

  • adam||

    The bailout didn't even 'save' GM and Chrysler. Both companies went bankrupt. Regardless of the government intervention, both companies would have emerged from bankruptcy. They owned a lot of valuable assets and, once shed of many of their liabilities, they were very valuable. The bailout was of the company's pensioners and unionized workers. If it weren't for the bailout, the bankruptcy judge would have torn up most of those obligations or significantly changed them.

  • ||

    It didn't even save those companies. First, the companies could have gone into Chapter 11 and come out just fine. And second, by reaffirming all of the union contracts, the bailouts did nothing to improve the long term prospects of those companies.

  • poetry||

    i like it when john and tony argue

  • GILMORE||

    Tony|1.25.12 @ 10:06AM|#

    It's understandable that you'd be bent out of shape because a government intervention saved an industry

    'Saved an industry'?

    you are such a brainwashed little non-thinking fuck that you'll just take whatever partisan shit you are given by Obi-Wan-Obama to chant endlessly, never once asking yourself if it even makes sense.

    You think Ford, Toyota, Honda, Volkwagen, Hyundai were 'saved' government intervention? That Cars would simply cease to exist in our completely auto-dependent society? If Obama had not had the courage, insight, and willpower to stop it, we'd all be back to horse and buggy?

    If GM had gone chapter 11, the others would have rapidly competed to buy up their market share, and all the 'fired' GM workers would have to go to work elsewhere on terms that actually can sustain a company.

    How is it worse now? Moral hazard, fuckwad. Look it up.

  • Major Johnson||

    You mean allowed a failed company to survive artificially (the Shiavo comparison by Heller is quite apt here) at the expense of the companies that were not failed. Every car GM can sell because it was bailed out is a car Ford, Honda, Toyota and BMW won't sell.

  • The Question of Auban||

    True - and do not forget that some foreign companies like Honda, Toyota and Hyundai build cars in the United States!

  • cynical||

    "It's understandable that you'd be bent out of shape because a government intervention saved an industry"

    Sure, in the same since that raising a corpse as a zombie slave saves a life. Hey, maybe that'll be my new nickname for Obama. Il Douchey is old and busted. "The Necromancer" is the new hotness, and just in time for The Hobbit.

  • JEP||

    "We bet on American workers. We bet on American ingenuity"

    So, my company has laid plenty of people off in the past. When that happens, the engineers who got laid off generally band together and form a new company. This has happened multiple times because of lay offs and when a group of engineers just gets fed up with the way things are done.

    If you wanted to "bet" on American workers and ingenuity, then you'd let the companies fail and then you'd the engineers, mechanics, etc split off and form their own companies. It's not really betting if you're using government money to insure a certain outcome, and it's not really ingenuity if you're left with the exact same company/problem you had before.

    What a douche.

  • poetry||

    B-but, b-b-b-ut, Tony says the bailout worked! Shouldn't the US fed gov now bailout every company that gets into financial trouble!?

  • NeonCat||

    Only if they're up to date on their contributions to the Obama re-election campaign and/or if the majority of their workers are unionized. Otherwise, they're profit-mongering republicans who need to go out of business.

  • JEP||

    I just like thinking of how many different automotive designs we'd have by now.

    Obama likes trying to spur innovation through giving people millions of dollars, i.e. the 6 million or so he used to generate (ha!) interest in electric vehicles.

    You'd really have a lot of innovation if you let the big auto companies fall apart. The people who lost their jobs would realize that the old way doesn't work anymore. You'd have new physical designs, new engine designs, etc.

    It would have been an automotive renaissance.

  • mr simple||

    My progressive wife, who was a huge Obama supporter 4 years ago, said she can't believe they're running him for re-election.

  • ||

    Does she also say that she won't vote for him?

  • mr simple||

    She won't go so far as to declare her intent this far in advance, though she has been know to write in a name just to voice her protest to the candidates offered.

  • poetry||

    i'll offer your advance, baby

  • cynical||

    My progressive wife and I don't talk about politics much, which is why we have such a happy marriage. But it was a heartening sign that when she saw that the SOTU address was coming on, she groaned and went to Netflix to play some episodes of Doctor Who instead.

  • Jim Treacher||

    I just tried to watch "Daleks in Manhattan." Just as bad as I'd heard.

  • Discount Double Choke||

    A million jobs at stake? Really, well, I guess he was only off by like a factor of 10. Close enough for government work.

  • Montani Semper Liberi||

    I was amused that Pittsburgh was one of his examples of a city that has rebounded. Apparently he is unaware that all the steel mills are gone now and the biggest employers in the city are education and health care, which are industries heavily subsidized by the government. I don't know how feasible that strategy is for other US cities.

  • Montani Semper Liberi||

    Oh, and the Raleigh metro is build around state government and education (NC State, UNC, Duke) as well. I don't really know much about Cleveland's revitalization, if in fact there has been one.

  • ChrisO||

    Cleveland has substituted the Rock 'n Roll Hall of Fame for actual industry.

  • Concerned Citizen||

    And the RRHOF refuses to induct real musicians, such as Yes, ELP, Rush, Kansas, etc. Typical for Cleveland, to eschew quality.

  • ||

    Add Jethro Tull to the list. I'm sure the Foo Fighters will be inducted before JT.

  • BakedPenguin||

    Yanni Weiner (the Rolling Stone douche) has stated that Rush will never make it in while he's alive.

  • Concerned Citizen||

    Who has sold more albums than Rush? The Beatles and the Rolling Stones. That's it.

  • ||

    That's criminal. Anti-Canadianism rears its ugly head again.

  • Concerned Citizen||

    Maybe we could start a Rock Musicians Hall of Fame. We could fill it pretty quickly.

  • ||

    The decisions are made in New York, are they not? Cleveland gave Rush one of its first big US breaks (WMMS). You'd think the fuckers would get that. Then again, the argument that a Rock 'N Roll HOF is anathema to the concept of rock 'n roll is persuasive. So in that sense, it's good that one of the best bands ever is not in there.

  • o3||

    no, the cleveland clinic is a multi-billion $/yr industry

  • Obamacare||

    Not for long!

  • Cleveland clinic billing||

    we got no prob w the new insurance regs

  • Concerned Citizen||

    My wife works in the medical insurance billing industry. They'll have to outlaw abortion so there are enough workers to handle the insurance regulatory nightmare.

  • o3||

    explain please. who's "they"?

  • Concerned Citizen||

    They, who have sovreignity over us, who make our decisions.

  • Amakudari||

    The Research Triangle has a lot of tech and biotech companies. Government's still the largest single industry in Raleigh, but it's the capital so that's a given.

    Granted, government, education and medicine are all recession-proof, so it doesn't say much.

  • Alack||

    Shhhhh, don't point that out! They'll use it as evidence that governmental "investment" helps industries thrive and create jobs!

  • ||

    Don't forget that the city is also under state recievership.

  • sarcasmic||

    Obama had to abandon the free market to save the free market, or something like that.

  • JEP||

    It's very similar to how we must abandon our liberties for security...so we can secure our liberties.

  • ChrisO||

    Did anyone besides Suderman actually watch this nonsense?

  • Raston Bot||

    of course not.

  • ||

    You know you're truly living in Bizarro world when the president promises that he can make the rest of the US just like Detroit.

  • cynical||

    Maybe he just played Human Revolution? Cybernetic limbs for everyone!

  • Kwanzaa Cake||

    Surely the Canadian government should step in and "save" RIMM, right? What would the world do without RIMM cell phones that are getting absolutely slaughtered by Apple and Samsung in the marketplace? Similarly, I wonder if GM's sales lagged because their cars sucked. Nah, couldn't be.

    Kodak should also be saved, for the good of Rochester, NY. Who cares that the company has no viable business model?

    The list could go on.

  • Montani Semper Liberi||

    Sure, they are expensive and not very practical, but I'm convinced that the Chevy Volt is the future.

  • Kwanzaa Cake||

    Also the batteries apparently catch fire. But the important thing is that John Q. UAW worker makes $75/hour building them.

  • o3||

    nope - wages were 2 tiered during negoiations which mgmt proposed.

  • ||

    “No bailouts, no handouts, and no copouts,” he said.

    "Now, I call upon you folks in Congress to get your thumbs out of your asses and BAIL OUT ALL THOSE UNDERWATER HOMEOWNERS!"

  • Shenequ'a||

    Bitch better keep the Obama money coming. I'm pregnant. Again.

  • ||

    And, when the FDIC starts shutting down the banks whose balance sheets are destroyed by those homeowner bailouts, we'll bail them out again.

  • Holdfast||

    You'll bail our the banks or the FDIC (the "them" was unclear), or maybe both?

    Dr. Nick: Free Bailouts for Everyone!

  • ||

    At one point, Roger Penske was in serious negotiations to buy the Saturn brand and its dealer network, and an interim product line. I thought (still do) a Saturn led by Roger would probably be outselling Chevrolet in ten years. Somebody in Washington must have agreed with me, because the deal got torpedoed, and a valuable asset was allowed to be tossed in the dumpster to avoid the competition.

  • ||

    My dad worked for Roger Penske as SVP of the Penske Auto Centers back when he had quick lube places in K-Marts. They had just started to branch out to making stand alone stores when he decided to jetison that entire branch of his company. It took me a couple years to realize he saw the writing on the walls about the slow death of chain quick lubes.

  • ||

    One of my best friends in high school's uncle is a senior VP at Chrysler. He and a couple of other Chrysler execs wanted to buy the Oldsmobile name and brand from GM after GM stopped making them. It was a win win for GM. GM gave up a name and brand it didn't intend to use and got a fat check and royalties on any cars they actually sold. The deal was killed because the UAW threw a fit. The only way to make Oldsmobile work was to build non union plants. And we can't have that.

  • ||

    Did anyone besides Suderman actually watch this nonsense?

    "Not I," said the rat.

  • protefeed||

    The company’s investors—that would be everyone who pays taxes—are losing money on this deal.

    Oh, for fuck's sake. What a profoundingly statist thing to say. I'm gonna shout here to see if I can get it through your skull, Suderman. THE PEOPLE WHO WERE ROBBED TO PAY FOR THIS BAILOUT ARE NOT INVESTORS IN GM. The government is the "investor". We are not the government, any more than we would be the mafia if mafiosa extorted money from us to pay off mafiosa debt.

  • sarcasmic||

    Doesn't voting make you government?

    If the mafia offered you the opportunity to vote for their leader, wouldn't that make you a "made" man?

    Sure they'd still kill you if you didn't pay them for "protection", but you voted!

    Voting makes you part of whatever it is you vote for!

    We are government!

  • Geithner, Biden, Sebelius||

    ONE OF US! ONE OF US! ONE OF US!

  • GILMORE||

    The headline could very well have been, "Obama Proposes New Regulations and Oversight Departments in Speech Promising To Lift Regulations and Streamline Government" The whole thing was an exercise in marketing one thing while selling another. This is par for the course these days... where its all just a matter of 'redefining' what X means to get at your desired result. Can't create jobs? Then create or save them. Done and done!

    Its like the thing noted today by Cato today:

    http://www.cato-at-liberty.org.....ate-taxes/

    Claim: “Right now, companies get tax breaks for moving jobs and profits overseas.”

    False: There are no such breaks. Instead, we punish U.S. and foreign businesses for investing and creating jobs here.

    Claim: “If you’re a business that wants to outsource jobs, you shouldn’t get a tax deduction for doing it.”

    False: There is no such tax deduction.

    Basically, Obama suggests companies who pay less than the onerous domestic US corporate taxes are "subsidized" by lower tax rates elsewhere. Or that they get a 'deduction' by choosing to operate in a country more friendly to business. Basically, the assumption is that if you are a "US" company, you BELONG to the government, and you're being very naughty not giving the government their 'fair share'.

    As in their repeated characterization of the Bush Tax Cuts as "spending"... because 'money we let you keep is actually OUR money, given to you!'

    That is a sick and scary thing... being told you're a slave, and expecting to nod and clap when they say it I kind of irritated they get away with it without anyone taking them to task right to their faces.

  • Holdfast||

    I wonder if he Taz Law I at Hah-Vaahd?

    Release the transcripts!

  • Holdfast||

    "Tax", damnit.

  • Doctor Whom||

    I've heard some people ask why GM and Chrysler can't just design and build competitive cars. Why should they, when the government makes sure that they don't have to?

  • Joe M||

    Today, General Motors is back on top as the world’s number-one automaker.

    By what metric, exactly?

  • GILMORE||

    Number of vehicles sold.

  • Geithner, Biden, Sebelius||

    ONE OF US! ONE OF US! ONE OF US!

  • Masturbatin' Pete||

    Can someone explain why Obama feels entitled to take credit for Ford's recent success? I mean, I can understand GM and Chrysler, but Ford?

  • Anonymous Coward||

    Because Obama was generous enough to not fire a torpedo at Ford the same way he did at Toyota (OMG! Sticky gas pedals! Oh wait, you fuckers just don't know how to drive, that's all.)

  • Jim Treacher||

    Obama will say whatever he needs to say in order to get through the next 30 seconds, even if it directly contradicts what he says 30 seconds before and/or after.

  • cynical||

    So, voting for Newt is like voting for 4 more years of Obama?

  • Jim Treacher||

    I don't know. Newt didn't give this speech.

  • ||

    "Ford is investing billions in U.S. plants and factories. And together, the entire industry added nearly 160,000 jobs. "
    Ford!! Ford!! Ford didn't take Obama's stinkin' bailout. So they aren't owned by the union goons or the taxpayers. But Barry will just take credit for them too. The ###hole!

  • Shooter||

    The bail out was a political move for more union support towards the left. If GM/Chysler were allowed to declare bankruptcy they could have been able to rebuild and get rid of union, as it exsisted, that has destroyed the American Auto Industry as we know it.

  • ||

    I am not a big fan of bailouts for any reason. However, my living depends on a healthy automotive industry. I am involved in the Visit vehicle transport industry. If the vehicle manufactoring companies are able to pay back the borrowed taxpayhers dollars, what harm did it do?

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