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Detroit’s bankruptcy: Another bad Obama bet
According to multiple speakers at the Democratic National Convention last week, President Obama saved Detroit by refusing to let it go bankrupt.
Michigan Governor Jennifer Granholm said, “Almost nobody had the guts to help us — not the banks, not the private investors and not Bain capital. Then, in 2009, the cavalry arrived: our new President, Barack Obama! He organized a rescue, made the tough calls and saved the American auto industry.”
An Obama campaign ad says, “President Obama stepped up, rescued the jobs, saved the industry.”
In December of 2008, the President allocated $17.4 billion to GM and Chrysler. That was President Bush. In total, Bush ordered the first $25 billion of the $85 billion GM and Chrysler got from the taxpayers. The idea that Obama courageously made the call to save GM and Chrysler is a myth.
Another myth: the companies did not go bankrupt. Both GM and Chrysler went through bankruptcy. They closed dealerships, shuttered plants and laid off workers. GM folded the Pontiac and Saturn brands. The bankruptcy was done under conditions set by the Obama administration — conditions that heavily favored the United Auto Workers union, which had endorsed Obama, at the expense of investors.
The choice was not whether GM and Chrysler would go bankrupt. It was whether the taxpayers would finance the transition. Mitt Romney argued that the better route was to let the companies go through a private bankruptcy in which taxpayer money would not be put at risk. He was right. The U.S. Treasury Department estimates that taxpayers will lose $23 billion in the deal.
Once again, the Obama campaign is crafting a narrative that portrays him as a bold and wise distributor of taxpayer resources, when in fact he sheparded them to his political allies. From the auto bailout to the stimulus to Solyndra, Obama gives your money to his friends, loses much of that money in the process, then portrays himself as a smarter investor and better turnaround artist than Mitt Romney. As Joe Biden would say, that is literally unbelievable.
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