The White House will hail today’s Chrysler repayment of government loans as a victory for a president that bravely fought off naysayers to do the right — if not the popular — thing by rescuing Chrysler and the U.S. economy.
Trample the rights of secured bondholders, threaten investors, unilaterally restructure labor overhead, and mold the bankruptcy code to your liking, and any company with the awesome powers of the White House behind it could turn around its fortunes. This is a victory for “gangster government” as Michael Barone put it. Dismiss the ugly evidence, and – sure – this bailout was a model taxpayer rescue.
While we can dismiss the White House’s straw-man argument that critics of the Detroit bailout would have left GM for the vultures, it is true that Chrysler was in jeopardy. For all of its brash energy, talent, and segment-breaking products, this was a firm that had already been through one federal bailout, multiple owners, and lacked the product diversity to survive in the long term.
That is still the case.
Chrysler survived for one reason — a bipartisan agreement that an already weak economy could not survive the domino effect of a major auto company going under.
“The simple fact is that an uncontrolled collapse of the Detroit-based auto industry . . . carried enormous political and economic risks for whoever sat in the Oval Office, regardless of political party,” writes my Detroit News colleague Dan Howes.
That, and Democrats intervened on behalf of a key special interest, Big Labor, and gave the company free to Fix-It-Again-Tony. That is a debatable foundation for an enterprise that must do battle against the likes of non-union Hyundai.
Mission Accomplished? Stay tuned.