The Democratic Convention was reportedly going to feature bragging about the success of the GM bailout, which President Obama has said he regards as the model for what he’d like to do unto other sectors of the economy.
As the president said recently at a campaign stop in Colorado:
When the American auto industry was on the brink of collapse, I said, let’s bet on America’s workers. And we got management and workers to come together, making cars better than ever, and now GM is No. 1 again, and the American auto industry has come roaring back.
President Obama might want to rethink that: GM appears to be in serious trouble—again.
Michael Barone has a column headlined “From Bad to Worse: Obama’s GM Bailout.” Barone writes:
GM has been selling cars in the U.S. at deep discount, and while it’s making money in China — and is outsourcing operations there and elsewhere — it’s bleeding losses in Europe. It’s spending billions to ditch its Opel brand there in favor of Chevrolet, including $559 million to put the Chevy logo on Manchester United soccer-team uniforms — and it just fired the marketing exec who cut that deal.
It botched the launch of its new Chevrolet Malibu by starting with the green-friendly Eco version, which pleased its government shareholders even though the car got lousy reviews. And it’s selling only about 10,000 electric-powered Chevy Volts a year, a puny contribution toward Obama’s goal of one million electric vehicles on the road by 2015.
“GM is going from bad to worse,” reads the headline on the analysis of Automotive News’s editor in chief, Keith Crain. That’s certainly true of its stock price.
The government still owns 500 million shares of GM, 26 percent of the total. It needs to sell them for $53 a share to recover its $49.5 billion bailout. But the stock price is around $20 a share, and the Treasury now estimates that the government will lose more than $25 billion if and when it sells.
The Obama administration rewrote bankruptcy law to bailout GM, a bailout that consisted mostly of preserving union privileges at the expense of taxpayers and holders of secured loans. If the auto maker had gone through a real bankruptcy and had the opportunity to restructure in a less union-friendly way, it might be doing better. Or it might not—sometimes, tragically for the people who work there, companies fail, a phenomenon of which President Obama seems ignorant.
It should be noted that, despite the billions the administration spent on the bailout and stimulus programs, the economy remains in the tank. The number of jobless claims rose last week—"unexpectedly," as usual. No wonder all the Democrats want to talk about these days is non-biology major Todd Akin, who has supplied them some alternative talking points for a convention in a time of economic stagnation.