Former U.S. President George W. Bush told car dealers gathered at a convention in Las Vegas he “didn’t want to gamble” with a depression in defending the loans he gave to General Motors Corp. and Chrysler LLC.
“I didn’t want there to be 21 percent unemployment,” Bush said in a speech yesterday to cap the annual National Automobile Dealers Association convention, attended by more than 20,000 people. “I didn’t want to gamble. I didn’t want history to look back and say, ‘Bush could have done something but chose not to do it.’ And so I said, ‘no depression.’”
The Bush administration provided loans to GM and Chrysler starting with $4 billion to each company in December 2008 and January 2009. Bush eventually provided $17.4 billion in aid to the automakers before Barack Obama’s administration expanded the rescue of the companies to $62 billion.
Obama has cited the assistance given to the auto industry as an example of policy that protected U.S. jobs. Republican presidential candidates including Mitt Romney have criticized the moves by Bush and Obama as bailouts that interfered with private markets and contributed to the national deficit.
“I’d make the same decision again if I had to,” Bush, 65, told Stephen Wade, the dealers association’s outgoing chairman.
GM, which emerged from bankruptcy as General Motors Co., has since regained leadership in global auto sales, while Chrysler, which became Chrysler Group LLC, last year made its first profit since emerging from bankruptcy with the backing of Italian automaker Fiat SpA.
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Ford Motor Co., which voiced support for its competitors’ bailouts because of risks to suppliers, joined GM and Chrysler in gaining U.S. market share in 2011, the first time all three did so since 1988, according to Autodata Corp.
Chrysler aired a two-minute Super Bowl commercial on Feb. 5 featuring actor and Academy Award-winning director Clint Eastwood, who heralded the city of Detroit’s recovery and told America that its “second half is about to begin.”
The spot by Auburn Hills, Michigan-based Chrysler may have resonance in an election year when the economy, job growth and government bailouts are key criticisms by Republican candidates seeking to run against Obama.
“My view with regards to the bailout was that, whether it was by President Bush or by President Obama, it was the wrong way to go,” Romney said at a Nov. 9 debate in Rochester, Michigan. Romney, whose father George was chief executive officer of American Motors Corp. and a Michigan governor, has said U.S. bankruptcy laws work fine without White House involvement.
Bush told dealers he still believes in the free market.
“If you make a bad decision in business, you ought to pay,” he said. “The problem is, sometimes circumstances get in the way of philosophy.”
Bush wrote in his 2010 memoir “Decision Points” that he met with Obama six days after the current president’s election and discussed the auto companies in the Oval Office. Within the week, he told his economic team he “wouldn’t let the automakers fail.”
“Nobody was more frustrated than I was,” he wrote. “It was frustrating to have the automakers’ rescue be my last major economic decision. But with the market not yet functioning, I had to safeguard American workers and families from a widespread collapse. I also had my successor in mind.”
Automakers are increasing production at car plants after U.S. light-vehicle sales rose by at least 10 percent for two straight years for the first time since 1984. The momentum for added production is expected to continue this year as the nation’s auto deliveries may rise to 13.6 million, the average estimate of 18 analysts surveyed by Bloomberg.
U.S. light-vehicle sales rose 11 percent in 2010 and 10 percent last year after falling to a 27-year low of 10.4 million in 2009, according to Woodcliff Lake, New Jersey-based Autodata.
States that were hard-hit by the 2007-2009 recession, such as Michigan, have been among the biggest beneficiaries of the industry’s rebound. Since 2008, Michigan’s economy fared better than that of any other state, except for oil-booming North Dakota, according to the Bloomberg Economic Evaluation of States. The index calculates growth by examining job creation, personal income, tax revenue, housing prices, mortgage delinquencies and the stock performance of locally based companies.
GM, Chrysler, and Dearborn, Michigan-based Ford will hire or retain 42,300 employees nationwide over four years thanks in part to new United Auto Workers contracts.
Michigan’s unemployment rate dropped to 9.3 percent in December, according to the Bureau of Labor Statistics. That was the lowest since September 2008 and is down from a high of 14.1 percent in August 2009. In Detroit, where both GM and the UAW are based, the metropolitan region’s unemployment rate has fallen to 9.7 percent from a high of 16.6 percent in July 2009.