Politico disappears Bush from GM bailout history

››› ››› JOCELYN FONG

A Politico article quoted Republican criticism of President Obama's "decision to pour about $50 billion" into GM but did not note that $13.4 billion of those funds were authorized by the Bush administration.

In a June 8 article headlined, "Republicans hope General Motors is President Obama's Hurricane Katrina," the Politico reported that the "GOP sees President Barack Obama's decision to help the unpopular carmaker as an easy opportunity to paint him as a bailout-happy, deficit-drunk spendthrift." However, the Politico did not also report that former President Bush also made a decision to assist GM. The article stated, "The Republicans are linking the decision to pour about $50 billion into 'Government Motors' to the new administration's energy, health care and housing plans -- all of which, they argue, will result in higher costs for consumers and bigger national deficits." In fact, the Obama administration did not commit all of the $50 billion in aid to GM; Bush pledged $13.4 billion in assistance to GM in December.

On June 1, the Obama administration announced a plan that will "provide approximately $30.1 billion of financing to support GM through an expedited chapter 11 proceeding." Bloomberg News reported on June 1 that "[b]efore declaring bankruptcy, GM received $20.57 billion in U.S. Treasury loans, according to the court filing today. Administration officials said yesterday the government would advance $30 billion more, with another $9.5 billion from the Canadian government." Among the $20 billion of existing loans are funds that were authorized by the Bush administration, a fact ignored by Politico. On December 19, 2008, Bush announced that GM would receive $13.4 billion in loans from the Troubled Asset Relief Program fund and gave GM and Chrysler until March 31 to demonstrate viability or repay the loans. The Wall Street Journal reported on December 20, 2008:

The auto agreement provides the government with nonvoting stock warrants in GM and Chrysler, adding those ownership stakes to the government's rapidly expanding portfolio that includes much of the American banking industry, American International Group Inc., Fannie Mae and Freddie Mac.

[...]

In essence, Mr. Bush's plan lets the auto companies survive through March. He leaves it to the Obama administration to decide many tough questions after that. Obama officials must wrestle with how much in wage and benefit concessions to demand from the United Auto Workers union, which strongly backed Mr. Obama's campaign and helped him carry Michigan over Republican rival John McCain; how to wring savings from the companies' politically powerful dealerships; and what concessions can be squeezed from debt holders, suppliers and other groups.

ProPublica provides a list of the loans the government has pledged to GM to date, totaling approximately $50 billion. In addition to the $13.4 billion bridge loan, the Bush administration provided GM with $884 million to increase its equity share in GMAC.

Prior to GM's June 1 bankruptcy filing, the company also received $2 billion from the Treasury Department on April 22 and $4 billion on May 20, in addition to a $360.6 million loan granted on May 27 to guarantee warrantees during bankruptcy.

From the June 8 Politico article:

General Motors hopes that bankruptcy will make the struggling automaker stronger and more competitive.

Republicans are hoping it will do the same for them.

The GOP sees President Barack Obama's decision to help the unpopular carmaker as an easy opportunity to paint him as a bailout-happy, deficit-drunk spendthrift eager to impose a heavy government hand on a swath of industries.

The Republicans are linking the decision to pour about $50 billion into "Government Motors" to the new administration's energy, health care and housing plans -- all of which, they argue, will result in higher costs for consumers and bigger national deficits. Even the war spending bill now pending in Congress, they say, amounts to a "global bailout" for the International Monetary Fund.

"The pattern here is pretty clear," House Minority leader John Boehner (R-Ohio) said Thursday. "Every time the president makes a so-called tough decision, it's the American middle class that gets hit the hardest."

Obama defends his administration as a reluctant and stern savior of an industry that's vital to the American economy.

"I refused to kick the can down the road," Obama said when he announced the bankruptcy details. "If GM and Chrysler and their stakeholders were willing to sacrifice for their companies' survival and success; if they were willing to take the difficult but necessary steps to restructure and make themselves stronger, leaner and more competitive, then the United States government would stand behind them."

But Republicans see in GM a chance for their party to come out with a unified message -- a confidence grounded in the conservative belief that government involvement in private industry always spells disaster. And GM's long history of financial problems -- even in more prosperous times -- also makes Republicans see the company as a big albatross around Obama's neck.

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Economy
Network/Outlet
The Politico
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