Obama's Auto Bailout Success Story Will Prove Crucial in Election Fight vs. Romney

ANALYSIS

Obama Washington Auto Show
President Obama sits inside a Chevy Silverado at the Washington Auto Show on Tuesday. Reuters

Picture President Barack Obama's re-election campaign as a showroom.

Over there, at one stand, is an overall improving economy -- he hopes. And somewhere in the showroom, either as a part of the economy stand or standing on its own, will be the health and restoration of the U.S. automotive industry. It won't be the main exhibit. But if the past week and a half is any indication, Obama plans to use it as a critical point in his re-election campaign as the industry continues a dramatic recovery from dire straits just more than two years ago.

If Obama and his campaign have their way, they might even decorate the stand with a large printout of a 2008 New York Times op-ed entitled Let Detroit Go Bankrupt. That, of course, was written by then-former Republican presidential candidate Mitt Romney, who lost the nomination to John McCain. Four years later, Romney is at the center of his second campaign, emerging as the clear front-runner after a landslide victory in the Florida primaries Tuesday.

Obama has already begun taking subtle shots at Romney and his opinion of the auto industry bailout Obama approved in 2009 for General Motors Corp. and Chrysler Group LLC. They first came in his State of the Union address last Tuesday. They continued a week later, when Obama stopped by the Washington Auto Show and declared that the U.S. auto industry is back.

When you look at all these cars, it is a testimony to the outstanding work that's been done by workers, American workers, American designers. The U.S. auto industry is back, Obama said at the auto show, according to a pool report.

The fact that GM is back to No. 1 I think shows the kind of turnaround that's possible when it comes to American manufacturing. It's good to remember the fact that there were some folks who were willing to let this industry die.

Clearly, this will be a recurring theme throughout a potential general election fight between the Republican Romney and the Democrat Obama. Strategists on both sides of the political aisle say it's a point Romney will struggle to counteract, and one that could enable Obama to capture critical, manufacturing-heavy swing states in the November election.

In late 2008, President George W. Bush enacted $17.4 billion in loans to GM and Chrysler that would take effect under the next administration. Obama threw nearly $85 billion more at the companies early into his presidency, saying the funds were necessary for the industry to emerge from bankruptcy protection without liquidating.

Today, both bailed-out companies -- along with fellow U.S. automaker Ford, which received no taxpayer funds -- are flourishing. GM recently reclaimed the top spot among global automakers in terms of sales. On Wednesday, Chrysler reported its first annual net profit since 1997. All three companies saw sales increases in 2011.

What does that mean? Prepare for the buzzwords.

Job creation. When you think about all the manufacturing jobs that reside in those states, it's quite clear that the president is trying to draw a clear contrast when it comes to job creation, said Michael Wissot, a senior political strategist at the Republican strategist group Luntz Global, of the battleground states of Michigan, Ohio and Pennsylvania.

I use that term very deliberately. We focus very heavily on language. It's far more effective for candidates to talk about job creators than it is to say entrepreneurs or innovators. I think that will become a very common buzzword in these elections.

Most of the supporting evidence is the perfect set for the Obama spike on Romney's side of the court. Perhaps nothing is more damning than the op-ed, published on Nov. 18, 2008. In its opening paragraph, Romney writes that if the U.S. automakers are given bailouts, you can kiss the American automotive industry goodbye.

Romney, the son of an auto chief executive that later became Michigan's governor, favored a managed bankruptcy. He wrote in the op-ed that a bailout would only keep automakers down the same failed paths that led them to bankruptcy.

But by most experts' estimates, a new path has led to a prosperous U.S. industry. Even with unfathomably low sales compared to peaks in the early 2000s, companies are building on their profits. Companies are manufacturing some of their best products, and the quality of cars has improved so immensely that there are no clunkers anymore, said Jesse Toprak, an analyst at TreCar.com.

In a study released in December, the Center for Automotive Research said that the government's bailouts saved 1.14 million jobs and prevented personal income losses of about $97 billion for 2009 and 2010. And the industry is expected to add 167,000 jobs by 2015.

All of that should lead Obama to champion what, at the time, was another unpopular bailout decision, along with the bank bailout. The language, crucial on this point as well, Obama managed to turn around, said Peter Fenn, a Democratic political strategist whose group has worked with General Motors.

I think it's eminently fair for the president to criticize Mitt Romney, Fenn said in a phone interview.

Do you want [consumers] buying Toyotas and Hondas and Hyundais? Or do you want them buying General Motors and Chrysler? he said of the decision at hand in 2009. And it was a gutsy move. The wording on this: Was it called a loan? Hell no. It was called a bailout. When you're Mitt Romney and you demagogue that thing, it's a legitimate issue to me in the 2012 elections.

There are some risks. For one, the government still owns about a 25 percent stake in GM. But even public opinion seems to be shifting. GM Chairman and CEO Dan Akerson said in November that a survey the company performed in 2011 displayed a 70 percent favorable opinion of GM -- up from a 70 percent disapproval just two years ago.

And though Wissot thinks Obama could ultimately lose Florida in a general election, the manufacturing sector could ultimately swing Michigan, Ohio and Pennsylvania to Obama.

The revamped health of the auto industry is Obama's shiny new car this election season. Without as much pomp and circumstance, expect him to carry the shiny message through the summer and into the election.

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