Failures of Auto Bailouts Hidden by Deceptive Accounting and Bogus Jobs Figures
Mounting evidence shows that the auto bailouts weren’t worth it. They have been far more costly, and less successful, than claimed, as even liberal commentators now have admitted. The Washington Post fact-checker criticizes President Obama’s phony accounting on the auto industry bailout: “What we found is one of the most misleading collections of assertions we have seen in a short presidential speech. Virtually every claim by the president regarding the auto industry needs an asterisk, just like the fine print in that too-good-to-be-true car loan.”
Obama cites various figures of jobs allegedly saved through the bailout. But he’s playing deceptive numbers games that take credit for jobs actually created by foreign car manufacturers that didn’t participate in the bailout. As the Washington Post’s Charles Lane earlier noted, Obama’s jobs figures cite jobs created by the foreign competitors of GM and Chrysler, and their competitors’ auto dealers, including “not only the Detroit 3, but also all of the plants operated by foreign car makers in the U.S., the entire supply chain and all car dealerships around the country!”
Obama’s false jobs figures are reminiscent of the previously debunked claims by the Obama administration about the $800 billion stimulus package, which it defended by citing imaginary jobs created in 440 non-existent congressional districts, such as Arizona’s 15th and 86th districts. Meanwhile, economists concluded that the stimulus had wiped out a net 550,000 jobs in the real world. (The stimulus destroyed a million private sector jobs, while creating or preserving 450,000 government jobs.)
The Post‘s Lane notes that although GM and Chrysler temporarily benefited from the Japanese earthquake and tsunami, which cut the market share of their Japanese competitors like Toyota, they failed to properly take advantage of it. Instead, lower-cost Korean automakers took almost twice as much market share from the Japanese as American automakers did. GM and Chrysler’s ability to survive and expand over the long haul is impeded by the fact that the Obama administration, for short-sighted political reasons, failed to adequately reduce GM and Chrysler’s high labor costs in the bailouts. As a Post observes, “the administration … did not press the United Auto Workers, its political ally, for even deeper labor cost reductions” needed to maximize the automakers’ long-run chances of survival.”
As a result, when the effects of the Japanese earthquake receded, so, too, did GM’s sales: “Car sales sputtered in May, slumping to levels that were much lower than expected as higher vehicle prices led consumers to put off purchases in the face of a weakening economy. Tightening supplies of vehicles after the Japan earthquake emboldened many companies … to raise car and truck prices, a strategy that analysts and investors said had backfired. U.S. automakers … reported sales on Wednesday that fell short of expectations as the industry experienced its lowest sales rate in eight months.”
Under the Freedom of Information Act, the Obama administration was recently compelled to release documents that show that it previously deceived the public about the costs and consequences of the GM bailout, which has been far more costly than Obama has claimed.