On Tuesday, I was on Fox News’ “Special Report with Bret Baier” answering Doug McKelway’s questions on the Treasury Department’s upward revision of taxpayers’ losses from the auto bailout. Although it was once breathlessly claimed that taxpayers would actually profit, losses are now projected to be $25 billion. A snippet of my interview also ran on “Studio B. with Shepard Smith” that same day.
During the in-depth interview with Doug, which also was part of a fine story he wrote on Fox News’ website, I emphasized another important point I have made in the past few days: that in the bailout, some workers — notably those in the United Auto Workers — were more equal than others. In articles in National Review and the Daily Caller, my Competitive Enterprise Institute colleague Mark Beatty and I point out how the Obama administration’s “Team Auto” task force put 100,000 auto dealer jobs — a number approaching the total workforce at GM and Chrysler — at risk by pushing the auto companies to close more than 2,000 dealerships in a just a few months. By contrast, Mitt Romeny’s old private equity firm, Bain Capital, is taking heat for laying off 750 workers at GST Steel eight years after it acquired the company.
In the articles, Beatty and I detail how Neil Barofsky, former Special Inspector General for the Troubled Asset Relief Program (TARP), slams the dealer closings as completely arbitrary in his new book Bailout. Barofsky, a Democrat whose critiques of other aspects of TARP have been praised in progressive outlets like the Huffington Post, writes that “relatively little thought had gone into Treasury’s determination that the dealership closings had to be immediate” and that a cost-savings estimate wasn’t performed until a few weeks after the closures were announced. Indeed, it’s unclear that any significant cost savings were achieved, as dealers impose no direct cost to automakers; it is just believed that excess dealerships reduce auto demand. Barofsky reports that after “interviewing many of the same experts Treasury had consulted,” his group of auditors “found remarkably little support for the auto team’s determination that the viability of GM and Chrysler depended on their closing so many dealerships so quickly.”
All this comes at the same time The Daily Caller’s Matthew Boyle has uncovered emails that indicate direct intervention by the Obama Treasury Department to give UAW workers preferential treatment at one-time GM subsidiary Delphi, which manufactures auto parts. UAW workers there were given full pension benefits, while nonunion workers had their retirement plans slashed by as much as 70 percent.
And as I have written previously for Open Market and other outlets such as National Review, there is some fuzzy math going on with the auto jobs numbers. Jobs added, for instance, at the domestic plants of Toyota and Hyundai in right-to-work states far away from Detroit are included to pad the number of U.S. “auto industry jobs created” by the bailouts. Given this evidence, Beatty and I conclude that while a traditional, court-approved bankruptcy for the automakers would not have been cost-free for the economy, many blue-collar employees of dealerships and non-union manufacturing employees may have fared better than they did under the bailouts.