Geithner calls Detroit bailout a success
It was announced on Wednesday that the White House expects the federal government to lose $14 billion of the roughly $80 billion it spent in 2009 to rescue GM and Chrysler. Treasury Secretary Timothy Geithner wrote an op-ed in the Washington Post calling that a big success.
Today, six years earlier than planned, Chrysler has repaid its outstanding government loans. While it has a long way to go, Chrysler has made enormous strides. Tough decisions, stemming from the restructuring, have helped Chrysler post five consecutive quarters of operating profit. It has announced more than $3 billion in investments in plants and technology since emerging from bankruptcy and is poised to hire back workers.
The story has been similar for GM — and the industry as a whole. The domestic automakers are getting stronger. For the first time since 2004, each has achieved positive quarterly net income.
While it remains unacceptably high, Detroit’s unemployment has fallen nearly one-third over the past two years. The car companies are leading a comeback in American manufacturing. And while we will not get back all of our investments in the industry, we will recover much more than most predicted, and far sooner.
While the taxpayers lost $14 billion on the deal, they would have lost far more if the companies had been liquidated. A million jobs or more would have been lost, exacerbating the ongoing budget problems at the state and local level, requiring far more spending on unemployment benefits, Medicaid and other social services, reducing local and state tax revenue and fueling a renewed foreclosure crisis.