Bush Defends Auto Bailout Amid Romney Attacks
February 7, 2012 2:00 PM
Bush, Romney, and Obama all show some love to the bank bailouts, though -- who says we can't all get along
President George W. Bush (R) created strong divisions within the Republican party when he
backed a $700B USD bailout
of the struggling automotive and financial sectors. Both he and current President Barack Obama (D) see eye to eye on this issue, though -- they felt that bailouts were the only thing keeping the nation from economic collapse.
Public surveys during the height of the recession indicated that
nearly 60 percent of Americans disapproved
of the bailout.
I. Bush Defends Bailouts, Says he Did the Right Thing
Criticism from his party and the public has not swayed former President Bush's conviction that he made the right choice. In a Q&A at an auto dealer convention in Las Vegas, President Bush
as saying, "I'd do it again. I didn't want there to be 21 percent unemployment."
As to the
free market proponents
that say that the companies should have been allowed to go through the traditional process of bankruptcy and liquidation, Mr. Bush disagrees. He says that he would traditionally support that -- but that the cumulative impact of the recession required a
more intimate approach
. He comments, "If you make a bad decision, you ought to pay. [But] sometimes circumstances get in the way of philosophy."
He says he "had to" break with his rigid conservative roots and craft the bailout, in order to "safeguard American workers and families." He takes credit for crafting the financial tools that President Obama would later use to slow the recession and set the nation back on more stable financial ground. He comments, "[I expected to] kind of ride out to the sunset [in my last year of presidency]. [But] I didn't want to saddle my successor with an additional economic crisis."
He said his Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke approached him, stating, "Are you willing to gamble [with the chance of depression]."
He recalls replying, "I don't want there to be a depression, no matter what the probability may be…"
President Bush says he made a tough choice, but the right one. [Image Source: Getty Images]
The bailout will go down in American history as a controversial invasion of the private sector, which the American government has traditionally sought to play a limited regulatory role in. But some economists and historians also credit the program for possibly preventing a depression [
], although such "what if" scenarios are indelibly open to debate.
II. The Results
For all the resentment, President Bush believes that inaction would have left his reputation far more tarnished. He states, "I didn't want to gamble. I didn't want history to look back and say, 'Bush could have done something but chose not to do it.'"
Presidents Bush and Obama used the Troubled Asset Relief Program (TARP) to ease financial firms and automakers through a gentler process [
], which allowed them to consolidate their profitable segments and stay in business. Laggard units were
dumped off to the highest bidder
in an attempt to pay the bailout loans and grants.
Presidents Obama and Bush cumulatively archictected the bailout. [Image Source: AP]
The government even took a stake in many of the "bailed out" financial firms, as well as General Motors Comp. (
) and Chrysler. The government has
recouped some of the money
it loaned, but it will likely never be repayed some of the billions it poured into both sectors. In fact, it's
already forgiven some of the bailout recipients
of substantial chunks of taxpayer debt, and given many of these struggling firms tax holidays, which will allow them to enjoy tax-free profits for years to come.
On the flip side of the coin, while the government isn't collecting any corporate taxes from these fortunate corporations, it has avoided a surge in unemployment. GM and Chrysler today profitable [
-- as are some of the rescued financial firms.
Liquidation would have left tens of thousands of GM and Chrysler assembly line workers unemployed. [Image Source: Scott Olson/Getty Images]
Other nations also participated in the bailout of the automakers [
III. Republican Hopeful Romney Blasts, Bush, Bailouts
One person who is
not a fan of President Bush or his bailouts
is leading Republican 2012 presidentical candidate Mitt Romney. He commented in September, "[Automakers] needed to move into a managed bankruptcy process rather than getting money up front by President Bush or President Obama. They wasted a lot of money."
Mr. Romney stirred up controversy during the waning days of the Bush presidency, with an editorial in
The New York Times
Let Detroit Go Bankrupt
which blasted the Bush bailouts.
In the piece he wrote:
IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.
Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.
Intriguingly, Mr. Romney has not been overly critical of the banking sector, which received far more money from TARP than the automotive sector. One possible reason why? According to
" such as JP Morgan Chase & Comp. (
), Bank of America Corp. (
), and Goldman Sachs Group, Inc. (
) have been extremely generous Mr. Romney, donating millions to his presidential bid.
On the financial sector he
, "I believe that it was necessary to prevent a cascade of bank collapses."
Mitt Romney has attacked the bailout to try to score points with conservative voters.
[Image Source: Emmanuel Dunand/Getty Images]
Judging as the average corporation or special interest group receives $222 USD in tax breaks per $1 USD spent [
], the $10M USD he received from the financial sector would put him on the hook for roughly $2.22B USD in "tax holidays", and similar taxpayer funded goodies, should he be elected.
"There is a single light of science, and to brighten it anywhere is to brighten it everywhere." -- Isaac Asimov
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