In late 2008, Chrysler and General Motors told America that they were in danger of folding. George W. Bush agreed to a temporary bailout, but handed the auto companies' long-term future over to his successor, President-ElectBarack Obama. Obama then shepherded a comprehensive bailout of the two companies that allowed them to stay in business but imposed numerous conditions that, it was hoped, would secure their viability and allow the companies to eventually return to profitability.
How you saw this series of events depended a lot on where you stood politically. If you were a progressive, you saw that Obama selected the best of unattractive options. While he didn't particularly want the government running car companies, the alternative was to let them go out of business right at the moment when the economy was reeling from the worst downturn since the Great Depression. At stake were not only the jobs of all of GM and Chrysler's employees, but the jobs of people who worked for hundreds of suppliers, from stereo manufacturers to steel and rubber producers. Estimates of the potential job losses topped one million. So he did what had to be done.
If you're a conservative, on the other hand, the auto bailout was part of Obama's government power grab. Eager to amass power and increase the federal government's control of the economy, he took the opportunity to take over the auto industry, serving his thirst for centralized control.
These competing interpretations offer a textbook case of the "fundamental attribution error," in which we assume that our own behavior (or that of people we like) is a response to circumstance, while others' behavior (or that of people we don't like) is a function of their inherent nature. There's something else going on, too: once we make a value judgment about which policy choice is right, we tend to follow that up with a bunch of empirical predictions about what practical effects each alternative will produce. And when that happens, one side can be proven right, and the other side can be proven wrong. Here's today's news:
DETROIT, May 24 (Reuters) - Chrysler Group LLC was set on Tuesday to repay $7.5 billion in U.S. and Canadian government loans from its 2009 federal bailout, a move that will allow the U.S. automaker to distance itself from an unpopular bailout and deepen its ties with Italian automaker Fiat SpA (FIA.MI).
Under the original terms, Chrysler had until 2017 to repay the debt.
Sergio Marchionne, the chief executive of Fiat and Chrysler, is scheduled to appear at a Chrysler assembly plant in Sterling heights, Michigan, Tuesday afternoon to express thank to the governments for their financial support. Also at the event will be Ron Bloom, the Obama administration's point man on auto restructuring, and General Holiefield, head of the United Auto Workers union's Chrysler department.
The jobs were saved, the economy was helped, and the government gets repaid ahead of schedule. GM too is earning healthy profits again, allowing the government to divest itself of its GM stock. So: everybody wins.
It doesn't seem to have been polled in a while, but back in 2009 the auto bailout was extremely unpopular. But it's hard to imagine that Republicans are going to want to talk much about how they preferred to see Chrysler and GM liquidated. Nevertheless, if you forced them to, I'm sure they could come up with reasons why the turnaround in the industry proves nothing, and the bailout was still a bad idea.