President Obama's Cognitive Dissonance On Auto Bailouts

Ford did not take part in the federal bailouts of automakers - General Motors and Chrysler did as part of their expedited bankruptcy and reorganization.

So, why is President Barack Obama at a Ford factory in Michigan touting the benefits of the bailout there?

Visiting his third auto plant in the last week, Mr. Obama painted his efforts to save the industry as an act of patriotism, and the opposition to them as a fundamental expression of pessimism in the country. Even more than he did during a swing through Michigan last week, he suggested that his adversaries were virtually un-American in standing against his policies.

“I wish they were standing here today and saw what I see,” he told an audience of cheering workers at a Ford Motor Co. plant here in his hometown. “I wish they could see the pride you take in building these great cars, American-made cars. And my message to them is: Don’t bet against the American worker; don’t lose faith in the American people; don’t lose faith in American industry. We are coming back.”

Republicans who criticized the president’s auto industry bailout last year framed their position not as a lack of faith in American workers, but as an aversion to the government intruding aggressively into private sector. The United States government still owns a majority of General Motors shares, and Republicans have said that it should not be the government’s role to tell private industry how to run itself.

On Thursday, Republicans criticized Mr. Obama’s visit here because, unlike G.M. or Chrysler, Ford turned itself around without taking a federal bailout. “Desperate To Claim Economic Victory, Obama Visits Ford Plant To Tout Success He Had Nothing To Do With,” read the headline on a statement from the Republican National Committee.

White House officials countered that Ford benefited from the industry bailout even though it did not accept aid itself, because the federal money kept a network of suppliers in business. They also pointed to the industrywide boost from the government’s cash-for-clunkers program, which used tax credits to encourage consumers to trade in older, more polluting cars for new models last year.

It didn't help Ford.

Ford didn't benefit from the bailouts. In fact, one can argue that it suffered because its competitors got a federal funded assist to fix problems that should have been fixed internally years earlier. While Ford engaged in belt tightening and readjusting its debt and going through the painful exercise of cutting its bloated corporate structure and workforce, GM and Chrysler received tens of billions of dollars to allow both companies to limp along for months until they entered the bankruptcy courts. Ford's balance sheets would look even more spectacular if they received billions in taxpayer funds, but instead they're still looking impressive compared with the other domestic automakers who still have a mess of a balance sheet.

The Administration's claims that Ford benefited from having the supply chain remain intact is also specious given that Ford maintains its own supply chain distinct from GM or Chrysler. Moreover, claiming that a loan is the same is a bailout is absolutely disingenuous. Ford has to pay back loans it took from the federal government, but no one is expecting GM or Chrysler to ever repay the billions in the bailouts.

What this is President Obama trying to regain and energize support among union workers who are dissatisfied with the way the Administration has handled matters - particularly Card Check legislation that has stalled.