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Obama: We'll get back money from auto bailout

Thu, 07/29/2010 - 1:31pm
Manufacturing.net

President Barack Obama said the U.S. government will recover all the taxpayer money his administration provided to bail out the auto industry last year.

In an interview aired Thursday on the ABC television's talk show "The View," Obama said the auto industry "tells a good story" of his administration's efforts to rescue the economy. He planned to highlight that story with stops at three auto plants over the next several days, including stops at General Motors and Chrysler plants in Detroit on Friday.

"You now have all those U.S. auto companies showing a profit. They've rehired 55,000 workers. We are going to get all the money back that we invested in those car companies," Obama said in the interview.

The Obama and Bush administrations poured $85 billion into General Motors, Chrysler, auto lenders and suppliers to avoid an industrywide meltdown in 2008 and 2009. The companies have shown signs of improvement and Obama plans to discuss the progress in the auto industry following the government-led bankruptcies of GM and Chrysler.

The White House said Obama's proclamation on recouping funds referred only to the $60 billion his administration spent rescuing the auto industry, not the $25 billion spent under the Bush administration. The most recent government estimate found that taxpayers will lose $24.3 billion on the auto bailout.

Obama will visit a GM plant that is planning to assemble the Chevrolet Volt rechargeable electric car. The plant is one of nine the automaker will keep open during the typical two-week summer shutdown to boost production of popular models.

Obama will tour a Chrysler's plant, which recently added a second shift of production, adding about 1,100 jobs. Next week, the president will visit the Chicago plant where Ford builds the Taurus sedan and plans to assemble a new Explorer sport utility vehicle.

In a report on the status of the auto industry, the White House said failing to intervene would have led to the loss of nearly 1.1 million jobs. The auto industry has added 55,000 jobs in the year since the automotive bankruptcies, making it the strongest year of job growth in the industry since 1999.

White House officials estimate that Detroit automakers could add 11,000 new jobs before the end of 2010.

The administration pointed to several signs of progress: plans by GM and Chrysler to skip the typical summer shutdown of several auto plants to meet demand for hot-selling vehicles and the addition of shifts at GM, Chrysler and Ford Motor Co. plants. The report notes that the three companies are beginning to post profits.

GM has repaid $6.7 billion that the government considered loans, with the remaining $43.3 billion converted into a 61 percent stake in the company. GM is expected to conduct an initial public offering of shares in the company later this year, a move that could help the government recoup some of its investment.

United Auto Workers President Bob King said in a statement Thursday that GM would file paperwork in mid-August to start the process of selling stock to the public.

Chrysler received about $15 billion in government help and was placed under control of Italian automaker Fiat as part of its bankruptcy. The company has repaid about half of the $4 billion loan portion of its aid and is considering a public stock offering sometime in 2011.

Ron Bloom, the administration's senior counselor for manufacturing policy, said it was unclear how long the government would hold ownership stakes in the companies. "We don't like having this investment, but we're not going to sell it at a fire sale," he said.

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