Jul 19, 2012 at 12:59 pm
Presidents get credit and blame for all sorts of things over which they have no control. Gas prices are a recent example (although, as I’ve stressed, there’s an asymmetry here).
But there are some rare cases where an outcome is clearly and unequivocally linked to executive action. And one current example of that is President Obama’s decision to rescue the two auto companies — GM and Chrysler — that were facing liquidation in 2009. (Disclosure: I was a member of the President’s auto taskforce.)
The President was faced with a stark choice to intervene by providing government loans and equity financing or to let the companies fail. Given credit market conditions at the time, our conclusion, widely agreed upon by non-partisans, was that bankruptcy was certain, and that no private investors would step in a rescue the companies from liquidating their assets.
How did we know that? We asked them. As Steve Rattner, lead adviser to the auto taskforce recently wrote:
In late 2008 and early 2009, when G.M. and Chrysler had exhausted their liquidity, every scrap of private capital had fled to the sidelines.
I know this because the administration’s auto task force, for which I was the lead adviser, spoke diligently to all conceivable providers of funds, and not one had the slightest interest in financing those companies on any terms.
I vividly recall a meeting where the President was told he soon had to decide, one way or the other, which way to go on this. He insisted on all sides of the arguments and he got them — there was not unanimity among his advisors about which way this should go.
Though he’s hard to read, I could tell the President was deeply torn over this decision. As it happened, I was to introduce him for an internet town hall right after that meeting and we had a few minutes together before the show. We talked about how tough the call was — it’s rare that government intervenes in industry so directly and deeply — but how much was at stake. Not just jobs all along to supply chain, but communities that depend on them. (I then deftly baited him into an argument on how my colleagues and I in the Office of the VP could take his office in bball. He didn’t think anyone in our shop could post up Reggie Love…we never had that game, but it’s a little known fact that got Biden’s got a money set shot from 15 feet…)
He has said since that he didn’t put his finger in the air and test the political winds on this one, and that’s absolutely true. In fact, the auto bailouts would later poll even worse than the TARP. He made the call based on economics, a uniquely deep market failure, and the importance of the auto industry to the American economic landscape.
Across town at Shorty’s True American Roadhouse, Michelle Maziars [sp] has seen that improvement. She and her husband are taking their two young kids out for barbecue. “Around here, a lot of people work at the auto plants… both my parents work for Jeep [a Chrysler product--jb]. And I can tell you, like a year ago from today, no one was getting overtime or anything like that, and now you’re starting to see third shift come back.” Business is picking up at the mall where she works, but she doesn’t give this President credit. “I give that to our city, that credit goes to our city… that’s our people, in our community.” She does not think that Barack Obama will get her vote again.
Like I said, there are lots of things for which Presidents get credit and blame, for no good reason. And then there are rare cases, like this one, when they can credibly say, “my actions made a big, positive difference.”
I wish people could work just a little bit harder to sort out which is which.
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