Obama Sees Auto Revival as a Success

Obama Sees Auto Revival as a Success
By JACKIE CALMES
Copyright by The Associated Press
Published: July 30, 2010
http://www.nytimes.com/2010/07/31/business/economy/31obama.html?th&emc=th


DETROIT — President Obama came here on Friday to promote an economic success story, but even before he could get out of Washington, he was handed new evidence of the continued challenge he faces from the sputtering recovery.

Mr. Obama was fired up at Chrysler and General Motors plants before enthusiastic autoworkers as he related the good news that the companies had returned to profitability and added jobs since their unpopular taxpayer bailout over a year ago. His remarks, however, competed with the news that the economy’s growth had slowed in the second quarter of the year, reinforcing the widespread view that unemployment was likely to remain high for some time.

The news that the country’s gross domestic product slowed to 2.4 percent in the second quarter, from 3.7 percent in the first quarter, is likely to complicate matters substantively and politically for Mr. Obama and Congressional Democrats.

The government has all but run out of tools to fix things. The boost from Mr. Obama’s two-year stimulus package is waning, and Republicans have worked hard to convince many voters that the tax cuts and spending did not work in the first place — a contention that many economists dispute. Senate Republicans have blocked Mr. Obama’s additional stimulus initiatives, including aid to the states and the long-term unemployed and, on Thursday, a package expanding tax cuts and lending assistance for small businesses.

Moreover, the economic slowdown is certain to embolden Republicans in arguing against letting the Bush income tax cuts for the wealthy expire as scheduled by law after this year, as Mr. Obama wants, to help reduce the federal debt.

Given that debt, other actors in the government can do little either, although Ben S. Bernanke, the chairman of the Federal Reserve, said last week that the central bank might take further actions to stimulate growth. But it is not clear that any fiscal or monetary policy proposals under consideration can invigorate the economy enough to make rapid headway in replacing the more than eight million jobs lost since 2007.

This is the backdrop at summer’s midpoint, just as voters’ views about the two parties are starting to harden and November draws nearer.

In Detroit, Mr. Obama enthusiastically accentuated the positive and got a rousing reception from autoworkers whose jobs were recently in jeopardy. He emphasized that the economy had grown in the last quarter, making for a full year of growth; it had been shrinking at the rate of about 6 percent a quarter when he took office. And he told an estimated 1,500 union workers at each of the auto plants that they had “vindicated” his belief that the widely unpopular bailout would work.

The president — showing energy reminiscent of his campaign rallies — brought the workers at both plants to their feet, applauding and cheering, when he concluded: “Don’t bet against the American worker. Don’t bet against the American people.”

The administration is planning to make much of the success story at G.M. and Chrysler in the run-up to the midterm elections, citing estimates that without the government’s intervention one million jobs would have been lost, hurting suppliers, dealers and whole communities as well. The president travels next week to a Ford plant in Chicago; Ford did not accept a bailout but its executives have acknowledged indirect benefits from the other two companies’ rescue because it helped keep the network of auto supply companies intact.

The Chrysler plant that Mr. Obama visited assembles the 2011 Jeep Grand Cherokee and since last summer has added 1,100 workers, bringing its work force to more than 2,800. Mr. Obama and the employees got more good news after his arrival with the announcement by the Chrysler chief executive, Sergio Marchionne, that a nearby assembly plant that was slated to close in 2012 would instead stay open and add 900 jobs on a second shift, with 500 more jobs for suppliers.

Mr. Obama recalled that a year ago, with G.M. and Chrysler “on the brink of liquidation,” he could either have provided another bailout without strings attached as the Bush administration did, or he could have given no help at all. The latter is what the “leaders of the ‘just say no’ crowd in Washington” wanted, he added — though polls showed that many Americans, already fatigued by the financial bailout, also were willing to say no to the auto companies.

“I refused to let that happen so we came up with a third way,” Mr. Obama said, and officials forced the firms and unions in exchange for $60 billion to overhaul their operations and to require sacrifices from all parties.

Skeptics opposed a government takeover, Mr. Obama said, but he added to some laughter, “I didn’t want government to get into the auto business. I have enough to do.”

“I want you to remember, though, that if some folks had their way, none of this would have been happening,” he said. “This plant and your jobs might not exist.”

Afterward, workers were happy to tell reporters their stories of newfound hope, even some who had not supported Mr. Obama.

“There’s still a little fear here,” said Peter Orlando, 46, a Chrysler worker who identified himself as a political independent. “But a little fear is a good thing” to motivate people, he said. Naming Southern senators who opposed the bailout, he added, “The people that nay-sayed us, I’d like them to come and work in our shoes for eight hours.”