To mark the second anniversary of General Motors Corp.'s filing for bankruptcy and the fact that Chrysler has repaid its outstanding government loans six years ahead of schedule, Treasury Secretary Timothy Geithner took to Wednesday’s Washington Post opinion page to defend the federal government’s automaker bailout.
Geithner notes that GM and Chrysler have returned to profitability and Detroit’s unemployment rate has fallen by one-third over the past two years as he writes that “the industry is mounting one of the most improbable turnarounds in recent history.”
Geithner focuses on that improbability throughout -- painting a picture of a politically uncertain choice the White House bravely made as he defends the intervention.
“President George W. Bush provided more than $17 billion in temporary loans to GM and Chrysler to avert that disaster, but those efforts, while important, were not enough,” Geithner writes. “President Obama took office faced with an industry that was burning and had to determine whether additional government support made sense.”
Geithner outlines a hypothetical domino effect, whereby the restructuring of GM and Chrysler could have caused suppliers to go under, which in turn could have caused the liquidation of Ford and other automakers, possibly leading to a total loss of “at least 1 million jobs.”
“Nothing about the president’s call was popular,” he writes. “It may have been more politically expedient to let Chrysler fail. But the president knew that if Chrysler collapsed, tens of thousands of jobs would have been shed in the near term — a body blow to an economy already on the ropes.”