Workers assemble General Motors vehicles at the GM auto assembly plant in Arlington, Texas, in February 2009, shortly after the start of the Bush bailout. | Tony Gutierrez/AP Photo Bush bails out U.S. automakers, Dec. 19, 2008

On this day in 2008, a week after Senate Republicans killed a Democratic-sponsored bailout bill, asserting it failed to impose sufficient wage cuts on autoworkers, President George W. Bush announced a $17.4 billion bailout to General Motors and Chrysler, of which $13.4 billion would be extended immediately.

Without federal aid, GM and Chrysler warned, they faced bankruptcy and the loss of 1 million jobs. (Ford, the remaining “Big Three” automaker, said it didn't need the funds since it had already cut costs. But it asked to be included so it wouldn't suffer by having to compete with subsidized companies.)


Lacking congressional backing, Bush diverted cash from the Troubled Asset Relief Program, which Congress had passed in October and was supposed to be restricted to rescuing banks. “I didn’t want there to be 21 percent unemployment,” Bush told a meeting of the National Automobile Dealers Association in Las Vegas in 2012, explaining why he acted as he did. “I didn’t want history to look back and say, ‘Bush could have done something but chose not to do it.’”

Sen. Barack Obama (D-Ill.), the president-elect, supported Bush’s move, saying it was a “necessary step to avoid a collapse in our auto industry that would have devastating consequences for our economy and our workers.” Six weeks later, President Obama created an auto task force that extended tens of billions more in emergency financing to Detroit.

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The U.S. Treasury lent money to and bought stock in GM and Chrysler. It provided incentives to spur new car purchases. In effect, the government nationalized GM and Chrysler, as it did Fannie Mae, Freddie Mac and the American International Group.

In all, the federal government extended nearly $81 billion to bail out the auto industry in a rescue effort that began under Bush’s watch and ended in December 2014, well into Obama’s second term. The effort cost taxpayers $10.2 billion.

On Nov. 27, 2018, President Donald Trump threatened to cut off federal subsidies to GM in retaliation to its planned cutbacks in the Midwest, the politically sensitive region in which Trump had promised a manufacturing rebirth during the 2016 campaign.

Trump unloaded on Twitter a day after GM announced it would shut five plants and slash 14,000 jobs in North America. “Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan, and Maryland” while sparing plants in Mexico and China, Trump tweeted, adding: “The U.S. saved General Motors, and this is the THANKS we get!”

Buyers of electric vehicles made by GM and other automakers get federal tax credits of up to $7,500, as an incentive to get more of the zero-emissions vehicles on the road.

Turning the other cheek, GM said: “We appreciate the actions this administration has taken on behalf of industry to improve the overall competitiveness of U.S. manufacturing.”

SOURCE: “This Day in Presidential History,” by Paul Brandus (2018)

