With GM back on its feet, Democrats hope to punish Republicans for their early opposition. | AP Photo Auto bailout could aid Obama

President Barack Obama and his allies in two big industrial unions appear poised to make the auto bailout — begun under President George W. Bush in 2008 — a central issue of the 2012 campaign.

With General Motors back on its feet — it announced $2 billion in new investments at 18 GM plants Tuesday — and losses from the government’s intervention shaping up to be minimal, Democrats hope to punish Republican presidential candidates for their early opposition. The party is building the groundwork for that argument in the key swing states of Michigan, Ohio, Indiana and Pennsylvania, and using it to target the blue collar voters whose allegiance Obama has struggled to retain.


The task will not be easy. A growing awareness of the seeming success of the auto bailout did little to keep Democratic candidates from being massacred in the region last November.

Obama has already learned, in other contexts, that the political benefits of a crisis averted may be elusive, and some observers note that communities also lost plants and jobs during the bailout and restructuring process — a dynamic that could mute voters' warm memories of the deal.

“There’s a lot of localized opinion on this — depending on if the plant is growing and or the plant is shut down,” said Scott Paul, executive director of the Alliance for American Manufacturing, pointing to Spring Hill, Tenn. and Pontiac, Mich. as examples of communities that lost either jobs or clout in the restructuring process.

Some Democrats also worry that the public still isn’t well informed on the success of the bailout — Sen. Sherrod Brown of Ohio said he doesn’t know whether the public is aware of the big turnaround in the industry.

The Obama White House and the president’s reelection campaign are determined to tell this story loudly and proudly, Democrats say, and are focusing tightly on the parts of the industrial Midwest where the effects were the most concrete.

“If General Motors would have liquidated and had to sell off their assets, it would have been a disaster.” said David Green, president of the United Autoworkers Local 1714, Lordstown, Ohio. “Without the loans to the auto industry, we’re not working today.”

Kicking off the effort, an email from Obama’s campaign last week reminded supporters in the region that bailing out their local industry “wasn’t the politically popular thing to do.”

Indeed, a December 2008 CNN/Opinion Research poll showed 61 percent of Americans opposed the initial loans to the auto industry. But even at the depths of the national unpopularity for the bailout in 2009, a Rasmussen survey found the measure had the support of 52 percent of Michigan voters, though its outcome was still quite uncertain.

“The very Republicans that now want to be president lined up against this to make it a political issue instead of a jobs issue,” said United Steelworkers political director Tim Waters, whose union, along with the United Autoworkers Union, depends heavily on the car industry and is concentrated in the industrial Midwest.

“Much to their disappointment now — it proved to be very, very successful. Guys like Mitt Romney, certainly Mitch Daniels, and even (Mike) Huckabee and guys like that — they were actually willing to sit and watch the utter destruction of thousands of communities,” he said.

In 2008, automakers were viewed with bipartisan skepticism and even some hostility on Capitol Hill. All the major Republican presidential candidates lined up against the deal — even though it was Bush who first made bailout funds available to auto companies.

Romney called for letting Detroit “go bankrupt” in a New York Times op-ed, writing that “if General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye.”

Tim Pawlenty called the bailout “misguided,” and Newt Gingrich called it “irresponsible and dangerous.” Jon Huntsman, Huckabee, Michele Bachmann and Ron Paul also opposed the plan.

But even in the face of that united front, Obama extended and deepened the federal involvement with the auto companies, intensifying Republican criticism — criticism that key players in the 2012 field still stand by.

“President Obama spent billions of dollars in taxpayer funds to bail out the auto industry. Mitt Romney argued that, instead of a bailout, we should let the car companies go through restructuring under the protection of the bankruptcy laws,” said Romney aide Eric Fehrnstrom in an email. “This is the course the Obama administration eventually followed. If they had done it sooner, as Mitt Romney suggested, they would have saved a lot of money.”

The Obama administration and its allies argue that a more abrupt bankruptcy would have left the companies and their supply chains beyond repair. And taxpayers now are on track to recoup much of the Treasury money that was pumped into the auto industry in two separate packages in 2008 and 2009. In October, the Federal Reserve estimated that the government would lose $17 billion of its $86 billion investment. The Detroit Free Press was more optimistic, estimating in 2010 that taxpayers could suffer a loss of about $12 billion.

For political purposes, though, “bailout” remains a dirty word in many circles, particularly on the right. Most Republican candidates are already struggling to justify their support for the bank bailout, and there’s little space in the Republican Party, as a matter of pure principle, for using federal money to save Detroit.

“A federal bailout is never a success. Using taxpayer money to reward failure in private markets is a failure by definition,” Alabama Sen. Richard Shelby, a vocal opponent of the bailout, told POLITICO.

A key part of the next year’s political battle will be a regional and national debate over which party handled the crisis correctly.

“I do know that this has been a strong success,” Brown said. “It’s up to me in my 2012 race to let the public know, as President Obama will do, what this decision has done.”