Obama lauds auto industry rebound and pushes for financial regulations
Unexpectedly good news about the government’s auto industry bailout has bolstered the case for comprehensive federal regulations for the financial system, President Obama said in his weekly address Saturday.
Obama, facing public unease over unprecedented government interventions in the economy, noted that the Treasury Department found that the bailout of General Motors Corp. and Chrysler Group “will end up costing taxpayers a fraction of what was originally feared,” because those companies have performed far better than expected after getting federal help.
But to solve the underlying economic problems, Obama said Congress should pass his financial regulatory package designed to end taxpayer bailouts and shed more light on complex financial dealings.
According to some polls, the public narrowly supports new financial rules.
The auto bailout was less popular. Sixty-one percent opposed it in a CNN/Opinion Research Corp. poll in December 2008.
But Obama said Saturday that it was “absolutely necessary,” because GM and Chrysler were on the brink of collapse. “The best estimates are that more than 1 million American workers could have lost their jobs,” he said.
At the time, analysts put the cost of the bailout at as high as $130 billion, but the Treasury Department said this week it would be closer to $28 billion.
Government bailouts, including those of the banks, may now cost taxpayers a total of $87 billion, or less than 1% of gross domestic product, the department said. At one point, it was estimated that bailing out banks and automakers could cost $500 billion — 3.5% of GDP.
Obama noted that the auto industry has added 45,000 jobs since GM emerged from bankruptcy, and that GM and Chrysler have repaid certain loans early. Still, he said, “even as we have come a long way, we still have a ways to go…people are still hurting.”
Financial reform, he said, would help revive the economy and help insure such a collapse won’t be repeated.
He did not address criticisms of the plan from those on the left and right who say it will not put an end to the phenomenon that certain banks are “too big to fail” and would have to be bailed out in the event of another crisis. In the Republican response to Obama, Sen. Kay Bailey Hutchison of Texas noted that the bill does not prohibit future bailouts.