May 19, 2010 White House defends auto bailout | detnews.com | The Detroit News
White House defends auto bailout
Top aide: Taxpayers may lose one-fifth of $50B GM investment
Washington -- The White House's top economic adviser defended the $85 billion auto industry bailout Tuesday, saying the government may recoup most of its investment in General Motors Co.
At a daylong conference on the future of auto communities, Larry Summers, head of the National Economic Council, said the Obama administration expects to recover "most, if not all" of the $50 billion that went to GM.
At current pricing of GM bonds, taxpayers would lose about $10 billion of the investment.
Defending the bailout, Summers said the auto industry had shed 400,000 jobs in 2008, and the Bush administration had estimated the loss at another 1.1 million if GM and Chrysler were allowed to go under.
The job losses, he said, would have meant "state and local budgets pushed to insolvency. They meant rising crime. They meant people dying younger than they otherwise would have."
The administration acknowledged Monday that the government would assume at least $1.6 billion in losses on the $4 billion loan it made to Chrysler in January 2009.
The administration's latest public estimate predicts a $30 billion combined loss on the bailouts of GM, Chrysler and GMAC -- GM's former finance arm now known as Ally Financial Inc.
At the conference, United Auto Workers President Ron Gettelfinger said the bailout didn't just save GM and Chrysler but "saved the nation."
"We can't give up on our auto communities," said Gettelfinger, who steps down from his post next month.
Much of the conference, sponsored by the White House and the Brookings Institution, focused on Detroit's woes.
Detroit Mayor Dave Bing said "all is not lost."
Detroit has a population "that's blue-collar, that's tough, that won't give up, that won't quit, that are not going to run away," Bing said. "That's the nucleus of what we have to rebuild our city."
Sen. Debbie Stabenow, D-Lansing, said the "best way to revitalize auto communities is to create jobs in our communities."
In a report on its efforts to boost auto communities, the White House said it led trips to 11 communities in five states affected by the auto industry downturn in a bid to help cut red tape and win federal support.
Michigan members of Congress urged the administration to seek ways of helping U.S. manufacturers compete against what they consider unfair foreign trade and currency practices.