Bloomberg News

Auto Recovery Defines Terms of Engagement for Michigan Primary

February 28, 2012

(For more 2012 campaign news, see ELECT.)

Feb. 17 (Bloomberg) -- Don’t tell Tracey Harmon that the $82 billion federal auto bailout was a bad idea.

Harmon and her sister moved from Ohio in the past two years to work at Chrysler Group LLC plants in Michigan after President Barack Obama completed the rescue of the company and General Motors Co.

“That saved a lot of jobs,” Harmon, 40, said during lunch at a restaurant near the Sterling Heights Assembly Plant, where she puts together doors for the Chrysler 200. Before the bailout, the plant had been scheduled to close.

In a state where making cars determines economic health, auto factories are humming, unemployment is dropping and Republican presidential candidates are bringing this message to voters in their Feb. 28 primary: Government has done you wrong.

Mitt Romney, Rick Santorum, Newt Gingrich and Ron Paul may have a tough sale to make in Macomb County. It’s home to the 16,000-job GM Technical Center, and 155 car plants and parts suppliers with least 38,000 jobs, according to county officials.

Yesterday, GM said it earned $9.19 billion last year, the largest profit in its 103-year history, and regained its position as world’s top-selling automaker. The near-death and revival of the industry is the backdrop for a Republican campaign that’s hammered at big government.

No Loans, Please

“I will vote for the most conservative, electable candidate,” said Brian Pannebecker, a 52-year-old who works at a Ford Motor Co. parts plant in Sterling Heights. He called himself a union conservative and Tea Party follower who opposes government loans on principle. He also said that the federally assisted rebirth of GM and Chrysler helped his state.

During the 18-month recession that began in December 2007, the worst since the Great Depression, Michigan’s economy fared worse than most of the nation’s. Its 9.3 percent unemployment rate in December compares with a peak of 14.1 percent in August 2009, a month when the national rate was 9.6 percent.

Last year, Michigan gained 66,000 net jobs, the first increase since the turn of the century, according to a Jan. 13 state report. The University of Michigan’s Research Seminar in Quantitative Economics predicts a net rise of 101,300 by 2015.

About 135,000 Michiganders will work for the three major U.S. automakers by 2015, after bottoming at 102,000 in 2009, according to Ann Arbor’s Center for Automotive Research.

Net Required

Those numbers carry weight in Macomb County, which abuts Detroit’s northeast border and where Obama won by 8 percentage points in 2008. Its population of 841,000 has a median household income of $54,000, according to the U.S. Census.

Macomb voters don’t despise government, though they’re wary of how it spends money, said Ed Sarpolus, 58, a Lansing-based political consultant.

“You can’t go into Macomb and just call Democrats tax-and- spenders unless you have solutions to protect them with the safety net,” Sarpolus said.

A survey of Michigan voters this week showed that 52 percent support the auto bailout and 53 percent said Obama’s leadership had been good for the state economy, according to Public Policy Polling in Raleigh, North Carolina.

Michigan’s economic health dropped 1.3 percent after Obama took office in January 2009 through the third quarter of last year, although that decline was second mildest among states, the Bloomberg Economic Evaluation of States shows. Michigan improved faster than all states except North Dakota between the third quarters of 2010 and 2011.

‘Crony Capitalism’

Republican Governor Rick Snyder has said the rescue probably prevented an economic meltdown in Michigan that would have shut down the national automotive supply chain.

All the Republican presidential candidates opposed it.

Romney in 2008 said a bailout would mean “you can kiss the American automotive industry goodbye.” In a Feb. 14 guest editorial in the Detroit News, he said Obama’s program was “crony capitalism on a grand scale”

The auto industry would have been as well off or better without government help, Santorum told the Detroit Economic Club yesterday.

The bailout started in the last Republican presidency. President George W. Bush’s administration provided loans to GM and Chrysler starting with $4 billion to each company in December 2008 and January 2009. Bush eventually provided $17.4 billion to the automakers before Barack Obama’s administration expanded the rescue of the companies to $62 billion. More money went to Ally Financial Inc., formerly known as GMAC Inc., and to suppliers.

Yearning for Christie

The moves saved more than 1.4 million jobs and $96 billion in personal income nationwide, according to a November 2010 report by the Center for Automotive Research.

Many Republicans didn’t support the rescue because it hurt GM bondholders in favor of the United Auto Workers union, said Republican state Representative Pete Lund of Macomb County.

County resident John Lankston, 68, said he opposed the bailout and that GM -- perhaps not Chrysler -- would have survived without it. Still, Lankston, a retired hospital executive, said he doesn’t like any of the Republican candidates. He wants New Jersey Governor Chris Christie to enter the race.

“He seems to be very straightforward and he really doesn’t hold anything back,” Lankston said.

In hypothetical matchups, all the Republican candidates trailed Obama by double-digit margins in the Public Policy Polling survey. The company surveyed 560 voters from Feb. 10 to Feb. 12 and said the poll had a margin of error of plus or minus 4 percentage points.

Meet the People

Lisa Lauretti, co-owner of The Pantry Restaurant, said saving Chrysler, which is majority owned by Fiat SpA and has four plants in the county, was an obvious benefit to a business her father opened 34 years ago. Now, her top concern is for the government to help homeowners facing foreclosure.

Lauretti, 51, said her father was a staunch Republican. She’s more independent, having voted for Obama. She said she’s open to change in the White House, though she doesn’t care for any of the Republican candidates and is repelled when they attack one another.

Britni Gibbons, 20, of Macomb Township, plans to vote in her first presidential election this year. She doesn’t see much improvement in the economy. She is pursuing a degree in criminology and said financial aid is difficult to obtain.

“I worry about where I’m going to be in five years,” Gibbons said. “Am I going to be done with school, and am I going to have a secure, stable job?”

A president must show one quality above all, she said: “I want them to be interested in the working class. That’s a lot of people in America. He should know what they have to do to make ends meet every day.”

--With assistance from Michael Novatkoski in Princeton, New Jersey. Editors: Stephen Merelman, Mark Schoifet

To contact the reporter on this story: Chris Christoff in Lansing at cchristoff@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net


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