Cars And Obama As Criticism Mounts Of Efforts To Help GM And Chrysler

Two reports came out recently detailing the effects of the efforts of the Obama Administration and the U.S. Government’s attempts to help the domestic auto industry. The Congressional Oversight Panel for the Troubled Asset Relief Program (TARP) released a report on the investment of funds from that program into Chrylser and GM. Then a survey of a group of economists on future growth of the U.S. economy discussed the effect of the “Cash for Clunkers” program and its role in that growth.

The Oversight Panel was highly critical of the efforts to first infuse cash into the two companies and then finally help them through bankruptcy. They make it clear that little if any of the eighty-one billion dollars so far sunk by the taxpayer will ever be repaid let alone a profit being seen. The Panel also wants the program restructured so that it is not the Government and taxpayer taking the actual financial stake in the companies. They recommend the establishment of a trust so that there can be little direct influence by politicians or bureaucrats on the two companies. Finally the Panel of three Representatives heavily criticized the legality of using TARP funds for this purpose. The Treasury was only able to do so by taking a very broad view of what a financial company is, a view so broad that almost any company in the U.S. would qualify. Continuation of this policy would mean there is a chance that another industry could receive a similar bailout.

The survey of economists finds that there is expected growth in the U.S. economy. This after several quarters of negative growth as the global recession struck the economy. Much of the current uptick was caused by the “Cash for Clunkers” and now that this has ended there may be a drop in the economy. There is concern that many of the sales driven by this promotion were ones that would have occurred over the next several months anyway and these will now not be spread out as they normally would. That had been one of the major criticisms of the program when it was created and implemented.

The Administration is also claiming that in the current quarter three percent of growth will be added due to the “Stimulus“. There has been much discussion and dispute about the effect of the money as unemployment continues to rise despite the program. It is expected to continue to grow even as Obama claims it “saved” over a million jobs. There are major concerns that as the economy recovers there will be little job growth or creation.

There is plenty for critics to complain about with the U.S. money going to GM and Chrysler. It will take several months before the results are really shown as to whether it was better to keep them going rather then let them go through bankruptcy the normal way. Cash for Clunkers too has its issues and opponents and while it may have been a short term way to spruce up sales it might too have not been the best long term solution.