“At this point,” he says, “how could anybody argue that it was the wrong thing to do, because it worked.”
BAILOUT STILL DIVIDES
BY SHARON COHEN
THE ASSOCIATED PRESS
KOKOMO, Ind. — Back in this town’s darkest days, Jeff Shrock, a third-generation autoworker, would cruise down the streets where he grew up, past the foreclosed homes and four giant Chrysler factories, knowing their future — and his job — were in jeopardy. He sometimes imagined the worst.
“I wondered what would happen five, six years down the road when the weeds were growing in parking lots and the plants had their windows broken out,” he says. “What would the community look like then?”
These were not far-fetched fears. Kokomo had made an ignominious Forbes list of fastest-dying communities in America. The recession and collapse of the U.S. auto industry had battered the town. Three major employers — Chrysler, General Motors and Delphi, an auto parts supplier — had filed for bankruptcy. Hundreds of workers were laid off. Unemployment briefly topped 20 percent.
Shrock, who’d risen from Chrysler machine operator to a United Auto Workers international representative, was worried. It wasn’t just 4,000 Chrysler workers. He was also thinking about some 10,000 auto retirees in the county and their pensions.
During that tense first half of 2009, Shrock wondered if the automakers — and his town — would endure. The Obama administration had pumped in more than $60 billion to fund GM and Chrysler’s bankruptcies, but there were no guarantees.
Flash forward. The U.S. auto industry has staged an amazing comeback, and the town’s largest employer, Chrysler, has pledged to invest nearly $1.3 billion into its plants here, added about 1,000 workers and helped boost Kokomo’s fortunes — it was honored in 2011 by the state chamber of commerce as Community of the Year.
But the resurrection of U.S. automakers has done little to resolve a deep political divide over the bailout. Democrats, led by President Barack Obama, call it an undeniable success. The Republican presidential candidates, most notably Mitt Romney, condemn it as government meddling, both unfair and unnecessary, and even some Indiana politicians agree.
To many folks in Kokomo, though, the political debate seems disconnected from this reality: Kokomo survives.
Visiting reporters would ask Mayor Greg Goodnight: What are you going to do if the bailout and bankruptcy fall through?
“It’s kind of like someone asking me what would you do right now if we had an earthquake, a tsunami and seven bank robberies at the same time? You do what you have to do,” he says. “But I can’t think of a worse-case scenario, economically.”
Goodnight, a Democrat, knew some folks disapproved of the bailout. Once, a drug store clerk told him the government should let the automakers fail. “I said, ‘Look out the window. Who do you think helps pay for these roads, these street lights … who do you think pays for our schools, our teachers?”‘
This wasn’t just a Democratic attitude. Paul Wyman, owner of a real estate company and a Howard County commissioner, compares the auto meltdown to Hurricane Katrina — both of them catastrophes demanding extraordinary measures.
“As a Republican, I can tell you I’m for smaller government every day of the week,” he says. “But there is one thing I expect from the government and that is for government to respond to a major crisis. … It worked and now the government should get out.”
Wyman points out that a Republican — former President George W. Bush — approved $17.4 billion in bridge loans to Chrysler and GM. (Bush recently defended his action, saying “sometimes circumstances get in the way of philosophy.”)
“If it had gone the other way, our community would have been devastated,” he says. “In hindsight, it was the right thing to do.”
That’s not how Indiana Gov. Mitch Daniels sees it.
He says the GM and Chrysler bailout was a clear case of favoritism. “I was all over this state visiting with companies large and small that were in extremely difficult shape and nobody in Washington came around to wipe out their debts or write them a check,” he says. “There was just an unfairness about it.”
He and other critics maintain the rescue violated bankruptcy laws. Richard Mourdock, Indiana’s treasurer, unsuccessfully sued to stop Chrysler’s sale to Fiat SpA on behalf of three state pension and construction funds representing teachers, police, and others.
He argued the sale of the majority of the automaker’s assets favored unsecured stakeholders, such as the UAW, ahead of secured debtors in the funds. “How many of us believe that the U.S. government should pick winners and losers?” he asks. “Nobody agrees with that.”
A recent Gallup poll found 51 percent of Americans disapprove of the bailout, compared to 44 percent who like it. There’s a stark party line difference: 63 percent of Democrats approve, 73 percent of Republicans oppose it.
GM reported a record $7.6 billion profit last year. Chrysler, now privately held and majority owned by Fiat, earned $183 million in 2011, its first net profit since 1997.
Chrysler and Fiat have paid back all but $1.3 billion of Chrysler’s $12.5 billion bailout. And the government has recouped more than $22 billion of its nearly $50 billion GM bailout, after agreeing to take stock in return for most of its investment.
It’s that kind of record that makes Brian McKinley, a 42-year-old Chrysler engineer, wonder why there’s still any debate.
“At this point,” he says, “how could anybody argue that it was the wrong thing to do, because it worked.”