Indiana is the “Crossroads of America.” We are the second ranking automobile manufacturer in the nation.
Five years ago, we just about lost much of the industry that helped forge the Hoosier middle class.
Our leaders, from then-Gov. Mitch Daniels to Treasurer Richard Mourdock, were indifferent to whether General Motors and Chrysler survived as they teetered on the brink of oblivion. When the Bush 43 and Obama administrations infused Toxic Asset Relief Program funds to help these two companies survive the Wall Street meltdown, the ensuing Great Recession and their own mismanagement over the previous generation, the political reaction was the Tea Party, which opposed the “bailouts.” There was widespread skepticism from Indiana Republicans.
On Monday, General Motors announced it was making a final payment on the $49.5 billion it borrowed from the U.S. government in 2008 and 2009 to keep it out of liquidation. Taxpayers lost $10.5 billion on that deal.
But of the $80 billion in TARP that went to automakers, about $93 million has been paid back. NBC News reported that of the $421.8 billion spent on bailouts, $432.7 billion have been recovered.
“With the final sale of G.M. stock, this important chapter in our nation’s history is now closed,” Treasury Secretary Jack Lew said.
"It’s been a long, hard road with the label of ‘Government Motors’,” said GM North American Division President Mark L. Reuss.
“When things looked darkest for our most iconic industry, we bet on what was true: The ingenuity and resilience of the proud, hardworking men and women who make this country strong,” President Barack Obama said Monday. He and Vice President Joe Biden made a rare joint trip to a Kokomo Chrysler transmission plant in November 2010, and the president said then, “We decided to make a stand. We made the decision because we had confidence in the American worker.”
As GM and Chrysler stood on the brink in 2008, analysts from the Brookings Institute and the Center for Automotive Research told a forum in Indianapolis that a bankruptcy and liquidation could have cost up to 150,000 Indiana jobs — including 40,000 at GM — and billions of dollars in wages, as well as personal and corporate tax revenue. According to a white paper released by U.S. Sen. Joe Donnelly, Indiana had 102,000 workers in the auto industry, or 5 percent of the total workforce in 2008. Within a year, 30,000 of those jobs were gone.
Asked where Kokomo would be now without the auto rescue, Mayor Greg Goodnight observed, "It's hard to say, but we'd be in much worse shape. How much worse is anyone's guess."
Today, 102,000 Hoosiers are working in the auto industry, back to 2008 levels. At GM, Chrysler, Honda, Toyota, Subaru and Cummins Engines, the direct employment is 31,703. Scattered across the Hoosier prairie and dozens of cities and towns, more than 70,000 of us produce auto parts and sell cars at dealerships. Factor in the multipliers — businesses ranging from restaurants to construction, to services — and you see the huge impact of the industry.
It is hard to calculate where Indiana's economy might have fallen had GM and Chrysler liquidated. Some brands of the two companies such as Jeep would likely have survived. But Indiana's jobless rate spiked at 12 percent in 2009 — rose to close to 20 percent in Kokomo — and stayed in the 8 percent range up through this autumn. Had 150,000 Hoosiers been forced out of work, Indiana's economy certainly would have sunk into depression.
Today, these six companies mentioned have invested in the $2 billion range in Indiana facilities, including $1.6 billion at Chrysler’s Kokomo complex and $467 million at GM plants in Bedford, Marion, Fort Wayne and Kokomo.
The decisions Obama made in 2009 — initially pumping in TARP funds, rejecting an outright bailout in the spring, forcing an expedited bankruptcy that summer and a restructuring that saw Chrysler merging with Italian automaker Fiat and the UAW pension fund gaining partial ownership — were controversial here in Indiana, even with so much investment and legacy.
Mourdock tried to thwart the Chrysler/Fiat merger, saying it perverted two centuries of bankruptcy law, with the U.S. Supreme Court rejecting the case. Daniels characterized the bailouts as "good money chasing the bad" while GM was in the “handout business.”
Republicans such as former U.S. Rep. Mark Souder, with the Fort Wayne GM plant in his district, reluctantly backed the deal. “As long as they have a fighting chance, I’m willing to give them a fighting chance,” Souder said at the time.
In times of crisis, American presidents have made tough calls, ranging from Lincoln’s suspension of habeas corpus, to FDR’s misguided internment of Japanese-Americans. They have also leaned on our steel and production. During World War II, the auto industry became the “arsenal of democracy.” And it will still be with us in the future.
The payoff for Obama on this particular issue will come in the history books and his second term decision to increase fuel use levels to over 50 mpg within the decade, even though he lost Indiana to Mitt Romney in 2012 with only 42.4 percent of the vote.