Obama says U.S. can’t let Big 3 fail

Wednesday, February 25, 2009

Obama says U.S. can’t let Big 3 fail

In first speech to Congress, he also tells nation ‘we will recover.’

Gordon Trowbridge / Detroit News Washington Bureau

WASHINGTON — President Barack Obama scolded the domestic carmakers Tuesday night for "years of bad decision making," but said "the nation that invented the automobile cannot walk away from it."

In a speech to a joint session of Congress, the new president offered no details as to how he would help the industry restructure, and no promise to grant the billions of dollars in new aid that General Motors and Chrysler seek.

But it was his strongest commitment yet to preserving the companies that have defined Michigan’s economy and identity for a century.

"We are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win," he said. "Millions of jobs depend on it."

Though Michigan was largely focused on Obama’s brief comments on autos, the roughly hour-long address ranged widely, touching on everything from the just-passed stimulus plan to rescuing struggling homeowners to the wars in Iraq and Afghanistan.

But at its heart was a message about the economy both sobering and optimistic. Obama told the nation bluntly that it’s in trouble, but said he was offering solutions that could rebuild the economy and the nation’s confidence.

His administration will likely determine the futures of GM and Chrysler, which already have received more than $17 billion in federal loans — money desperately needed to stave off collapse amid falling market share and massive losses.

Last week, the companies submitted restructuring plans that include requests for up to $21 billion in additional aid. A White House task force, led by Treasury Secretary Tim Geithner, is to meet with company executives this week, and must decide by March 31 whether to continue aid. If dissatisfied with the plans, the administration could call in its loans and force the companies into bankruptcy.

"The auto industry is worried and they all should be," said Bob Kolt, a Lansing-based political consultant.

"The president was supportive but clearly whacked Detroit. And I’m sure most people think he’s right to rock the industry a little. You get a bailout, expect to get public whipping."

Michigan Democrats acknowledged that Obama had tough words for the industry, but praised his commitment to saving it.

"The key word I heard is ‘committed,’ " said Sen. Carl Levin, D-Detroit. "He’s talking about winning. He’s not talking about letting this industry go."

"He said we have to do better and we must do better," said the senator’s brother, Rep. Sander Levin, D-Royal Oak.

"I am very hopeful," said Rep. Candice Miller, R-Harrison Township, "that these words of support will be backed up by necessary action."

But Rep. Dave Camp, R-Midland, the top Republican on the House Ways and Means Committee, saw a threat ahead for the industry in Obama’s call for a "cap and trade" system to cut greenhouse gas emissions. "His reference to cap and trade would devastate manufacturing and the auto industry," said Camp, who also criticized Obama’s vow to lift the Bush-era tax cuts on those making more than $250,000 a year.

Sen. Debbie Stabenow, D-Lansing, a member of the Senate Finance Committee, which would help shape a cap and trade system, said legislation can protect the climate and protect manufacturing. "We’re working to craft a bill that would meet the necessary requirements to tackle global warming but to do it in a way that produces the most jobs," she said.

Obama spoke of "the stark reality of what we’ve inherited — a trillion-dollar deficit, a financial crisis, and a costly recession."

"Though we are living through difficult and uncertain times," he said, "tonight I want every American to know this: We will rebuild, we will recover, and the United States of America will emerge stronger than before."

Bill Rustem of Public Sector Consultants, a Lansing-based good government group, said Obama’s speech was "not just for the Congress, but for the people of the country. His call for people to not quit on themselves because they are also quitting on their country was clearly an appeal for a resurgence of personal responsibility."

"After only 35 days in office," Rustem said, "the president did a masterful job of setting the tone for his administration."

Victor Junior, 45, of Ferndale, said Obama’s plan for tax breaks, jobless benefits and fixing the credit crisis are all on point.

"The Democrats and Republicans may not both agree on the plan, but something has to be done," he said.

GOP leader weighs in

The Republican response to his address came from Louisiana Gov. Bobby Jindal, among the GOP’s most prominent young leaders, who criticized Obama for being unduly pessimistic about the nation’s challenges.

And Jindal went directly after Obama and Democrats in Congress for the just-passed stimulus package: "Who among us would ask our children for a loan, so we could spend money we do not have, on things we do not need? That is precisely what the Democrats in Congress just did."

But in describing the stimulus and the 2010 budget he will outline on Thursday, Obama defended an expansive federal role. "I reject the view …that says government has no role in laying the foundation for our common prosperity," he said.

His speech — a State of the Union address in everything but name — offered a relatively short list of new initiatives. But Obama said he would follow through on a campaign pledge to reform the nation’s health care system, beginning with his coming budget proposal.

And he touched on an issue of deep concern in Detroit: high school dropouts. Just 75 percent of students statewide, and 58 percent in Detroit, graduate.

"Dropping out of high school is no longer an option," the president said. "It’s not just quitting on yourself, it’s quitting on your country — and this country needs and values the talents of every American."

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