Bailouts may have contributed to the loss of jobs, according to a new report.
By Micah Hanks
Within the last 24 hours, Senate has positioned itself for a final vote, expected later in the day Wednesday, on extending $34 billion in benefits to unemployed Americans; meanwhile, support allocated to Fannie Mae and Freddie Mac aimed at stimulating the housing market is now believed to have helped push the Obama Administration’s federal bailout to an unprecedented $3.7 trillion, according to a Reuters report.
Following the aforementioned Senate vote, President Obama referred to a “partisan minority” that had effectively stifled the process of allocating “critical aid to our nation’s families three separate times,” calling Republican opposition to the unemployment benefit extension “obstruction and game-playing.” Republicans argue that this excessive stimulus spending will only drive the country deeper into an economic quagmire that warns of ultimate collapse, and that the key issue–preserving and creating jobs–continues to be undermined. While our president issues his condemnation of Republican opposition to his stimulus practices, one must wonder what Obama’s reaction might be if he were told he had actually caused tremendous job loss?
Few would argue that, despite the Obama administration’s best efforts, things simply aren’t looking good. With the US unemployment rate hovering well over 9 percent, government commitments toward guaranteeing loans, backed by agencies that include the Government National Mortgage Association and the Federal Housing Administration, have resulted in $512.4 billion in additional national debt, accrued during the first two quarters of 2010 alone. In total, it is estimated that federal debt supporting the US financial system has increased 23% in the last year, and according to the TARP Program’s Special Inspector General Neil Barofsky, this occurred “largely without congressional action.” However, of greater concern to Barofsky, as detailed in a recent report on the auto industry bailout, is the state of unemployment in the US–which he says may actually have been harmed inadvertently in the bailout process.
Addressing concerns over job losses in 2010, Obama emphatically stated in early July that his stimulus plan managed to save or create between 2.5 million and 3.6 million jobs. However, he is less quick to acknowledge how many jobs he may have cost American auto workers in what now appear to unnecessary terminations of auto dealerships. Barofsky noted during a recent appearance on Fox News’ “Your World with Neil Cavuto” that the Treasury Department’s auto team had acknowledged “that the auto companies wouldn’t have failed completely had they not accelerated these terminations of dealerships.” In his report, Barofsky comments further that initial automaker plans requiring fewer dealership closings were rejected by Obama’s administration, which remained intent on closing two thousand dealerships instead. Furthermore, a Senate hearing before the Committee on Commerce, Science and Transportation “demonstrated substantial confusion, even amongst dealers, as to how GM and Chrysler selected dealerships for termination and what benefit, if any, the companies gained.” The Treasury issued a statement disagreeing with Barofsky’s report, and GM commented that the dealership closings had occurred under “extreme circumstances.”
In retrospect, it appears a tremendous number of jobs may have been terminated by Obama, with no actual gains to show for it. And yet, no doubt, this administration will continue to throw money at problems which haven’t been addressed in their totality, verifying the compulsive inexperience Obama seems to wield like a sword. One can only imagine what other industries may suffer as the corporatist control of this floundering market continues… will they fare any better than companies like Chrysler and GM, or will the effectiveness of future bailouts–which remains questionable–cost those industries just as many jobs?
Image by Ricardo Carreon via Flickr.
