Republicans, Democrats Differ Over U.S. Automaker Bailout

PRINCETON, NJ -- Americans are more likely to disapprove than approve of the federal government's bailout of U.S. automakers that were in danger of failing three years ago, by 51% to 44%. While 63% of Democrats approve, 73% of Republicans disapprove. Independents are more evenly split, with 45% approving and 50% disapproving.

The findings are from interviews conducted as part of Gallup Daily tracking Feb. 20-21, 2012. Gallup asked Americans to evaluate the U.S. government action to provide financial assistance to the major U.S. automakers who were in danger of failing just over three years ago. The U.S. auto bailout was initiated by George W. Bush in late 2008 with $17.4 billion for General Motors and Chrysler, and completed by Barack Obama in 2009, using more than $60 billion in government funds.

Since then, GM, Ford, and Chrysler have enjoyed strong comebacks and record profits, and the two that were bailed out have paid back most of the loans. General Motors has paid back $22 billion of the $50 billion it got from the government. The Treasury might be able to recoup about an additional $13.5 billion if it sold its current GM stock holdings now. The auto bailout has taken on added importance given the industry's performance, as well as the important Michigan Republican primary on Tuesday, Feb. 28. Republican presidential candidate Mitt Romney, who was born in Michigan and whose father was an auto executive and governor of that state, has been an outspoken critic of the bailout; GOP candidate Rick Santorum has also been critical of it.

During the general election campaign, President Obama is likely to claim credit for the government action that aided the automakers' revival and the fact that the automakers have been able to pay back most of their loans.

In addition to the differences by party, Gallup finds differences in support for the U.S. automaker bailout by education and income. Those with postgraduate work favor the auto bailout, while other educational groups show majority disapproval. Those making $90,000 or more a year are evenly split, but those making less than that amount are more likely to oppose than favor the bailout. On the other hand, residents of the Midwest have at best only marginally more favorable views of the bailout compared with other regions, even though that region of the country is generally seen as benefiting most from this government action.

Implications

General Motors' recent announcement of record profits would seem to suggest that the U.S. government's decision three years ago to bail out failing U.S. automakers was a good one. Former President George W. Bush has taken credit for setting up the financial bailout of the automakers before he left office. President Obama has taken credit for the comeback of U.S. automakers and jobs preserved in the U.S. auto industry.

On the other hand, the federal government may never get all of its bailout funds back because it took GM stock in return for the funding it provided. GM's stock price would need to double before the government could sell its shares and break even.

From a theoretical perspective, some argue that the federal government should never bail out private companies that are failing but instead should let them fail and meet their fate in the free market, as happens with other businesses. Some critics perceive that the government showed favoritism toward the automaker unions and acted against the interests of company bondholders as it worked out the financial aspects of the bailout.

For these reasons, the U.S. auto bailout has become a political football as the Republican candidates vie for support prior to Michigan's Feb. 28 primary. These data imply that Romney's and Santorum's opposition to the bailout will resonate with Republicans nationally, who overwhelmingly oppose it. Additionally, with the general election approaching this November, the candidates' opposition appears to be in line with the majority of independents' attitudes.