President Obama will visit a Chrysler plant in Ohio on Friday to tout the automaker's repayment of bailout money, but a free-enterprise group accuses the administration of coordinating with General Motors' misleading marketing campaign last year about its own government-funded turnaround.
The Competitive Enterprise Institute said newly released Treasury Department documents show the administration engaged in a "cozy PR relationship" with GM in the weeks leading up to the company's ad campaign, which claimed it had repaid all its government loans with interest five years ahead of schedule.
It turned out GM used bailout funds from an escrow account to pay off $4.7 billion in government loans, a move that several congressional Republicans called deceptive.
"One year ago, the U.S. Treasury Department aided General Motors in its fraudulent claim that it fully repaid its government loans," said Sam Kazman, CEI general counsel. "Now the Treasury Department is re-enacting this smoke-and-mirrors routine on behalf of Chrysler. Whatever the bailouts may be credited with creating, honesty isn't one of them."
The Obama administration released a report Wednesday showing that taxpayers probably will lose $14 billion of the $80 billion that the government loaned to General Motors, Chrysler, auto lenders and suppliers.
The White House said taxpayers still could lose $1.9 billion on Chrysler; GM has repaid $23.1 billion of the $49.5 billion it received. Ford did not seek government help.
On Thursday evening, the Treasury Department issued a statement that the government had reached final terms with Italian auto-giant Fiat on selling the government's remaining 6 percent share of Chrysler, plus shares held in trust for its retirement program. Mr. Obama will announce the $560 million deal Friday during his Ohio visit.
Although taxpayers still stand to lose nearly 20 percent of the auto bailout funds, it's less than the 60 percent loss the Treasury Department initially forecast.
That development, along with the jobs that were saved, had presidential adviser Ron Bloom hailing Mr. Obama's decision to bail out auto manufacturers in 2009 as "courageous."
"There is no joy ... in recognizing that all of this money will not be returned," he said. "On the other hand, as we record what was lost, we need to also record what was saved."
But CEI and others say the administration has been overeager to promote the auto industry's turnaround amid an otherwise weak economic recovery.
Treasury documents obtained by CEI show a series of emails among administration officials, including Mr. Bloom and Treasury officials, about GM's upcoming ad campaign two weeks before it aired on television. The emails included draft schedules, draft remarks to be given by GM Chairman Ed Whitacre, and draft press releases from both GM and Treasury.
At the time of the marketing campaign, Reps. Darrell E. Issa, California Republican, and Jim Jordan, Ohio Republican, wrote a letter to Mr. Whitacre complaining that GM was engaged in "a lie to the American people." The lawmakers also faulted Treasury for potentially "colluding" with GM to deceive the public. Sen. Susan M. Collins, Maine Republican, called the marketing campaign "very misleading."
Treasury Secretary Timothy F. Geithner acknowledged at the time that some officials in his department were concerned about the ad campaign.
CEI filed a deceptive advertising complaint with the Federal Trade Commission last year, and GM stopped running the ad shortly after that.
The purpose of Mr. Obama's trip to Ohio isn't to call attention to the automakers' unpaid tab. Besides the final Fiat sale, he also plans to highlight Chrysler's announcement that it will repay $5.9 billion in U.S. loans ahead of schedule, and he'll meet with auto workers and local business owners whose jobs were saved.
"In the last year, the Detroit Three have all gained market share, they have all added jobs, and they've all shown the ability to make money," Mr. Bloom said. "Those three things together haven't been true of the Detroit Three in a long, long time."
White House officials say the auto bailouts have saved up to 1 million jobs, taking into account parts suppliers and other businesses that rely on the automakers.
Fending off criticism of Republican Mitt Romney, who announced his candidacy for president Thursday, Mr. Obama's aides are promoting the description of him as a bold risk-taker whose economic gamble paid off.
“The president took dramatic action because it was the right thing to do,” said White House spokesman Jay Carney. He pointed to seven straight quarters of economic growth.
Still, the overall level of U.S. manufacturing is at its lowest level since September 2009, and unemployment remains high
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