John Feehery: Speaking Engagements


Making Ron Burgundy Proud

Posted on November 15, 2013

The commercials are frickin’ hilarious.

Ron Burgundy, Anchorman, selling the Dodge Durango.

The ad campaign is brilliant.  In one, Burgundy (aka Will Ferrell) talks about the size of the glove box, which comes standard, in case you didn't know.  In another, he shoos off some “dirty dancers” who are dancing too close to his beloved Durango.  In a third, he wins a staring contest against a white horse, who he mocks as having insufficient giddy up compared to the horse power of the SUV.

There would have been no ad campaign like this if George Bush hadn’t started the bailout of the auto industry at the end of his tenure.

The American people hate bailouts of major corporations, by and large.   And some populists want to break up any company that is “too big to fail.”

They implicitly think that companies that are poorly run should be allowed to go out of business.

Usually I agree with that sentiment.  A company that can’t make products that can sell in the marketplace should be allowed to go bankrupt.

But I made an exception for the American auto industry.

General Motors and Chrysler were rescued first by President Bush and then by President Obama during a turbulent part of our nation’s history.

Both companies had made the wrong bets for a number of years on bigger vehicles vs. small cars, and both had labor costs that were out of control.

But they faced imminent bankruptcy not because of those bad bets and bad deals.  They faced catastrophe because of a financial crisis that had destroyed consumer confidence and dried up loans for those who did want to buy a car, which wasn't directly their fault.

Those were desperate times and they required desperate measures.

Had GM and Chrysler gone out of business, Ford would have followed suit in short order.  With GM and Chrysler gone, the supply chain that supports all three American automakers would have disappeared, taking with it Ford.

Had President Bush not stepped in when he did, America would have been without a domestic automobile manufacturer.

Now, some Southern Senators thought that would have been fine, mostly because Japanese, Korean and German car makers build their products in their states.

But having Michigan, Wisconsin, Illinois, Indiana and Ohio go into a deep depression would have been very, very bad for the country, and very, very bad for our national debt.

When unemployment is high, it puts a lot more stress on the federal budget.  Less tax revenue comes in and more welfare spending goes out.  And make no mistake about it.  If the auto bailout had no happened, a million people would have been unemployed.

According to a study by the Center for Automotive Research, the cost to U.S. taxpayers of those lost jobs in 2009 and 2010 would have amounted to $28.6 billion.  And that’s only in 2009 and 2010!

The American auto industry is back, in force.  GM’s stock is on the rise, Ford is a darling of Wall Street and Chrysler has Ron Burgundy.  None of this would have happened had George Bush, first, and Barack Obama, second, not taken effective action to rescue these companies during the worst of times.

In the next month or so, the government is, once and for all, going to sell the rest of its stake in General Motors and at that time, the pundits are going to analyze the bailout’s efficacy.

I am not an economist by training and I am pretty certain that most conservative economists will look at this episode in our history with a critical eye.

But, in my view, government’s role is not simply let economic catastrophe happen if it can somehow help plot a better course.  And George W. Bush and Barack Obama found a better alternative than simply allowing the American auto industry to die of a heart attack.

When the government sells its final shares of GM stock, the tab for the bailout, if you don’t include jobs saved, the families protected, taxes collected and the costs of increased welfare spending not calculated, will be around 10 billion dollars.

But if you add and subtract all of the costs from all of the benefits, a different picture emerges.  The taxpayers did ok by not turning its back on America’s auto industry, and we should all be pretty proud of how it all worked out.

Ron Burgundy certainly is.