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Special Report

Obama's Auto Bailout Celebration Premature?

The following is a rush transcript of the July 30, 2010, edition of "Special Report With Bret Baier." This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: Last year many thought this industry would keep losing jobs as it has for the better part of the past decade. Today, U.S. automakers have added 55,000 jobs since last June, the strongest job growth in more than 10 years in the auto industry.

(APPLAUSE)

(END VIDEO CLIP)

CHRIS WALLACE, ANCHOR: President Obama at a GM auto plant today claiming the government bailout saved the American car industry.

Let's bring in our panel, Steve Hayes, senior writer for The Weekly Standard; Erin Billings from Roll Call, and syndicated columnist Charles Krauthammer.

So, Steve, does the performance of the big three automakers over the last year vindicate the Obama and the Bush bailouts?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: No, I don't think it does. If you look at what we spent, $50 billion on GM alone, it's no wonder that we could save a million jobs or add 55,000 jobs. I just don't think it's any great accomplishment.

And if you look at what they've done, the president seems obsessed with this Chevy Volt. He was in one a few weeks ago, in one again today, and drove it a few feet, apparently. It's a car that costs, that retails for $41,000, and according to this terrific article in The New York Times, is basically offering the performance and space of a $15,000 economy car. That's what we're getting for spending all this money, and to a certain extent the future of GM is depending on the success of this car, which people are not going to pay $41,000 to buy.

WALLACE: Erin, an awful lot of people are going to sit there and say this is not only Obama it was also Bush before him, and if had not been for government intervention the auto industry might have gone under and ripple effect, that could have been millions of jobs -- not just a million in the car industry.

ERIN BILLINGS, DEPUTY EDITOR, ROLL CALL: And that's the argument we heard from the Obama administration today, we heard that from Democrats, as well. He is obviously using this to differentiate Democrats from Republicans. He was very much a candidate today -- very much in campaign mode, if you will.

And this was -- this is sort of a bright spot in an otherwise bleak economy. But you take that against the fact that economic growth is slow. People realize that. Consumer confidence is not high. Consumer spending is not increasing. And the unemployment rate is still hovering at 10 percent.

So, this is one small positive thing for the administration and their economic policies, but I think given the broader context people are still really concerned about where this country is going.

WALLACE: In Wendell Goler's piece, Charles, he had a clip from an auto industry expert who said in fact this may be the best spent financial money of all of these bailouts because of the fact that, he said, the vast majority of it is going to be repaid to the government, to the taxpayers.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Whether it is well-spent will depend on what the success the companies have in selling the car. Anybody can create the jobs if you give them $50 billion. The question is, can you create products that people are going to want to buy?

And I think Steve's point is very strong. The Chevy Volt is a disaster. It's extremely expensive. Every time you buy it the purchaser has to pay $41,000, and added on to that will be a federal government subsidy of $7,500 -- so it's a $50,000 car.

The only people who will buy it are going to be very rich people who will park it outside their townhouse for ostentatious show of how virtuous they are while they drive around in their Cadillac Escalade.

If this is how a publicly run big corporation operates, it will be a disaster. This is a classic example of what happens when the political and ideological desires of an administration are imposed on a private company. That's how the Soviets worked it with the five-year plan and it didn't work.

It is not how many jobs you create or even save, it's can you sell a product in the market that will make a profit? Otherwise it's a farce.

WALLACE: You talk about the Soviets -- the auto bailout may have been exhibit A for the argument that President Obama was a socialist who wanted tremendous government intervention in the private sector. And that was one of the points Obama was making today: "I didn't want to take over the companies." Have those fears been dispelled?

KRAUTHAMMER: The bailout was not an act of socialism. The Bush administration was the one who actually prepared the way. It gave a lot of subsidies. It didn't want to see it go down. It was an emergency measure at a time of emergency. And I wasn't against it in principle.

But what I am against is running it according to the ideological dictates of the government and producing products that are not wanted that will cause a company to fail. In the end the market is a determinant and it won't pass the test if it is run by government ideologues.

WALLACE: Erin, does this get Obama seeing what has happened and the fact we are getting out, as Charles says, not as much as we should, does that get the president off the socialist hook?

BILLINGS: I'm not sure.

I mean, look, nobody wants anymore bailouts. The bailout fatigue exists. I don't think this will change a lot of minds. Republicans still think we have spent too much to bail out Wall Street and to bail out the auto industry, and on down the line. And the American public, the average worker feels like they have not gotten their fair share. So I think those criticisms will probably persist.

HAYES: But look, it may have been emergency socialism, it may have been incremental socialism, but I still think it's a step in the socialist direction. Just because George W. Bush did it as well does not mean it doesn't care those same negative connotations, I think.

And look, we should also be very clear about the government having recouped all of its money. That is simply not what happened. There is $24 billion the government will likely never see again and even the money that has supposedly repaid, $6 billion of it that went to a loan came from a $13 billion fund that was an escrow fund that the government set up.

So GM took that money from the $13 billion escrow fund, put it towards the $6 billion loan -- it is like paying off, it's basically like transferring the balance on a credit card and giving your wife a high five and saying we paid off our debt.

WALLACE: Less than 30 seconds, Charles. With the bailout, with the structural changes to GM and Chrysler that came through the bankruptcy proceedings, are the car companies on sounder footing than they were two years ago?

KRAUTHAMMER: Well yes, because otherwise they would go over a cliff and disappear. They are in play. I think they have a chance of making it, but not if they are run according to the dictates of ideologues in the White House.

I make one distinction -- taking over health care, regulating financial reform and cap-and-trade, are acts of a socialist if you like, because it is unforced, it's an ideological desire. Acting in an emergency to nationalize an auto company I think is a different category.

WALLACE: OK, we have to leave it there. When we return the panel takes on the Friday Lightning Round.

(COMMERCIAL BREAK)

WALLACE: Every week on the FoxNews.com "Special Report" page viewers vote on what topic we should discuss first in the Friday Lightning Round. And today the winner is the fallout over the ruling of the Arizona immigration law.

Let's bring back the pane. And specifically, Steve Hayes, I want to talk about the story today that was first in The Washington Times and that we also reported about this memo that was leaked from the U.S. Citizenship and Immigration Services that seemed to indicate that there might be an effort at a backdoor amnesty plan. It's just a memo. How big a deal?

HAYES: Well, it was a memo and it was a draft memo. And if we were to catalog all the stupid things that have appeared in government draft memos, it would be a long list.

Having said that, it is truly frightening to see federal employees seeking ways to allow illegals to remain here, to circumvent federal law. And I think we ought to see whether the memo was ordered and what came of it.

WALLACE: Erin?

BILLINGS: Just learning of this memo today, I'm not sure how much traction it will have. But I will say that I think it is going to fuel border security advocates and particularly in the wake of the Arizona ruling and now the challenge to that ruling. And this is just going to fuel that debate further.

WALLACE: Charles?

KRAUTHAMMER: Not just a bad idea, bad politics. It's lawless. These are people who are appointed people in the administration deciding because Congress hasn't enacted a law it wants enacted, it will do it by creating or finding loopholes in existing law.

It is like the administration, which was not able to get approval by Congress for cap-and-trade or a carbon tax and having the EPA do it by itself. That's not the way the constitution says our government runs. The laws are done by Congress. The administration is supposed to administer.

WALLACE: All right, next subject in the lightning round, Charlie Rangel. There seem to have been two developments today. One is we found out that the House subcommittee that was investigating him, that they had recommend a reprimand which is one form of punishment, but down from a censure and certainly down from expulsion, and that is apparently what Rangel and the lawyers wouldn't agree to.

And in addition, when President Obama has just done an interview or has run on CBS News in which he says "I think Charlie Rangel served a long time and served constituents very well but these allegations are troubling. And he's somebody who is at the end of his career, 80-years-old. Sure he wants to help the career with dignity. I hope -- my hope is that it happens."

What do you make of both of those things?

HAYES: I'd like to know why he's still in Congress. This has been a two-year investigation and the charges and allegations have been known for a long time, and it is likely now that he is just going to get a reprimand because members of Congress don't like to kick out members of Congress. It seems silly to me.

WALLACE: You think he deserves expulsion?

HAYES: Yes. If you read the indictment, or the --

WALLACE: Assuming the charges are true.

HAYES: Assuming that the charges are true, and there is a lot of substantive evidence. It's troubling to me that members of Congress in all likelihood will not vote to expel him even with all of this evidence.

WALLACE: As the person among us who cover the Hill and watches it most closely, what is your read on what will happen to Charlie Rangel? Will he get off with a reprimand which I think a lot of people would think is pretty soft given these 13 violations?

BILLINGS: I think that a reprimand is probable. I think at the far end a censure, I do not think he will be expelled.

What surprises me though is he did not agree to a reprimand, which says to me he is really digging in or his lawyers are really digging in, and he thinks he has a decent case.

What's interesting to me and what I'm going to be watching in the next few weeks is how hard the Democrats push from the outside to try to get him to step down because he is obviously, you know, he's pretty stubborn. He did not want to give up his gavel as the Ways and Means chairman, so I don't think he's going to step down without a fight.

WALLACE: Charles?

KRAUTHAMMER: The statement the president made is a rather strong invitation to walk the plank.

WALLACE: It did seem to be a bit of a benediction, didn't it?

KRAUTHAMMER: It was. It was rather strong. I think it was a message delivered from his party that they do not want a trial and embarrassment.

I'm really surprised if he was offered a reprimand he turned it down. That is the least of the punishments. With all the pressure from the outside I can't believe this is not going to end with a deal before a trial in September in which he accepts a reprimand, it is such a light punishment.

WALLACE: And finally, a little bit more than a minute left -- two developments on the oil spill front. One is that Tony Hayward, the departing head of BP, gave an interview to The Wall Street Journal today. And let's put on the screen what it is he said:

"I became a villain for doing the right thing, but I understand people find it easier to vilify an individual more than a company."

He basically says he and BP did everything they could, Steve, and that his resignation was mostly PR.

The other news, and this is just breaking, is that the House has approved a bill to boost safety standards for offshore drilling and to remove the $75 million cap for liability for spills. Steve, your reaction to both?

HAYES: Tony Hayward became a villain -- there's a small grain of truth to what he said -- but he mostly became a villain because he said a series of really stupid things that got him in trouble and made him look like he didn't care that the people in the Gulf were suffering.

As for what happened in the House, we'll see where that goes. I would be surprised if it goes very far.

WALLACE: We're going to have leave it there. I'm sorry, this lightning round just ran out of time. You are each owed 30 seconds next time Bret does it.

(LAUGHTER)