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In a high-volume, arm-pumping speech at the Democratic National Convention on Sept. 6, 2012, former Michigan Gov. Jennifer Granholm proclaimed that President Barack Obama saved the American automobile industry.
It’s a claim, made repeatedly at the convention, that PolitiFact National has said is on pretty solid ground.
But Granholm got more specific.
"With the auto rescue," Obama "saved more than 1 million middle-class jobs all across America," said Granholm.
She continued by claiming jobs saved in a number of states, such as the election battlegrounds of Florida (35,000), Michigan (211,000) and Ohio (150,000). She said more than 28,000 jobs were saved in Wisconsin alone.
For us, Granholm’s claim really has three parts: the U.S. and Wisconsin jobs-saved figures; whether those jobs were "middle-class"; and whether Obama deserves full credit for saving the jobs.
Let’s turn the ignition.
Auto industry crisis
Granholm, now a law professor and host of a talk show on Current TV, is a Democrat who served eight years as Michigan’s governor after being elected in 2002. She alluded in her speech to late 2008, when the auto industry was near collapse. As PolitiFact National has reported, layoffs at auto plants and among auto parts suppliers were on track that year to reach 250,000 workers. General Motors was virtually out of cash to pay its bills and Chrysler was not far behind.
(Granholm stated in her speech that Republican Mitt Romney’s response at the time was to "Let Detroit go bankrupt." But as our colleagues noted in rating that claim Half True, it was a New York Times staff writer who put that headline on an opinion piece penned by Romney in which he advocated a "managed bankruptcy" with new management, new labor agreements and federal guarantees for post-bankruptcy financing.)
The auto rescue began under President George W. Bush, who just before leaving office gave Chrysler and GM more than $17 billion in loans. (Ford never asked for assistance.) Then in 2009, Obama provided $80 billion in relief. Some was offered as loans to the automakers, but much more was given in exchange for stock.
The Italian car company Fiat became the majority stockholder of Chrysler; the second-largest owner is the autoworker union’s retiree health care trust fund. For GM, the U.S. government now owns about one-third of the company, private shareholders about one-third and the retiree trust fund 10 percent.
Number of jobs saved
Obama’s campaign said the evidence for Granholm’s claim comes from a May 2009 study produced by the Center for Automotive Research. The center is an independent research group based in Ann Arbor, Mich., that gets some funding from automakers.
The study, released as the auto bailout was still playing out, made projections based on whether Chrysler and GM went through quick bankruptcies ("best-case" scenario) or lengthy bankruptcies ("worst-case" scenario).
Under the best-case scenario -- bankruptcy filings and settlement with debtors completed within 90 days -- an estimated 63,200 U.S. jobs would have been lost by the end of 2009, the study said. That included 9,700 direct jobs, with the rest coming from automaker suppliers and "spin-off" jobs -- jobs lost as a result of reduced spending by auto and auto-supplier employees.
Under the "worst-case" scenario -- bankruptcy proceedings that were "disruptive and disorderly" and would "drag on" -- the U.S. would have lost 1.34 million jobs by the end of 2009, including nearly 204,000 direct auto jobs, the study estimated.
For Wisconsin, the 2009 jobs loss was pegged at 1,766 under the best-case scenario and 30,513 under the worst-case scenario.
Granholm then did some math, subtracting the best-case jobs number from the worst-case number. For example, for Wisconsin, she claimed the bailout saved more than 28,000 middle-class jobs (30,513 minus 1,765 equals 28,748).
The math Granholm did isn’t done in the study. And it’s not clear if she was trying to be conservative by citing figures slightly smaller than the maximums. But Obama’s campaign did respond to our question on this point by noting that the Center for Automotive Research did a later study, in November 2010, estimating that the auto rescue -- by avoiding the worst-case scenario with drawn-out bankruptcy proceedings -- saved an estimated 1.14 million U.S. jobs, slightly fewer than the earlier estimate of 1.3 million jobs.
Kim Hill, associate research director of the Center for Automotive Research, noted that other studies also produced estimates of more than 1 million U.S. jobs being at stake. They included one study from the Brookings Institution, a Washington, D.C. think tank, and another from the University of Maryland.
But the Center for Automotive Research study Granholm relies on provided a range of job loss predictions, and Granholm chooses numbers that best serve her rhetorical purpose. Moreover, the study's figures were estimates, not actual counts of jobs saved.
There’s no way to know whether close to the worst-case scenario would have emerged had Obama not provided the auto rescue. And the alternate scenario outlined in the same report showed a much smaller potential job loss.
Types of jobs saved
The study Granholm cited did not use middle-class or any similar term in describing the jobs saved -- and it’s a term that many people interpret differently.
Hill, of the Center for Automotive Research, told us that more than half of the projected jobs saved could easily be classified as middle-class, given that average annual salary and fringe benefits exceed $60,000 for auto workers and $40,000 for auto supplier workers.
But to claim that all of the more 1 million jobs saved were middle class "gets to be a stretch," he said.
As for credit for saving jobs, Granholm gave it all to Obama.
But Obama doesn’t get full credit because Bush’s aid to Chrysler and GM kept them afloat and bought time for Obama to decide how to respond to the crisis, PolitiFact National concluded in its article about whether Obama saved the auto industry. Moreover, our colleagues observed, no one can say what would have happened without massive government intervention.
Granholm said that "with the auto rescue," Obama "saved more than 1 million middle-class jobs all across America," including more than 28,000 in Wisconsin.
The two figures are drawn from estimates from an independent study -- but: it’s not certain that job losses would have reached those levels without the rescue; not all of the jobs projected as saved were middle-class jobs; and Obama deserves a major share of the credit for saving jobs, not all of it.
Granholm’s claim was partially accurate but left out important details. On balance, we rate it Half True.
National Journal, text of Jennifer Granholm speech, Sept. 6, 2012
Washington Post, video of Jennifer Granholm speech, Sept. 6, 2012
Center for Automotive Research, "The impact on the U.S. economy of successful versus unsuccessful automaker bankruptcies," May 26, 2009
Center for Automotive Research, "The impact on the U.S. economy of the successful automaker bankruptcies," Nov. 17, 2010
Interview and email interview, Center for Automotive Research associate research director Kim Hill, Sept. 7 and 11, 2012
PolitiFact National, "Granholm says Romney’s response to auto crisis was ‘Let Detroit go bankrupt,’" Sept. 6, 2012
PolitiFact National, "Did President Obama save the auto industry?," Sept. 6, 2012
PolitiFact National, "Strickland credits auto rescue for Ohio manufacturing gains," Sept. 6, 2012
PolitiFact National, "President Barack Obama campaign video says auto companies ‘repaid their loans,’" March 21, 2012
PolitiFact National, "Obama campaign movie says auto bailout money had run out when he took office," March 19, 2012
Email interview, Obama campaign Wisconsin press secretary Gillian Morris, Sept. 10 and 11, 2012
Interview and email interview, Republican National Committee Wisconsin communications director Nicole Tieman, Sept. 7 and 11, 2012
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