The Tech - Online EditionMIT's oldest and largest
newspaper & the first
newspaper published
on the web
Boston Weather: 58.0°F | Light Rain
Article Tools

The distinction between the actual Obama and his myth

This is a response to the opinion piece “Detroit: Obama’s economic blueprint for America” published in The Tech on Sept. 14, 2012 by Keith Yost. I found a few factual inaccuracies in this article. Another issue with this article is with what is not mentioned, thereby painting an inaccurate picture of the topic at hand. It is also amusing to note how so many commentators still feel, after almost four years of hopelessness and changing promises, that President Obama and the Democrats are not shills to corporate America, all evidence to the contrary.

Mr. Yost first talks about the bailouts to Wall Street. The fact that the U.S. housing bubble and the gambles of Wall Street mainly caused the financial crisis is ignored. Instead, Mr. Yost tells us that with TARP, the U.S. government is helping docile corporations recover from “a global financial crisis.” Also, a misleading claim that the TARP is making its money back plus interest is put forth. While the money is being recovered, only a total of $360.94B has been received (including a paltry $2.26B interest), out of a total of $416.98B disbursed. The lifetime cost of TARP to taxpayers is estimated to be $63.49B. These funds are for helping out homeowners, and were not designed to be recovered. A fact left unmentioned is the other corporate handouts made, not under TARP, but through other ways. An analysis by the Bloomberg Market magazine showed that the Federal Reserve had committed $7.77 trillion in March 2009 to bail out the banks. This far exceeds the TARP funds. The frauds committed by bankers with TARP funds are a different story altogether.

Mr. Yost then seeks to contrast the “success” of the Wall Street bailout with the “failure of cosmic proportions” of the bailout of the U.S. auto industry. Putting the blame for the 2008-10 crisis in the automotive industry on the shoulders of the United Auto Workers (UAW) union is a convenient excuse for many. Factors such as high oil prices in 2008, a weak U.S. economy, and high interest rates apparently only affect automotive industries in other countries. In the U.S., however, the UAW is to blame for all the miseries of Detroit. Ignored is the fact that the U.S. auto industry, even after the oil shocks of the 1970s, fails to produce more fuel-efficient vehicles.

Then we come to the question of job additions attributable to the auto industry bailout. The thinking that the factories of GM and Chrysler would not idle during bankruptcy proceedings is flawed. Potential car buyers are unlikely to buy a GM or a Chrysler car if they see that the company is going under the water, because they most reasonably expect to receive no service or parts support in the future. Mr. Yosts’s claim about job additions — 4,500 jobs added by GM — is also misleading. According to the U.S. Treasury, the U.S. auto industry as a whole has added more than 230,000 jobs after GM and Chrysler emerged from bankruptcy. It is important to look at the total number of jobs added to the auto industry. If GM had gone bust, many of its suppliers, too, would have gone out of business, which would affect other car makers as well. When GM does well, so do other car makers and industries.

A compelling myth exists that Obama is the savior of the middle class, of the poor, the elderly, and a scourge of Wall Street and the big corporations and their unscrupulous ways. Obama’s political favoritism is evident, but his favor extends to pretty much the same corporations and the neoliberal policies, whether domestic or international, that George W. Bush (or Mitt Romney for that matter) espoused. Time and again, Obama has shown that he is the representative not of citizens, but of Monsanto, JP Morgan, Goldman Sachs, Big Pharma, Big Oil, insurance companies and other corporations/industries. The recent strike in Chicago between the teachers’ unions and Obama’s former White House chief of staff and now Chicago mayor, Rahm Emmanuel, shows Obama’s and the Democrat’s true attitudes towards unions — a disposable entity except at times of crucial elections.

Sumant Raykar is a graduate student in course 2