Clinton hits Sanders again on auto bailout

Michigan may be in the rearview mirror of the Democratic presidential primaries, but front-runner Hillary Clinton is keeping it in the headlights by insisting rival Bernie Sanders once opposed the automotive bailout.

During Wednesday’s Univision-Washington Post debate in Miami, Clinton revisited the issue of which candidate is the best friend of the Detroit auto industry by highlighting her support of the $80 billion in bailout loans to General Motors Corp., Chrysler LLC and their two lending arms that she raised in Sunday’s Flint debate.

The former secretary of state for President Barack Obama is pushing the automotive rescue issue ahead next Tuesday’s winner-take-all primaries in Ohio, Missouri and Illinois.

Although Sanders supported bailing out the auto industry, he opposed legislation devoted to forestalling the foreclosure crisis, a substantial portion of which Obama eventually used to prop up domestic automakers.

The interpretation of those votes has led to the continuing debate in the Democratic campaign.

Clinton has argued that the Vermont U.S. senator’s opposition to releasing the last $350 billion allotment from the $700 billion Troubled Asset Relief Program during the financial crisis was effectively a vote against the auto bailout.

Sanders rejected her argument, reiterating that he supported the unsuccessful auto bailout bill in the U.S. Senate in September 2008. He emphasized that he opposed the Wall Street and mortgage industry bailout legislation a month later and a subsequent measure to release more TARP aid to banks.

At issue is a Jan. 15, 2009, vote by the U.S. Senate on releasing $350 billion from TARP. The move was sought by then-Illinois U.S. Sen. Obama, the president-elect.

It was unclear at the time how much of the $350 billion might be used to aid the Detroit auto industry. U.S. Sen. Jon Kyl, R-Arizona, said he supported the release of the money because incoming Obama officials reassured him they would target the money to stabilize the financial markets, “not prop up failing companies” like the automakers as President George W. Bush had.

In a Jan. 15, 2009 letter, incoming top Obama economic adviser Lawrence Summers told congressional leaders the money would be used primarily to prop up lending and forestall the growing foreclosure crisis. The auto industry was mentioned only in the second sentence of the final bulleted paragraph, which emphasizes funding would be limited to eligible financial institutions. Auto firms, he went on to write, would “only receive additional assistance in the context of a comprehensive restructuring designed to achieve long-term viability.”

In mid-December 2008, Bush approved an initial $13.4 billion in emergency loans — $9.4 billion for GM and $4 billion for Chrysler — and drew the money from the TARP fund. The money was given on the condition automakers restructure themselves or face bankruptcy.

Bush said another $4 billion of the TARP money would be made available to GM in February 2009 if Congress allowed the spending of the second $350 billion of the Wall Street rescue fund. Obama praised the move.

In mid-January 2009, Congress voted 52-42 against a measure to block the release of the $350 billion in TARP money. Sanders was among the senators who wanted to block the money because they didn’t feel there were enough restrictions on the financial industry.

On April 30, 2009, the Obama White House tapped TARP to give Chrysler another $8 billion in federal aid as it forced the Auburn Hills automaker to file for bankruptcy protection and finalize a partnership with Italian automaker Fiat SpA.

In late May 2009, Obama raised the government’s total TARP loans in GM to $50 billion and forced it into a bankruptcy reorganization. The Bush and Obama administration ended up giving $80 billion in loans, of which $9.3 billion went unpaid.

Former New York U.S. Sen. Clinton said it was clear the TARP aid would help the auto industry.“But the fact is the money that rescued the auto industry was in that bill,” she said during Wednesday’s debate.

“Now, Sen. Sanders voted against it. That’s his perfect right to vote against it. But if everyone had voted as he voted ... we would not have rescued the auto industry.”

Sanders again defended his record, saying he voted for the original auto bailout legislation that died in the Senate in September 2008 but voted against “the bailout of the recklessness, irresponsibility and illegal behavior of Wall Street.”

The self-declared democratic socialist attacked Clinton.

“And I find it interesting that when Secretary Clinton, who was the former senator of New York, of course, when she defended her vote, she said, ‘Well, it’s going to help the big banks in New York. Those are my constituents,’ ” he said.

“And then you go to Detroit and suddenly this legislation helps the automobile workers.”

Clinton’s attack drew an immediate rebuke on Twitter from David Axelrod, Obama’s former campaign strategist and White House senior adviser.

“She did it again and I’ll say it again,” Axelrod tweeted. “It’s misleading to imply that TARP II was an auto bailout bill.”

When Axelrod directed a tweet toward former Obama National Economic Adviser Gene Sperling on the issue, the Ann Arbor native quickly sided with Clinton. “Sanders voted vs. every cent that went to auto rescue,” Sperling tweeted Wednesday night. “Puzzled why my friend @davidaxelrod feels HRC can’t say that.”

Sanders argues the TARP money wasn’t exclusively tied to the bailouts of GM and Chrysler.

Clinton supporters have noted that though Obama hadn’t decided in mid-January 2009 whether to save Chrysler and GM, the TARP fund would be the logical source.

In Dearborn on Monday, Sanders called his supposed opposition to the auto bailout “absolutely untrue.” During Wednesday’s debate, he pointed to an article in which Democratic U.S. Sen. Ron Wyden of Oregon as well as Democratic former U.S. Sens. Byron Dorgan of North Dakota and Evan Bayh of Indiana said they didn’t believe they were voting against the auto bailout.

“Compensating — with hundreds of billions of taxpayer dollars — the very investment bankers who took these outrageous credit risks is no way to restore confidence in our markets or the federal government,” Wyden said in a January 2009 statement. He has endorsed Clinton.