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Jobs, Cars and Politics, Oh My!

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Ohio is a very important battleground state in this election.  Not only are the presidential candidates fighting for its 18 electoral votes, but the Republicans are also trying to recapture control of the United States Senate.  The main points that the candidates are focusing on is the recovery of Ohio’s economy, including job growth, the unemployment rate and the President’s auto bailout.

In a recent interview with NBC’s “Meet the Press,” Ohio Gov. John Kasich discounted the impact of the auto bailout on economic recovery in Ohio.  Kasich says that the rescue of auto companies accounted for only 400 of the 112,000 jobs created in the state in the past year.  During the interview, the Governor said, “We did not grow Ohio’s economy just by relying on one industry, or just one sector.”  He continued, “We’ve done it by diversifying Ohio, and making it safe for people to come here.”

Over the past year, Ohio’s unemployment rate is down from 8.6 percent to only 7 percent—nearly a whole percent less than the national unemployment rate.  Kasich, however, credits this to other sectors, including information and technology, financial services and healthcare.

Similar discussion also created a heated exchange in the final Senate debate between incumbent Sen. Sherrod Brown and Ohio Treasurer Josh Mandel.  Mandel accused the Senator of being a “bailout senator” for supporting the bailouts of the banks and auto industry.  Brown justified his support by explaining that more than 800,000 jobs in Ohio are tied to the auto industry.

Mandel stated, “There’s no government bailout that I could think of that I would ever support.”  He explained that the private sector would have done a better job at the restructuring.  One reason for his opposition was the 20,000 Delphi retirees who had their fully funded pensions cut by up to 70 percent as part of this restructuring.  Delphi is the manufacturing company of General Motors (GM) that is headquartered in Troy, Michigan, with offices in Ohio.  Brown objected, “It was GM that made the decision to short the Delphi workers.”

The Senator stated that the bailout has stimulated job growth in Ohio.  He said that there were 180 people recently hired in Sharonville.  He continued, “Chrysler and GM have invested $500 million in the last year alone.”  Brown believes that jobs are on the rise “because we are enforcing trade rules,” while many believe that the economy will only be slightly impacted by trade actions.  Despite this, Brown continues to support bipartisan foreign trade, using the automotive companies and steel mills in the state to trade with China, further helping the state’s economy.

Is it a coincidence that those dismissing the impact of the auto bailout on the state’s economy are Republicans?  Probably not.  A Gallup study completed in February showed that 73 percent of Republicans oppose the bailout, while 63 percent of Democrats support the action.  Many politicians and citizens forget that the auto bailout was originally instituted by George W. Bush in 2008, when he spent $17.4 billion to save Chrysler and General Motors.  President Barack Obama simply completed the bailout plan that he inherited when he took office in 2009.

Since the bailout, both Chrysler and General Motors have made impressive comebacks and record profits, as well as paid back most of the funds they were provided.  Whether or not the Republican politicians admit that the bailout is the reason that Ohio’s economy has improved, it is very difficult to argue that it significantly impacted the recovery of the automobile companies throughout the state.

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