KOKOMO, Ind. — President Barack Obama defended the federal aid to General Motors Co. and Chrysler Group LLC, saying it was the “right decision” to save a major sector of the economy and the jobs that go with it.
Obama stopped Tuesday in Kokomo, Ind., a town hard hit by the recession and the struggles of the auto industry seeking to convince a skeptical public that his $814 billion stimulus and the bailouts of GM and Chrysler are paying economic dividends.
“Even as we continue to face serious challenges, what’s happening here at this plant, the changes we’re seeing throughout Kokomo are signs of hope and confidence in the future,” Obama said after touring a Chrysler transmission manufacturing plant.
Chrysler, the U.S. automaker operated by Fiat SpA, announced Tuesday that it is looking to invest $1.2 billion in its Kokomo manufacturing plants. Sergio Marchionne, chief executive officer of Chrysler and Fiat, was at the Kokomo facility along with Obama.
The visit to Indiana is Obama’s first domestic trip since the Nov. 2 midterm elections, in which Democrats lost their majority in the House of Representatives to Republicans, largely on voter concern about the economy. Obama has described the outcome as a “shellacking” for his party and said many Americans viewed the bailouts and the stimulus as an “overreach” by the government.
Obama also urged Congress to act in the next few weeks to extend income tax cuts for middle-income Americans. He said he’s ready to meet with Democratic and Republican congressional leaders to find a compromise.
Obama repeated his opposition to a permanent extension of the current tax rates for the wealthiest Americans. Republicans are pushing to extend all the tax rates, which were passed during the administration of President George W. Bush. The current rates are set to expire at the end of this year without action by Congress.
“The last thing we can afford to do right now is raise taxes on middle-class families,” Obama said. “I am eager to sit down with members of both parties and hammer this out. But we’ve got to hammer it out.”
Obama said helping the auto industry restructure “wasn’t an easy call” and the move had many critics.
“But we also knew that millions of jobs hung in the balance,” he said. “We also knew that the very survival of places like Kokomo were onthe line.”
Kokomo was labeled one of “America’s Fastest Dying Towns” by Forbes magazine in 2008 because of declines in auto and manufacturing jobs. By June 2009, the unemployment rate in the Kokomo metropolitan area, where Chrysler and auto parts supplier Delphi Automotive LLP are among the biggest employers, hit 19.6 percent. In September it was 11 percent.
Before the auto bailout and passage of the stimulus package, Chrysler and Delphi were shutting down production facilities and shedding workers.
“That was a pretty big burden on the city,” said Gary Cameron, Delphi’s director of engineering for power electronics in Kokomo.
Along with the Chrysler investment in the Kokomo facility, Delphi matched an $89 million in federal stimulus grant to establish a new hybrid vehicle component manufacturing plant that supports 119 jobs, Cameron said.
“It definitely improved our competitive position,” he said. “Kokomo is obviously a manufacturing site today because of the stimulus-partnership money.”
The president “needs to show where there have been successes, and Kokomo has been one of those places,” Greg Goodnight, the city’s mayor, a Democrat, said. “He has to show people that we’re heading in the right direction.” Information for this article was contributed by Kate Andersen Brower and Nicholas Johnston of Bloomberg News.
Front Section, Pages 2 on 11/24/2010