President Obama Hails Auto Industry Recovery in Michigan

Because of the bailout, Gibbs added, the auto industry "looks fundamentally different in its progress than we did just a year and a half ago."

Detroit may seem an unlikely place for Obama to tout job creation. Michigan's unemployment is the second highest in the nation, at 13.2 percent.

The White House said Thursday there is still a long way to go before the region bounces back but it continues to work with auto workers and their communities to focus on their needs and concerns.

"We can't be happy with the unemployment rate in the state of Michigan at over 13 percent or in Detroit [at] 20 percent," said Ed Montgomery, head of the White House Council on Automotive Communities and Workers. "But these are providing some needed resources to help autoworkers and others in the community begin the process of finding jobs."

Government Bailouts Sparked Controversy in 2009

As of June 2010, the federal government had provided about $85 billion to GM, Chrysler, their financing arms and other industry bailout programs, a decision that was controversial when it was first announced last year. GM received $50 billion in government money, GMAC $17 billion, Chrysler $12 billion, $5 billion for a program for auto suppliers, $1.5 billion for Chrysler Financial and $650 million for an auto-warranty program.

Both GM and Chrysler went through bankruptcy in the spring of 2009. When GM emerged from bankruptcy, the Treasury Department converted the $50 billion investment into a 61 percent stake in the new GM: $2 billion in preferred stock, and a $7 billion loan. GM has since paid back the $7 billion loan.

Because of the $12 billion given to Chrysler, the federal government holds a 10 percent stake in the automaker and a $7 billion loan to them. The newly structured Chrysler -- after the bankruptcy -- paid back about $2 billion to satisfy a portion of the loan but Treasury does not expect a significant return overall.

Ron Bloom, Treasury Secretary Tim Geithner's senior adviser on the auto industry, could not say Thursday exactly how long the federal government would have an ownership stake in the companies.

"We don't like having this investment but we're not going to sell it at a fire sale," he said.

All told, the Treasury Department has estimated that it could lose $28 billion on the bailout and Obama administration watchdog Neil Barofsky recently said that when they were pushing the automakers to cut dealerships, the government failed to take into account that 100,000 jobs could have been lost from the closings.

But the White House is painting a much rosier picture overall, highlighting that if there had been no government intervention, the job losses would have been higher and the economic forecast for the region would have been dire.

"A million people leaving their job would have had a multiplying economic effect," Gibbs said. "That's a million more people that would have been on unemployment benefits.

"When you walk into these communities, it's not as if these communities have a lot of other businesses, because they're built around these plants."

Analysts, including former John McCain campaign adviser Mark Zandi of Moody's, agreed that the government intervention was vital.

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