What the Controversial Ford Bailout Ad Got Wrong

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Ford Motors debuted a smart ad in recent weeks that should win someone a CLIO.

That guy sweats red, white and blue. Good stuff, with huge viral potential. Predictably, it has set off a political firestorm, with supportive YouTube videos, “scandal” segments on Fox News and, now, a Congressional investigation. Conservatives are charging that the Obama administration forced Ford to pull the ad, even though there is no on-the-record evidence to support that allegation, and both Ford and the White House deny it.

But before we get too drawn into right-wing scandal machinery, let’s pause a moment to reflect on the ad’s central claim. Chris McDaniel, a Ford customer, explains, why he likes Ford: “I was going to buy from a manufacturer that is standing on its own. Win, lose or draw. That’s what America is about.” The thing is, Ford is not standing on its own. It has received billions in federal subsidies to keep 13 factories working, and 33,000 employees on the job in Illinois, Michigan, Ohio and Missouri. Here’s what happened:

In 2008 and 2009, when the economic collapse cratered the auto industry, Ford did not follow General Motors and Chrysler to Capitol Hill asking for taxpayer cash to keep running. The reason was simply that Ford had better prepared for the collapse, as Paul Ingrassia explained at the time. That said, Ford did benefit indirectly from the bailouts–and supported them before Congress–since the company shares suppliers with its competitors. But supporting a bailout is not the same as getting a bailout. So McDaniel is half right.

The next question is different: Is Ford “standing on its own”? Not really.

In September of 2009, the Obama Administration awarded Ford Motors a separate $5.9 billion loan to upgrade manufacturing facilities in the four states mentioned above to improve fuel efficiency, as part of something called the Advanced Technology Manufacturing (AVTM) program. Since the money was given as a loan, the only cost to taxpayers was the “credit subsidy” cost, or the net long-term cost of the loan for the government. At the time Ford got the loan, its credit rating had dropped to CCC+, or “substantial risk,” according to the Government Accountability Office, which meant the loan was more expensive than usual for taxpayers. As of February of 2011, the average credit subsidy rate for companies in the AVTM program was running at 39%. Assuming Ford’s “substantial risk” rating was average, that works out to about $2.3 billion in taxpayer-funded Ford subsidies. Now, this compares favorably to the roughly $14 billion in taxpayer money lost to the bailout of General Motors or Chrysler, but it still comes out to $7.50 for every man, woman and child in the U.S., the price of a good sandwhich.

As for the claim that the White House tried to shut down the ad, it’s so thinly sourced as to be transparent. It comes from a column in the Detroit News, that included this paragraph.

The ad, pulled in response to White House questions (and, presumably, carping from rival GM), threatened to rekindle the negative (if accurate) association just when the president wants credit for their positive results (GM and Chrysler are moving forward, making money and selling vehicles) and to distance himself from any public downside of his decision.

No sourcing at all. And two paragraphs later, the column quotes an anonymous “industry source familiar with the situation” saying, “There was not any pressure to take down the ad.” That’s it. But that is apparently enough for Sean Hannity to go on Fox News to report that “there’s a brand new scandal that’s brewing in the Motor City.” And it is enough for House Investigations Committee Chairman Darrell Issa to write a letter to Ford demanding details of any “undue political pressure” on Ford. If only there were a committee in Congress as concerned about truth in advertising.
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