Look for the auto industry to get lots of attention as ... Look for the auto industry to get lots of attention as GOP candidates debate in Michigan (GM).
If there is one state in the union President Obama might think is secure for him in next year's election, it would be Michigan. After all, he led the tax-payer assisted bankruptcy reorganizations of General Motors and Chrysler, and turned Michigan from a complete economic basket-case to one of the top job creators in the country. But Michigan is anything but in the bag for Obama.

Two years after GM and Chrysler emerged from the federal sponsored bankruptcy--resulting in GM, Ford and Chrysler making the most profit they have in a decade or more--even Michiganders are split right down the middle on whether Uncle Sam should have helped GM and Chrysler and hundreds of parts makers survive. "It's about 50-50, which is surprising I know," says Debbie Dingell, a Democratic Party strategist and wife of Rep. John Dingell (D-MI), who represents Southeast Michigan in a district stretching from Ford's home of Dearborn, MI to Ann Arbor.

That is the opening that the President's Republican challengers are looking to exploit in tonight's CNBC sponsored debate today at Oakland University in suburban Detroit.

All eight GOP contenders are on the record saying they opposed the government bailout, and will reiterate that message if questioned tonight on the topic, which is inevitable. CNBC conservative personality Rick Santelli, an outspoken critic of the auto bailout, is on the panel of questioners.

Former Governor Mitt Romney, born and raised in suburban Detroit where his father was Governor and President of American Motors Corp, is hoping, if he is the nominee, to pick off Michigan from the President who won Michigan in 2008 in a landslide margin of 57-41.

Romney's position on the bailout is difficult to decipher, but it plays well with Michigan's ideological conservatives who like small government. Romney said he opposed the federal government giving GM and Chrysler billions in bridge loans, and he was also against the government investing in GM and Chrysler as part of their bankruptcies. He was in favor of letting the companies reorganize under bankruptcy code as soon as they ran out of cash.

But former White House auto industry adviser Steven Rattner said in an interview with AOL Autos earlier this year that Romney's position "makes no sense." "The banks were in free-fall, which meant there was no financing, except from the government, for GM and Chrysler to reorganize under bankruptcy," said Rattner. Rattner added: "Follow Romney's thinking, and it would have been liquidation, not reorganization, and the auto industry would be in a shambles today."

Sen. Carl Levin, D-Detroit, said it was a "no-brainer" to save the auto industry. "If we didn't do what we did, we'd probably have one American auto company," Levin said. "It was a no-brainer for Michigan and was a no-brainer for the country to keep manufacturing in this country."

The recovery of the auto industry made Michigan the number-one job creating state in 2010, with it vying for the same title in 2011. Indeed, Michigan's economy is recovering from the recession at the second-fastest pace in the U.S., according to the Bloomberg Economic Evaluation of States Index. The home of Motor City was topped by North Dakota, where an oil boom is raising incomes at the nation's quickest pace.

Stubborn unemployment

Michigan, though, maintains the third-highest unemployment rate in the nation at 11.1%, or roughly two percentage points higher than the national unemployment rate. Lack of housing starts and exodus of non-auto manufacturing from the state, continues to hurt economic progress. The housing crisis in the state persists as well owing to the downsizing of the auto industry over the last decade and a half and a population decline: Michigan ranks in the top 10 for the highest number of foreclosures in the country, with 1 in every 322 homes in bank repossession, according to RealtyTrac.

Obama has been to Michigan numerous times in the last year to have press events at factory expansions that owe new jobs to the recovery of GM, Chrysler and parts makers. Still, Debbie Dingell says, "The President's campaign has to do a better job of telling the story here."

Ford did not have to go through bankruptcy, but was threatened if GM and Chrysler and the parts makers did not get Federal help because of the impact a massive disruption of the supply chain would have had on its business.

As for the other seven GOP contenders besides Romney, they are as united against the auto industry bailout as they are against abortion rights, higher taxes and evolution.

General Motors today posted a third quarter profit of $1.7 billion, the automaker's seventh straight quarterly profit since emerging from bankruptcy. The company has a 19% share of the U.S. auto market, and its credit rating was boosted this year. The U.S. government still owns 26% of GM, and plans to sell that when GM's stock is at a higher price.

Chrysler is also profitable, and, under control of Italian automaker Fiat, has paid back the government all the money that was due, including buying the government's shares in the company years ahead of schedule.

Ethanol subsidies to get play too

Look for the topic of ethanol subsidies to get some air in tonight's debate as well. Despite the importance of Iowa, the first state to hold a caucus or primary and a corn state that gets huge benefits from government ethanol subsidies, most Republicans, and even some Democrats, are against continuing $6 billion a year in ethanol subsidies, an annual expenditure that is slated to balloon to $60 billion a year a decade from now.

The auto industry has produced millions of flex-fuel vehicles that will run on E85, which is fuel containing 85% ethanol.

Mitt Romney and Newt Gingrich support ethanol subsidies, while rivals Ron Paul, Jon Huntsman and Rick Santorum are against them. Minnesota Congresswoman Michele Bachmann has said only that subsidies should be "examined," a predictable position considering the popularity of the subsidies in both her home state, as well as her birth-state of Iowa and a caucus state that will likely either give her steam going into early primary states like South Carolina or doom her campaign. Herman Cain's ethanol position is hard to decipher, seeming to be for them and against them at the same time.

Share This Photo X