General Motors, which the Obama Administration rescued in 2009 with bridge loans as it went through a managed bankruptcy, announced a record annual profit in nominal terms, which will earn the union workers at the company a substantial upside benefit.

General Motors earned its largest profit ever in 2011, two years after it nearly collapsed into financial ruin.

The 103-year-old company (GM) made $7.6 billion in 2011, up 62% from 2010 […]

GM also said Thursday that its 47,500 blue-collar workers in the U.S. will get $7,000 profit-sharing checks in March. The checks are based on North American performance and are a record for the company.

The large majority of the profits came from North American performance.

I’m sure we’re going to hear from Mitt Romney and others that these profit-sharing checks are proof that Obama, in Kenyan Muslim socialist fashion, handed over the company to greedy union members. In actuality, the equity stake given in the GM restructuring was the compensation for the large health care trust fund that union workers were promised in past contracts. They exchanged cash for the equity stake, meaning that the workers had skin in the game and a financial interest in the company’s success. And what do you know, they ended up helping make GM successful.

Romney’s other point on the auto rescue was that the government should not have put public money at risk during the bankruptcy, which as the Economist explains would have been completely impossible. Nobody would have given GM the bridge loans they needed at the time to maintain cash flow. Either GM would survive on the government loans and reorganize, or they would have been liquidated, with dozens if not hundreds of small suppliers going down with them. The auto rescue avoided all of that, and GM has now come back stronger.

GM isn’t the perfect company: it reduced costs mostly on the backs of workers, and they continue to try to squeeze worker pensions (they just converted all pensions to a 401(K) program for white-collar employees). But the important thing here is that it’s still a profitable company employing tens of thousands of people, who at least will share in the company’s success to some degree, far more than in other industries. This was a very well-handled feature of Obama’s first term, one that saved the industrial backbone of the Midwest.

The government still owns 26.5% of GM, and they’re waiting for the right sale price to unload their shares.

David Dayen

David Dayen