Obama Officials See Hope in Jobless Numbers, Defend GM Plan

[1969pontiac]

June 7 (Bloomberg) -- White House officials said they see encouraging signs in the slowing rate of job losses and defended the Obama administration’s handling of the bankruptcy of General Motors Corp.

Companies shed 345,000 jobs last month, fewer than expected and the lowest number since September, the Department of Labor reported June 5. Unemployment rose to 9.4 percent.

“Hopefully, that is a sign that this is turning,” David Axelrod, senior adviser to President Barack Obama, said on CNN’s “State of the Union” television program. “While it’s going to take some time for these unemployment numbers to turn around, for the momentum to completely stop and turn in the other direction, it feel as if we’re moving.”

Axelrod and Obama economic adviser Austan Goolsbee defended Obama’s moves on the economy, including his decision to seek a $787 billion economic stimulus and the handling last week of the bankruptcy of General Motors Corp.

Goolsbee, appearing on “Fox News Sunday,” said Obama brokered the best deal possible with GM after the Bush administration gave the automaker billions in loans the month before leaving office.

“I don’t know why the Bush administration handed them money and shoved the problem onto the next guy,” Goolsbee said.

The Obama plan was criticized on the Fox program by Thayer Capital Partners Chairman Fred Malek and Google Inc. Chief Executive Officer Eric Schmidt for favoring labor unions over the company’s bondholders.

Unions and Creditors

“What this amounts to is a bailout for the unions at the expense of the secured creditors,” Malek said.

Goolsbee said the administration drove a hard bargain with labor unions, winning concessions on pay, benefits and pensions.

“In the Obama plan, it asks more and received more from the unions and the other stakeholders than the people who objected to the bailout last November asked for,” he said. “All the stakeholders have made sacrifices.”

While Goolsbee conceded unemployment numbers were higher than the 8 percent the administration had projected, he said that helps make the case for economic stimulus legislation enacted right after Obama took office in January.

He called the jobless numbers “a terrible number, but it’s a substantial improvement.” When asked whether the U.S. was bound for double-digit unemployment, Goolsbee said the economy continues to face a “rough patch” and jobless numbers are “likely going to be a little higher.”