Obama heads to defend record

WASHINGTON: President Barack Obama will defend his economic stewardship on Friday by reminding voters in a visit to an Ohio auto plant that his rescue of the industry saved jobs in a state vital to his 2012 re-election hopes

Obama will arrive in Toledo hours after the release of a monthly employment report that is expected to deliver Americans a stark reminder the labour market remains weak and unemployment high.

The numbers follow a rash of data signaling the US economy may be losing steam. Obama, a Democrat, must coax the jobless rate down convincingly in order to be confident of securing a second White House term.

Polls show he is still favored over all potential Republican opponents. But the troubled economy remains his biggest weakness.

On Thursday Mitt Romney kicked off his second bid for the White House by accusing Obama of spending too much and not protecting jobs.

Obama won Ohio by a 4-point margin over challenger John McCain in 2008. But the state went narrowly to Republican President George W. Bush in 2004 and is expected to be a highly competitive race in 2012.

The White House claims credit for Obama’s rescue of the auto industry and hope this success for US manufacturing will warm him to blue-collar voters whose support he needs to win next year.

"The president took dramatic action, including unpopular decisions like bailing out the American auto industry, because he felt it was the right thing to do," White House press secretary Jay Carney said on Thursday.

Chrysler repaid the US government $5.9 billion last month and the US Treasury announced on Thursday it will sell its remaining 6 percent equity stake in the firm to Italy's Fiat in a deal netting Washington $560 million.

After the transaction with Fiat, Treasury will have received some $11.2 billion back from its $12.5 billion investment in Chrysler.

Chrysler's success in rebounding from its 2009 bankruptcy protection filing reflects the wider recovery of the US auto industry since receiving a massive government bailout.

This was initially expected to cost taxpayers $80 billion, but estimates have since shrunk to a fraction of that price.

General Motors Co filed for bankruptcy in 2009 but soon emerged from under court protection thanks to Washington's rescue.

Its profits are now beating expectations.

Ford Motor Co did not take a US government bailout but did receive direct and indirect financial assistance through loans, capital, tax credits and other programs that have aided its strong turnaround.

The administration expects that rescuing an industry that was once a proud emblem of US manufacturing prowess, will end up costing taxpayers around $14 billion.

It also argues that it saved far more money because it safeguarded hundreds of thousands of US jobs, sparing authorities from making billions of dollars in unemployment benefits, as well as forgoing tax revenue.

"He felt that the million jobs associated with the auto industry were worth saving if we could extract from those companies measures that would ensure that they were given the better chance of succeeding," Carney said.

But voters will cast their choice next year on the basis of how they view their own economic future, not what happened in the past, and the data on Friday will make clear that conditions for many Americans will remain tough.

Analysts polled by Reuters predict the rate of unemployment crept down to 8.9 percent in May from 9 percent in April, while 150,000 new jobs were created during the month. The data will be released at 8.30 a.m. EDT (1230 GMT).

COPYRIGHT REUTERS, 2011