Was GM really saved?

September 5, 2012, 9:21 PM UTC

FORTUNE — In the run-up to the 2012 presidential election, Democrats are using the slogan “Osama bin Laden is dead and General Motors is alive” to defend the record of President Barack Obama.

Republicans can’t easily deny bin Laden’s demise at the hands of U.S. Navy Seals on President Obama’s watch. But the opposition is eager to make an issue of the government’s managed bankruptcy of GM in June, 2009. The GOP’s rebuttal of Democratic bragging about the biggest domestic automaker depends in part on just how “alive” GM is.

Presidential candidate Mitt Romney has argued that the government’s management of an accelerated 30-day bankruptcy process should have been a conventional bankruptcy instead, implying that a stronger GM (GM) might have emerged. The government’s blueprint included firing the CEO, elimination of hundreds of dealers and the discontinuation of GM brands like Hummer and Saturn.

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Critically, the team installed by Washington also decided to save rather than sell GM’s troubled European operations. Losses at GM Europe and an inability to fix operations on the continent are ballooning into GM’s No. 1 headache and a principal reason why the automaker’s profitability is subpar, according to CEO Dan Akerson.

Jeremy Anwyl, vice chairman of the Edmunds.com automotive website, credited the government for rescuing GM from insolvency. “But the real question is whether (GM) will be successful in 10 or 15 years. Here the answer is much cloudier,” he wrote Tuesday in a report analyzing August vehicle sales. And he asked a question that sounded rhetorical: “Has GM’s culture really changed?”

GM’s stock came out at $33 a share in an initial public offering in November, 2010. Since then it has dropped about a third, selling in the low 20s. The S&P 500, meanwhile, has gained 17% over the same period.

On the plus side, Detroit-based GM has posted a profit for the past ten straight quarters. GM’s strongest global region in terms of finances and vehicles sold is North America, where it’s remained the market leader. Akerson in early August held a meeting with GM employees in which he criticized the company’s complexity and urged them to exercise initiative rather than “stand around waiting for someone to tell you where we’re going to go.”

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Akerson is a relative newcomer to the automobile industry. He and other GM directors forced out CEO Fritz Henderson, an auto industry veteran who many thought would be ideal to whip a refinanced, reorganized GM into shape. Henderson had advocated for selling GM’s European operations to one of several bidders, which the GM board overruled. Since the early part of the decade GM has lost more than $12 billion in Europe.

An auto industry veteran and turnaround specialist, Steve Miller, believes GM could have been mired in bankruptcy for a decade if the Obama administration hadn’t sponsored and financed the reorganization. Miller, who is chairman of AIG, said “GM mightn’t have survived the process, because the process is no good,” meaning that large bankruptcies attract too much litigation and have become too costly.

Under the government’s supervision, Miller said, GM creditors were short-changed while the United Auto Workers union received a retirement health-care fund financed with GM stock.  “The lesson of the GM bankruptcy is that creditors must beware when a politically well-connect labor union is involved,” he said.

In towns and states where UAW auto plants are operating the Obama-Biden ticket will win its share of supporters. In those same towns there could be a surprisingly large share of Romney-Ryan voters as well, who believe that an industry propped up by government isn’t an enduring model for investment or jobs.