WASHINGTON: US President Barack Obama on Friday makes his rescue of America's iconic auto industry a driving force of his 2012 reelection bid and a repudiation of rising attacks on his economic leadership.

At a Chrysler Jeep plant in the electoral bellwether state of Ohio, Obama will argue that his high-risk decision to embrace an dollar 80 billion government bailout saved hundreds of thousands of jobs and rebooted an entire industry.

But his tour in Toledo may be overshadowed by the release of the latest set of jobless data which analysts expect to further fuel fears that the economic rebound - crucial to Obama's hopes of a second term - is slowing.

With unemployment at 9.0 per cent, a slumbering housing market, and with many Americans yet to feel relief in their wallets, Obama's arguments that the economy is on the move face strong headwinds.

So the White House is extra keen to highlight the success of the auto bailout.

“When the President took office, we had an automobile industry in absolute freefall,” said Ron Bloom, a counselor to the president on manufacturing.

“We had obviously an economy in great distress, but the automobile industry in some ways was falling faster than just about any other sector.

“The president faced very difficult decisions about what to do to deal with this critical part of the American economy.” Officials say the rescue of General Motors and Chrysler staved off a liquidation of firms that would have hammered the economy in fragile states and sparked widespread misery.

The industry has added 115,000 jobs since GM and Chrysler exited bankruptcy and, along with Ford, are now churning out profits and popular new energy efficient models.

Backdrops of cheering workers and packed assembly lines make great campaign fodder for the White House, especially in economically depressed areas of the country likely to play a key role in the 2012 election.

But back in 2009, the bailout was highly controversial, and second guessed by Obama's Republican opponents who warned against a government takeover of a huge sector of the economy and mocked the president as automaker-in-chief.

It will be particularly satisfying to the White House that a chief critic at the time was Mitt Romney - one of Obama's potential Republican foes in 2012.

In a New York Times article in November 2008, just after Obama was elected, entitled “Let Detroit go Bankrupt” Romney argued that bailing out iconic American auto firms would be counterproductive.

If they “get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye,” he wrote.

Though Romney did reserve some wiggle room in the article, arguing for the kind of government-managed bankruptcy that Obama eventually adopted, he was subsequently critical of the Obama plan.

Romney launched his own 2012 bid for the Republican nomination on Thursday, with a stinging attack on the president, saying he failed America and prolonged the economic crisis.

The administration says the bailouts did not just save GM and Chrysler, but also helped Ford -- which did not take a bailout - as well, as the firm uses a the same supply chain propped up by its competitors.

“The impact of the collapse of GM and Chrysler would not have been just the couple hundred thousand people who worked at these companies,” said Bloom.

“Three times as many people worked in the supply base. Other three times as many worked in the suppliers, to say nothing of all the pizza parlors and all the dry cleaners and all the other people in these communities.” US automaker Chrysler announced last week it had exited the US and Canadian rescue program six years early with the repayment of billions of dollars provided during the crisis. The Treasury on Thursday said it agreed to sell its Chrysler shares to Fiat.

However, the White House acknowledged on Thursday that around 14 billion dollars of taxpayer cash used in the bailout would likely never be recovered.

However, for the first time since 2004, all three Big Three automakers are operating at a profit, further bolstering the Obama administration's claims.