Mitt Romney, self-proclaimed "son of Detroit," appears to be in serious trouble in Michigan, falling behind to rival Republican presidential candidate Rick Santorum in new polls.
Despite that, he's standing firm on his position that the Obama administration should have allowed two iconic car companies — GM and Chrysler — to enter the regular corporate bankruptcy process three years ago.
It seems an especially risky tack since Santorum has been wooing blue-collar Republican voters with his proposal of tax breaks for U.S. manufacturers meant to help them expand and create and sustain jobs.
Yet Romney's sticking to his earlier opposition to U.S. government aid to the U.S. car industry. In an op-ed Tuesday in the Detroit News and other papers in the state, he restated his view, expressed in a 2008 New York Times op-ed, that being forced into the standard corporate bankruptcy process would have been the best possible situation for the companies, their creditors and U.S. taxpayers:
"My view at the time — and I set it out plainly in an op-ed in the New York Times — was that 'the American auto industry is vital to our national interest as an employer and as a hub for manufacturing.' Instead of a bailout, I favored 'managed bankruptcy' as the way forward.
"Managed bankruptcy may sound like a death knell. But in fact, it is a way for a troubled company to restructure itself rapidly, entering and leaving the courtroom sometimes in weeks or months instead of years, and then returning to profitable operation.
"In the case of Chrysler and GM, that was precisely what the companies needed..."
In a state so auto-industry dependent, it would seem a dubious proposition to call for the industry to go through the regular bankruptcy process with all the uncertainties and pain that would have entailed.
Many experts inside and outside the industry at the time and since said bankruptcies of Chrysler and GM would have resulted in liquidations, meaning millions of jobs lost and not just at the auto makers but their suppliers as well.
They also warned that such bankruptcies could have taken their toll on healthier car makers too since their supply chain would have been disrupted, as well.
But Romney's position could appeal to many Michigan conservatives who opposed the bailouts and, right now, he's all about trying to win the primary. The Michigan contest has disproportionate importance for him since he was raised in the state and his father, George, headed American Motors and was a popular governor of that state.
Public Policy Polling the following:
"We polled support for the auto bailout in MI over the weekend and 62% of Republicans said they opposed it. Romney stance not bad for primary"
A potentially major problem for Romney is that, if he does go on to eventually win his party's presidential nomination, it may prove very difficult for him to make more palatable for a general-election audience his "let them go bankrupt' message of the primaries.
His current position will be an especially hard sell to the many Michigan workers who supported the auto bailouts that actually started under President Bush and continued under Obama. And that's not to mention the chilling effect his position will have on auto workers and union members in other states, as well as workers in related industries.
Meanwhile, Romney is going to find his assertions about what was best for the auto industry challenged by the Obama campaign, its supporters in organized labor and from a number of other quarters.
One especially useful analysis of Romney's Tuesday op-ed comes from Justin Hyde who reported on the bailouts for the Detroit Free Press. Hyde contradicts a number of Romney's statements, dismantling Romney's argument piece by piece. An excerpt in which Hyde boldfaces passages from Romney's op-ed, then provides the facts as he knows them from his reporting:
" 'The president tells us that without his intervention things in Detroit would be worse. I believe that without his intervention things there would be better.'
"The crux of Romney's argument: If Obama had not acted, private companies would have stepped in and run a 'managed bankruptcy.' What this ignores is that in the fall of 2008, before Obama was even sworn in, no one on Wall Street or anywhere else was willing to lend GM and Chrysler a penny — let alone the $81 billion they and their financial arms eventually needed..."
Not incidentally, Hyde provides a link to a Detroit News article in which former President George W. Bush recently told a Las Vegas meeting of auto dealers that he would repeat the auto industry bailout.
" 'I'd do it again,' Bush told thousands of the nation's auto dealers, explaining approving a $700 billion bailout fund used to rescue banks, insurers and automakers. 'I didn't want there to be 21 percent unemployment.'
"Bush said he believes in the free market and under normal conditions, automakers and other businesses should have been allowed to fail.
" 'If you make a bad decision, you ought to pay' Bush said. 'Sometimes, circumstances get in the way of philosophy.' "
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