Romney lacks perspective on bailouts

November 11, 2011

Romney lacks perspective on bailouts


Listen, Mitt, if you’re gonna draw lessons from the cautionary tales of Detroit and its hometown auto industry, at least put things in the proper perspective — because your adversaries certainly won’t.

On the same day Mitt Romney and fellow Republican presidential wannabes descended on Oakland University for yet another Republican debate, former Gov. Jennifer Granholm used the website of debate sponsor CNBC to lambaste Romney again for this infamous “Let Detroit Go Bankrupt” op-ed in the New York Times.

“By his own admission, had Mitt Romney been president in 2009, he would have simply let General Motors and Chrysler meet their demise,” Granholm wrote. “Romney would have turned a cold shoulder on auto workers in Michigan and across the country, and the consequences would have been disastrous.”

Added Mark Brewer, chairman of the Michigan Democratic Party: “He deserted the domestic auto industry in its darkest hour. Tonight, Romney had the audacity to say, ‘I care about this state and auto industry like no one else on this stage.'”

Maybe, maybe not. Romney’s prescriptions — offered the day after disastrous congressional testimony in November 2008 by the CEOs of Detroit’s automakers and the president of the United Auto Workers — read nothing like turning “a cold shoulder on auto workers” or the companies that employed them.

They read like tough love medicine administered by someone who understands rejuvenation through restructuring. They sound like the workout first proposed by President George Bush, pushed by Senate Republicans, opposed by the United Auto Workers and then reshaped and executed by President Barack Obama’s auto task force.

Romney called for eliminating the cost disparity between Detroit’s automakers and their foreign-owned rivals down South, which they pretty much did. He called for dumping existing management, which they did. He called for investing in the future, managing cash flow and strengthening balance sheets — all of which the task force recommended and the new managements at General Motors Co. and Chrysler Group LLC are pursuing aggressively.

The discrepancy? Where the money would come from — the private capital markets or American taxpayers. Romney advocated private capital, an option the head of the auto task force, Stephen Rattner, has said was pursued but dropped amid the changeover of administrations and the global financial meltdown, which made bankruptcy financing virtually impossible to secure.

Granholm and others don’t bother with this inconvenient truth, among others, because it undercuts their broad-brush takedown of Romney. And Romney doesn’t clearly make the distinction because he’s deathly afraid of weakening his suspect conservative cred, or being (again) portrayed as a flip-flopping opportunist pandering to Michigan homers, or both.

“Whether it was by President Bush or by President Obama, it was the wrong way to go. I said from the very beginning they should go through a managed bankruptcy process, a private bankruptcy process,” he said at Wednesday’s debate, according to a transcript. “… Then finally they adopted the managed bankruptcy, I was among others that said we ought to do that.”

Which is it, Mitt? Do it because there is value in jobs, assets and communities worth saving? Or don’t do it because greedy executives and a greedy union hopelessly over-reached, and the government shouldn’t be doing that kind of thing, anyway?

Obama didn’t deliver his ultimatums to GM and Chrysler — offer credible restructuring plans or prepare for bankruptcy — until late March 2009, more than four months later. He understood clearly what President Bush before him understood: Like it or not, the collapse of two Detroit automakers imperiled Ford Motor Co., the base of suppliers serving the entire U.S. industry and the jobs of tens of thousands.

Romney, a veteran private-equity player, understands the mechanics of what makes companies succeed or fail. A son of Michigan whose father served as its governor and CEO of American Motors Co., he knows how far Detroit has fallen since the heyday of his childhood — as do so many of us.

But as a would-be president, it’s still not clear he gets how politically and economically consequential the collapse of Detroit would have been for whoever is — or would be — sitting in the White House, regardless of party.

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